Exemption for services provided to Government Withdrawn

The following changes in tax rates on services to/by government notified vide Notification No. 16/2021 CTR come in to effect from 1^st January,2022

Exemption for following services is WITHDRAWN. They shall be taxable at rate 5 %, 12% OR 18%.

1. Pure services (excluding works contract service or other composite supplies involving supply of any goods) provided to a Governmental authority or a Government Entity by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution.
2. Composite supply of goods and services in which the value of supply of goods constitutes not more than 25 per cent. of the value of the said composite supply provided to a Governmental authority or a Government Entity by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution.

However, if above services are provided to the Central Government, State Government, or local authority then the exemption is available

 

Services by a Governmental authority by way of any activity in relation to any function entrusted to a municipality under article 243W of the Constitution or a Panchayat under article 243G of the Constitution.

However, if above services are provided by the Central Government, State Government, or local authority then the exemption is available

 

Governmental authority

It is an authority or a board or any other body, –

(i) set up by an Act of Parliament or a State Legislature; or

(ii) established by any Government,

with 90 per cent. or more participation by way of equity or control, to carry out any function entrusted to a Municipality under article 243W of the Constitution or to a Panchayat under article 243G of the Constitution.

 

Government Entity

It is an authority or a board or any other body including a society, trust, corporation,

(i) set up by an Act of Parliament or State Legislature; or

(ii) established by any Government,

with 90 per cent. or more participation by way of equity or control, to carry out a function entrusted by the Central Government, State Government, Union Territory or a local authority.

E.g. National Highways Authority of India (NHAI)