The Ministry of Finance has issued Circular No. 245/02/2025-GST, dated January 28, 2025, providing essential clarifications on the applicability of GST on various services. This circular, based on the recommendations from the 55th GST Council meeting held on December 21, 2024, addresses several key issues. Let’s explore the main points and their implications.
Key Highlights of the Circular
GST Exemption for Payment Aggregators
Context: Clarification was sought on whether payment aggregators (PAs) are eligible for GST exemption under Sl. No. 34 of notification No. 12/2017-CTR.
Clarification: RBI-regulated PAs, involved in the settlement process of payments up to ₹2000 in a single transaction, are considered ‘acquiring banks’ and are eligible for GST exemption. This exemption does not apply to Payment Gateways (PGs).
GST on Research and Development Services
Background: The GST Council recommended exempting R&D services provided by Government Entities against grants.
Clarification: The exemption applies from October 10, 2024. For the period from July 1, 2017, to October 9, 2024, GST on these services is regularized on an ‘as is where is’ basis.
GST on Skilling Services by NSDC-approved Training Partners
Context: The exemption for skilling services provided by NSDC-approved Training Partners was withdrawn but later reinstated.
Clarification: The exemption is restored from January 16, 2025. For the period from October 10, 2024, to January 15, 2025, GST on these services is regularized on an ‘as is where is’ basis.
GST on Facility Management Services to MCD
Issue: Clarification was sought on the applicability of GST on facility management services provided to the Municipal Corporation of Delhi (MCD).
Clarification: These services are not exempt from GST as they are not related to functions entrusted to a Municipality under Article 243W of the Constitution.
DDA as a Local Authority
Issue: Clarification was sought on whether the Delhi Development Authority (DDA) is a ‘local authority’ under GST law.
Clarification: DDA does not qualify as a local authority under section 2(69) of the CGST Act, 2017.
GST on Renting of Commercial Property
Context: Renting of commercial property by unregistered persons to registered persons was brought under reverse charge basis.
Clarification: Taxpayers under composition levy are excluded from this provision. GST on such transactions for the period from October 10, 2024, to January 15, 2025, is regularized on an ‘as is where is’ basis.
GST on Support Services by Electricity Utilities
Issue: Clarification on GST applicability on incidental services provided by electricity utilities.
Clarification: These services are exempt from GST. The exemption is regularized for the period from October 10, 2024, to January 15, 2025.
GST on Services by Goethe Institute/Max Mueller Bhawans
Context: Goethe Institutes/Max Mueller Bhawans did not collect or pay GST, believing their services were exempt.
Clarification: GST on their services from July 1, 2017, to March 31, 2023, is regularized on an ‘as is where is’ basis.
GST on Transportation Charges HSN Codes Explained
Conclusion
Circular No. 245/02/2025-GST provides much-needed clarity on various GST-related issues, ensuring compliance and reducing ambiguities. Entities affected by these clarifications should review their practices to align with the new guidelines and ensure proper GST compliance.
