Regarding the application of GST on specific services, the CBIC has provided explanations in Circular No. 190/02/2023- GST, dated January 13, 2022.
Requests for explanation on the following problems have been received:
- The use of GST on accommodation services provided to Air Force personnel by the Air Force Mess;
- The application of GST on the RuPay Debit Cards incentive and low value BHIM-UPI transaction incentive paid by the Ministry of Electronics and Information Technology (MeitY) to acquiring banks.
The following are the explanations for each issue:
Application of GST on accommodation services provided to Air Force Mess personnel-
According to Sl. No. 6 of Notification No. 12/2017 – Central Tax (Rate) of June 28, 2017, all services provided by the Central Government, State Governments, Union Territories, or local authorities to anyone other than business entities are exempt from the GST. These services include postal services, transportation of goods and passengers, among others.
GST is applicable to the incentive that MeitY provided to acquiring banks as part of its incentive programme to promote RuPay Debit Cards and low-value BHIM-UPI transactions.
In accordance with the Council’s recommendation, it is now made clear that MeitY’s incentives granted to acquiring banks as part of the Incentive Scheme for Promoting RuPay Debit Cards and Low Value BHIM-UPI Transactions are in the nature of subsidies and are not therefore taxable.
