GST Circular dated 11.10.2024-GST on certain services!

On October 11, 2024, the Government of India, through the Ministry of Finance and the Department of Revenue, issued Circular No. 234/28/2024-GST, providing important clarifications on the applicability of Goods and Services Tax (GST) on various services. This circular follows the recommendations made during the 54th GST Council meeting held on September 9, 2024, and seeks to address multiple concerns raised by taxpayers and stakeholders across sectors.

The clarifications span a wide range of services, including the affiliation services provided by universities and educational boards, the taxation of flying training courses, transportation services by helicopter, and more. Notably, the circular aims to bring clarity on the treatment of ancillary services, the regularization of past GST liabilities, and the tax implications for specific services, including those in the construction, electricity, and film distribution sectors.

Let’s understand the circular!

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Key Highlights of GST Circular No. 234/28/2024-GST dated 11th October 2024

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1. GST on University-Affiliation Services: Affiliation services provided by universities to colleges are subject to 18% GST, as these services do not fall under the educational exemptions.
2. GST on School Affiliation by Educational Boards/Councils: GST is applicable on affiliation services provided by Central and State educational boards to schools, but services to government schools are exempt. Past payments of GST from 01.07.2017 to 17.06.2021 have been regularized.
3. DGCA-Approved Flying Training: DGCA-approved flying training courses are exempt from GST, as they are recognized educational services.
4. Helicopter Passenger Transport: GST on passenger transport by helicopter on a seat-share basis is set at 5%, effective from 10.10.2024. Charter services continue to attract 18% GST. The payment of GST on transportation of passengers, with or without accompanied baggage, by air, in a helicopter on a seat share basis is hereby regularized on ‘as is where is’ basis for the period from 01.07.2017 to 09.10.2024
5. Incidental Services by Goods Transport Agencies: Ancillary services like loading, unloading, and transshipment provided by Goods Transport Agencies (GTA) are considered composite supply being transport service as the principal supply when they are provided as a part of the transportation process. However, if such services are not provided in the course of the transportation of goods and are invoiced separately, then these services will not be treated as a composite supply of transport of goods.
6. Import of Services by Foreign Airlines: The import of services by foreign airline establishments from related entities outside India, when made without consideration, is exempt from GST. Past GST payments from 01.07.2017 to 09.10.2024 are regularized.
7. Preferential Location Charges in Real Estate: Preferential Location Charges (PLC) collected with consideration for residential or commercial properties are treated as part of the construction service i.e. composite supply and attract the same GST rate.
8. Support Services by Electricity Utilities: GST on certain support services provided by electricity transmission and distribution utilities, such as meter rentals and shifting services, has been exempted, with regularization of past payments from 01.07.2017 to 09.10.2024.‍
9. Film Distribution Services: Before 1st October 2021, GST at the rate of 18% was leviable on “Motion Picture, videotape, and television program distribution services” under Heading 9996 whereas a 12% rate of GST was leviable on “temporary or permanent transfer or permitting the use or enjoyment of intellectual property right in respect of goods other than IT technology software” under Heading 9973. It was observed that both entries covered services by way of licensing of rights to broadcast or show films. This issue was discussed in the 45th GST Council meeting held on 17.09.2021 wherein, the Council recommended keeping a uniform rate of 18% on both these entries with effect from 01.10.2021. 

GST on transactions between film distributors and exhibitors granting theatrical rights has been regularized at 18% for the period from 01.07.2017 to 30.09.2021. 

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Conclusion

The clarifications provided in Circular No. 234/28/2024-GST address several key issues regarding the applicability of GST across various sectors, including education, transportation, real estate, and utilities. The guidance offered by the GST Council, particularly regarding the taxation of services like university and school affiliations, helicopter passenger transport, and support services by electricity utilities, aims to resolve ambiguities and ensure uniform compliance.

With the regularization of GST payments for past periods, businesses and institutions can now align their operations with updated tax guidelines, preventing any potential disputes or penalties. As GST laws continue to evolve, staying informed and adapting to these changes is crucial for smooth business operations. For entities impacted by these clarifications, it is important to review their tax liabilities and adjust their invoicing practices to remain compliant with the latest GST framework.

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