GST

Supply vs Non-Supply Under GST What Counts as a Supply? What Doesn’t? Know Every Rule, Exception & Case

Supply vs Non-Supply Under GST Why the Supply vs Non-Supply Distinction Is the Backbone of GST Goods and Services Tax (GST), introduced in India on 1st July 2017, is built on one foundational concept: the taxability of a ‘supply’. Unlike the old indirect tax regime — where different taxes like VAT, Service Tax, Excise Duty, and CST applied based on the nature of the activity — GST follows a unified principle. If a transaction qualifies as a ‘supply’, it is potentially taxable under GST. If it does not qualify as a supply, GST simply does not apply, irrespective of any consideration involved. This makes the determination of whether a transaction is a ‘supply’ or a ‘non-supply’ the single most critical step in any GST analysis. Getting this wrong can result in either paying GST where none is due (leading to cash flow losses) or not paying GST where it is applicable (inviting penalties, interest, and audit scrutiny). In 2026, with the GST Council having completed several rounds of amendments and the CBIC issuing numerous clarificatory circulars, the legal framework around supply and non-supply has become significantly more refined — but also more nuanced. This detailed guide covers every dimension of the Supply vs Non-Supply distinction under the GST Act: the statutory definition, the scope of supply, the essential ingredients, the deemed supply provisions, and — critically — what falls outside the scope of GST (non-supply) under Schedule III of the CGST Act, 2017. We also cover practical examples with Indian Rupee calculations, recent judicial decisions, and compliance insights for 2026. What is ‘Supply’ Under GST? The Statutory Definition The term ‘supply’ is defined under Section 7 of the Central Goods and Services Tax (CGST) Act, 2017. This section is the cornerstone of the entire GST framework. Section 7(1) defines supply as including: All forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business. Import of services for a consideration, whether or not in the course or furtherance of business. Activities specified in Schedule I, made or agreed to be made without a consideration (deemed supplies). Activities referred to in Schedule II, which shall be treated as either supply of goods or supply of services. Section 7(2) of the CGST Act further specifies that activities or transactions listed in Schedule III shall be treated as neither a supply of goods nor a supply of services — these are the ‘Non-Supplies’ or ‘negative list’ of GST. Additionally, the government may notify certain activities as non-taxable supply by way of an official notification under Section 7(2)(b). The Five Essential Ingredients of a GST Supply Ingredient What It Means Example Supply of Goods or Services The subject matter must be goods or services (or both) Selling a laptop (goods); providing accounting services (services) Made by a Taxable Person The supplier must be a registered or liable-to-register person A GST-registered firm selling products In Course or Furtherance of Business The transaction must be in the context of a business activity A manufacturer selling finished goods For a Consideration Generally, there must be some payment or benefit involved (except Schedule I supplies) Cash, credit, barter, or any other form of payment Within Taxable Territory The supply must be in the taxable territory of India (J&K included post-2019) Supply from Delhi to Mumbai, or from India to an SEZ Scope of Supply: Breaking Down Section 7 in Detail Supply for Consideration in Course of Business The most common form of supply under GST is a transaction for consideration in the course or furtherance of business. ‘Consideration’ under Section 2(31) includes any payment made or to be made in money or otherwise, or any act or forbearance, in respect of, in response to, or for the inducement of, the supply of goods or services. The consideration need not be in money — it can be in kind (barter), in the form of services, or any other benefit. ‘In course or furtherance of business’ means the activity must have a business nexus. A one-time personal transaction generally does not qualify as supply under GST. For example, if an individual sells their personal car, it is not a GST supply. But if a car dealer sells a car from their inventory, it is very much a supply. Supply Without Consideration: Schedule I Deemed Supplies Schedule I of the CGST Act lists activities that are treated as supplies even when made without any consideration. These are anti-avoidance provisions to prevent related-party transactions from escaping the GST net. As of 2026, Schedule I includes: Schedule I Entry Description GST Implication Entry 1 Permanent transfer or disposal of business assets on which ITC has been availed Taxable even if no consideration Entry 2 Supply between related persons or distinct persons (different GST registrations of the same company) in course of business Taxable; value determined as per Rule 28 (open market value or similar) Entry 3 Supply of goods by a principal to his agent where the agent undertakes to supply goods on behalf of the principal (or vice versa) Treated as supply; e.g., consignment arrangements Entry 4 Import of services by a taxable person from a related person or from any of his establishments outside India in the course of or furtherance of business Taxable even if no payment between the entities Practical Example: Distinct Person Supply (Schedule I, Entry 2) ABC Ltd. has two GST registrations — one in Maharashtra (GSTIN-MH) and one in Karnataka (GSTIN-KA). The Maharashtra unit transfers goods worth Rs. 10,00,000 to the Karnataka unit for further processing, free of charge. Despite no monetary consideration, this is a deemed supply under Schedule I. ABC Ltd. must raise a tax invoice from GSTIN-MH to GSTIN-KA, charge applicable GST (say 18% = Rs. 1,80,000), and GSTIN-KA can claim ITC on this GST. Value to be used: Open Market Value as per

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GST ON RENT RCM vs FORWARD CHARGE

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GST ON RENT RCM vs FORWARD CHARGE GST on Rent in India — Why It Matters in 2026 The Goods and Services Tax (GST) regime, introduced in India on 1st July 2017, brought a sweeping change to the indirect tax landscape, including the taxation of rental income. Under the pre-GST era, service tax was applicable only on commercial property rentals. With GST, the ambit expanded significantly — encompassing commercial, industrial, and even certain residential property rentals. In 2026, with several amendments, CBIC circulars, and judicial clarifications having shaped the framework, understanding GST on rent has become critical for landlords (lessors), tenants (lessees), Chartered Accountants, and business owners alike. The fundamental question that arises is: Who pays the GST — the landlord or the tenant? This is precisely where the distinction between Reverse Charge Mechanism (RCM) and Forward Charge comes into play. This comprehensive guide covers everything you need to know about GST on rent in 2026 — the applicable rates, RCM vs Forward Charge rules, ITC eligibility, exemptions, invoice requirements, compliance obligations, and real-life examples with Indian Rupee calculations. 📚 What Is GST on Rent? — Legal Framework Under the CGST Act, 2017, ‘renting of immovable property’ is classified as a supply of services and is taxable under GST. The legal provisions governing GST on rent include: Key Legal Provisions ➡️ What Is Forward Charge in GST on Rent? Under the Forward Charge Mechanism (also called the Normal Charge), the supplier of the service — i.e., the landlord (lessor) — is responsible for collecting GST from the tenant and depositing it with the Government. How Forward Charge Works The landlord rents out property (commercial, industrial, or residential) to a tenant The landlord charges GST @ 18% on the rent amount in the invoice The tenant pays rent + GST to the landlord The landlord files GST returns (GSTR-1 and GSTR-3B) and remits GST to the government The tenant can claim Input Tax Credit (ITC) on the GST paid, subject to eligibility conditions When Does Forward Charge Apply? Forward Charge — Quick Summary: • Who pays GST: Landlord (Supplier / Lessor) • GST Rate: 18% (9% CGST + 9% SGST for intra-state; 18% IGST for inter-state) • Invoice: Raised by Landlord • Return Filing: GSTR-1 & GSTR-3B by Landlord • ITC: Available to Tenant (if GST registered and property used for business) ↩️ What Is Reverse Charge Mechanism (RCM) in GST on Rent? Under the Reverse Charge Mechanism (RCM), the liability to pay GST shifts from the supplier (landlord) to the recipient (tenant). The tenant is required to self-assess, pay the GST, and file the necessary returns — even if the landlord is not registered under GST. The Core Logic of RCM RCM was introduced to bring unregistered suppliers into the GST compliance net indirectly and to ensure that GST is not lost on transactions where the supplier (landlord) may be exempt or unregistered. The tenant — who is typically a registered GST entity — becomes the deemed taxpayer for that supply. When Does RCM Apply on Rent? Landlord is NOT registered under GST Tenant IS registered under GST The property is ANY type — commercial, industrial, or residential (post-2022 amendment) Specifically applicable when a registered person takes a residential dwelling on rent for use as residence (18th July 2022 onward — later modified, see below) RCM on Rent — Quick Summary: • Who pays GST: Tenant (Recipient / Lessee) • GST Rate: 18% (self-assessed by Tenant) • Invoice: Self-Invoice raised by Tenant • Return Filing: GSTR-3B by Tenant (declare and pay RCM liability) • ITC: Available to Tenant on the RCM paid (subject to conditions) • Landlord: No GST obligation; does not need to register solely for this rental 🔄 The Critical 2022 Amendment — Residential Property Under RCM One of the most significant and widely discussed changes in GST on rent came into effect on 18th July 2022 via Notification No. 05/2022 – Central Tax (Rate). Prior to this amendment, residential property rented to individuals for use as a residence was fully exempt from GST. What Changed on 18th July 2022? Pre-18th July 2022: Renting of a residential dwelling for use as a residence was EXEMPT from GST — regardless of the registration status of landlord or tenant Post-18th July 2022: The exemption was WITHDRAWN if the tenant is a registered person under GST. In such cases, RCM applies — the registered tenant must pay GST @ 18% on rent for residential property Further Clarification — CBIC Circular 2022 If the tenant is an individual who rents a residential dwelling for personal use (not for business), GST is still EXEMPT even if the tenant is GST registered If the tenant is a company, firm, or other GST-registered entity that provides the accommodation to its employees, RCM applies The property must be used as a ‘residence’ — hotels, guest houses, and commercial accommodations are covered under different entries 2024 CBIC Clarification (Circular No. 228/22/2024-GST) CBIC clarified in 2024 that the intent of the 2022 notification was to tax situations where businesses use residential properties as offices or employee accommodation while being GST registered. A salaried employee who is GST-registered (e.g., for rental income) and rents a home for personal use is NOT liable for RCM on such rent. 📊 RCM vs Forward Charge — Comprehensive Comparison Table (2026) Parameter Forward Charge Reverse Charge (RCM) Definition Supplier (Landlord) collects & pays GST Recipient (Tenant) pays GST directly to govt. Landlord’s GST Registration Required Not required Tenant’s GST Registration Not mandatory Required (trigger for RCM) Who Raises Invoice Landlord raises Tax Invoice Tenant raises Self-Invoice GST Rate 18% (CGST 9% + SGST 9%) 18% (CGST 9% + SGST 9%) ITC for Tenant Yes — if property used for business Yes — on RCM paid (except residential for personal use) GSTR-1 Filing Landlord reports in GSTR-1 Tenant declares in GSTR-3B Applicable Property Commercial / Industrial / Residential (if tenant is registered business) All property types where conditions met Cash Flow Impact Tenant

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GST for Start-ups – Compliance Calendar

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GST FOR START-UPS COMPLIANCE CALENDAR 2025–26 Why GST Compliance Matters for Start-Ups Starting a business in India is an exciting journey, but it comes with a critical responsibility — Goods and Services Tax (GST) compliance. For start-ups, missing a GST deadline is not just a compliance lapse; it can lead to heavy penalties, blocked Input Tax Credit (ITC), disrupted cash flows, and even legal notices from the GST authorities. India’s GST regime, introduced on 1st July 2017, has undergone significant refinements. In 2025-26, the GST Council has further streamlined return filing, strengthened e-invoicing mandates, and introduced stricter ITC matching rules. For a start-up founder juggling product development, fundraising, and team building, keeping track of GST deadlines can be overwhelming — but it is non-negotiable. This blog is your ultimate GST Compliance Calendar for Start-Ups — a detailed, month-by-month guide that covers every return, every deadline, every penalty clause, and every best practice you need to run your start-up without falling foul of Indian tax law in FY 2025-26. SECTION 1: GST BASICS FOR START-UPS What is GST and Who Needs to Register? Goods and Services Tax (GST) is a comprehensive, multi-stage, destination-based indirect tax that replaced multiple Central and State taxes in India. Under GST, tax is collected at every stage of the supply chain, but credit of taxes paid at the previous stage is available, making it effectively a tax only on value addition. Mandatory GST Registration Thresholds (2025-26) Category Annual Turnover Threshold Type of Registration Goods Supplier (General States) Above ₹40 Lakhs Mandatory Goods Supplier (Special Category States) Above ₹20 Lakhs Mandatory Service Provider (General States) Above ₹20 Lakhs Mandatory Service Provider (Special Category States) Above ₹10 Lakhs Mandatory E-Commerce Operator / Seller No Threshold Limit Mandatory (Regardless of Turnover) Inter-State Supplier No Threshold Limit Mandatory (Regardless of Turnover) Casual Taxable Person No Threshold Limit Mandatory (Temporary Registration) Non-Resident Taxable Person No Threshold Limit Mandatory Voluntary GST Registration — Should Your Start-Up Consider It? Even if your start-up’s turnover is below the mandatory threshold, voluntary GST registration offers significant advantages: Claim Input Tax Credit (ITC) on purchases and operational costs Appear more credible to B2B clients, investors, and large corporates Enable inter-state supply of goods and services Participate in government tenders that require GST registration Facilitate seamless onboarding on e-commerce platforms like Amazon, Flipkart, Meesho Types of GST Applicable to Start-Ups GST Type Full Form Applicable On Revenue Goes To CGST Central Goods and Services Tax Intra-State Supply Central Government SGST State Goods and Services Tax Intra-State Supply State Government IGST Integrated Goods and Services Tax Inter-State Supply / Imports Central Government (Shared) UTGST Union Territory GST Supplies in UTs without legislature Union Territory GST Rate Structure — Know Where Your Products or Services Fall GST Rate Slab Examples Relevant to Start-Ups 0% (Exempt) Fresh fruits, milk, books, newspapers, educational services 5% IT services (certain), branded food items, transport services 12% Software on media, mobile phones, processed food 18% Most IT & software services, restaurants (with AC), advertising 28% Luxury goods, aerated drinks, online gaming (real money) 💡 Start-Up Pro Tip: Most SaaS, IT services, consulting, and digital marketing start-ups fall under the 18% GST slab. Always confirm the correct HSN/SAC code for your product or service using the GST Council’s official HSN lookup tool at www.gst.gov.in to avoid misclassification penalties. SECTION 2: COMPLETE GST RETURN FILING GUIDE FOR START-UPS Understanding All GST Returns — Form by Form The GST return ecosystem in India consists of multiple forms, each serving a distinct compliance purpose. As a start-up, knowing which returns apply to you is the first step in building a robust compliance calendar. GSTR-1: Outward Supplies Statement GSTR-1 is the return for reporting all outward supplies (sales) made by a registered taxpayer. It includes details of B2B invoices, B2C sales, credit/debit notes, and export invoices. Filing Frequency Applicable To Due Date Key Data to Report Monthly Taxpayers with turnover > ₹5 Crore 11th of next month B2B invoices, B2C large invoices, exports, CDNs Quarterly (QRMP) Taxpayers with turnover ≤ ₹5 Crore 13th of month after quarter Consolidated quarterly supply details GSTR-3B: Monthly Summary Return GSTR-3B is a monthly self-declaration summary return where a taxpayer reports the summary of outward supplies, ITC claimed, and net tax payable. Tax payment must accompany this return. For QRMP filers, GSTR-3B is filed quarterly but tax must be paid monthly via PMT-06. Taxpayer Category Due Date Tax Payment Deadline Turnover > ₹5 Crore (Monthly filers) 20th of next month 20th of next month Turnover ≤ ₹5 Crore – Category A States 22nd of next month after quarter Monthly via PMT-06 by 25th Turnover ≤ ₹5 Crore – Category B States 24th of next month after quarter Monthly via PMT-06 by 25th 📌 Category A States (22nd Due Date): Chhattisgarh, Madhya Pradesh, Gujarat, Maharashtra, Karnataka, Goa, Kerala, Tamil Nadu, Telangana, Andhra Pradesh, Daman & Diu, Dadra & Nagar Haveli, Pondicherry, Andaman & Nicobar Islands, Lakshadweep 📌 Category B States (24th Due Date): Himachal Pradesh, Punjab, Uttarakhand, Haryana, Rajasthan, Uttar Pradesh, Bihar, Sikkim, Arunachal Pradesh, Nagaland, Manipur, Mizoram, Tripura, Meghalaya, Assam, West Bengal, Jharkhand, Odisha, J&K, Ladakh, Chandigarh, Delhi GSTR-2B: Auto-Drafted ITC Statement GSTR-2B is an auto-generated, static statement that reflects the Input Tax Credit (ITC) available to a recipient based on the GSTR-1 filed by their suppliers. It is generated on the 14th of each month and is now the primary document for ITC reconciliation. Start-ups must diligently reconcile GSTR-2B with their purchase records before claiming ITC in GSTR-3B. GSTR-9: Annual Return GSTR-9 is the annual GST return consolidating all monthly/quarterly returns filed during the financial year. It is mandatory for taxpayers with an annual aggregate turnover exceeding ₹2 Crore. For start-ups below ₹2 Crore turnover, filing is optional but recommended for transparency. Form For Whom Due Date (FY 2024-25) Mandatory Threshold GSTR-9 Regular taxpayers 31st December 2025 Turnover > ₹2 Crore GSTR-9C Reconciliation Statement + Self-Certification 31st December 2025 Turnover > ₹5 Crore GSTR-9A Composition Scheme taxpayers 31st December 2025 All

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GST on Bitcoins & Cryptocurrency

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GST on Bitcoins & Cryptocurrency The Crypto Tax Landscape in India 2026 Cryptocurrency has fundamentally transformed the Indian financial landscape. With over 2.5 crore (25 million) active crypto investors in India as of 2026, digital assets like Bitcoin (BTC), Ethereum (ETH), and thousands of altcoins have moved from the fringes to the mainstream of personal finance. Yet, navigating the tax obligations associated with these digital assets remains one of the most complex challenges for Indian investors, traders, and businesses alike. The Indian government, through the Ministry of Finance and the Central Board of Indirect Taxes and Customs (CBIC), has taken significant steps to regulate and tax cryptocurrency transactions. Two key tax frameworks govern crypto in India: the Income Tax Act (with TDS under Section 194S and flat 30% tax under Section 115BBH) and the Goods and Services Tax (GST) Act. While the 30% income tax on crypto gains grabbed widespread attention after the Union Budget 2022, the GST implications of cryptocurrency transactions are equally critical and often misunderstood. This comprehensive guide covers every aspect of GST on Bitcoin and cryptocurrency in India as of 2026. Whether you are an individual investor, a crypto exchange operator, an NFT creator, a DeFi participant, or a business accepting Bitcoin as payment, this blog will give you the complete picture of your GST obligations, compliance requirements, and practical strategies. What is Cryptocurrency? A Brief Overview for Tax Purposes Before diving into GST implications, it is important to understand how the Indian government classifies cryptocurrency. Under the Finance Act 2022, the government introduced the concept of Virtual Digital Assets (VDAs). Section 2(47A) of the Income Tax Act, 1961, defines VDA as: Any information, code, number, or token (not being Indian currency or foreign currency) generated through cryptographic means or otherwise, providing a digital representation of value that is exchanged with or without consideration, with the promise or representation of having inherent value, or functions as a store of value or a unit of account, including its use in any financial transaction or investment. This definition covers Bitcoin, Ethereum, Litecoin, Ripple (XRP), Dogecoin, Solana, NFTs (Non-Fungible Tokens), and other crypto assets. However, for GST purposes, the classification of crypto as a ‘good’ or a ‘service’ remains a grey area, which is at the heart of many GST compliance complexities. Key Regulatory Bodies Overseeing Crypto Taxation in India Central Board of Direct Taxes (CBDT) — Income Tax on crypto gains Central Board of Indirect Taxes and Customs (CBIC) — GST on crypto services Reserve Bank of India (RBI) — Monetary policy and foreign exchange implications Securities and Exchange Board of India (SEBI) — Regulatory oversight of crypto as securities Financial Intelligence Unit (FIU-IND) — Anti-money laundering (AML) compliance for VASPs GST Framework: Is Cryptocurrency a Good, Service, or Both? The fundamental question under GST law is: What exactly is a cryptocurrency transaction? The answer determines whether it attracts GST, at what rate, and who is liable to pay it. The CGST Act, 2017, defines: Goods vs. Services Classification Under Section 2(52) of the CGST Act, ‘goods’ means every kind of movable property other than money and securities. Under Section 2(102), ‘services’ means anything other than goods. This creates an immediate ambiguity — cryptocurrency can be interpreted as: A commodity (like gold), making it ‘goods’ subject to GST A currency or money substitute, potentially exempt from GST A financial instrument or security, which is exempt from GST A service when used as a medium of exchange in a transaction The Current Position (2026) As of 2026, the CBIC has NOT issued a comprehensive GST circular specifically classifying all types of cryptocurrency transactions. However, the government’s practical approach has been to levy 18% GST on crypto exchange services (brokerage, trading fees, commission) as a ‘service’ under HSN/SAC Code 9971 — Financial and Related Services. The underlying crypto asset itself has not been subjected to a separate GST levy in most exchange transactions. GST Rates Applicable to Cryptocurrency Transactions in India 2026 Transaction Type GST Rate SAC/HSN Code Who Pays GST Crypto Exchange Trading Fee / Brokerage 18% 9971 Crypto Exchange (collected from user) Crypto-to-INR Conversion Fee 18% 9971 Exchange / Platform Crypto Mining as a Service (Cloud Mining) 18% 9983 Service Provider NFT Marketplace Commission/Fee 18% 9971 / 9983 NFT Platform Crypto Wallet Services (Custodial) 18% 9971 Wallet Service Provider Payment Gateway Services in Crypto 18% 9971 Payment Gateway Sale of Mining Equipment 18% 8543 Manufacturer / Dealer Electricity for Mining (Commercial) As applicable 2716 Electricity supplier DeFi Protocol Fees (where applicable) 18%* 9971 Service provider (*disputed) P2P Transactions (direct user-to-user) 0% (no service involved) N/A N/A *Note: DeFi (Decentralised Finance) transactions are still in a regulatory grey zone in India. Where there is no identifiable service provider, GST may not be directly applicable. However, if the DeFi platform has a registered entity in India collecting fees, the 18% GST applies. GST on Crypto Exchange Services: Detailed Analysis How Crypto Exchanges Charge GST Every major Indian crypto exchange — WazirX, CoinDCX, ZebPay, Giottus, Bitbns, and others — is required to be GST-registered if their annual turnover exceeds Rs. 20 lakh (Rs. 10 lakh for special category states). These exchanges charge an 18% GST on the trading/transaction fee they collect from users. Practical Example: GST on a Bitcoin Trade Scenario: Rahul buys Bitcoin worth Rs. 5,00,000 on a crypto exchange. The exchange charges a 0.25% trading fee. Trading Fee = Rs. 5,00,000 x 0.25% = Rs. 1,250 GST on Trading Fee (18%) = Rs. 1,250 x 18% = Rs. 225 Total Cost to Rahul = Rs. 5,00,000 + Rs. 1,250 + Rs. 225 = Rs. 5,01,475 Note: GST of Rs. 225 is collected by the exchange and deposited with the government. Rahul does NOT separately pay GST on the Rs. 5,00,000 Bitcoin purchase price. Input Tax Credit (ITC) on Crypto Exchange Services If a business (e.g., a crypto trading firm or a company that uses crypto as part of its treasury operations) is GST-registered, it may be eligible to

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GST PORTAL NEW FEATURES 2025-26

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GST PORTAL NEW FEATURES 2025–26 Why GST Portal Updates Matter in 2025-26 The Goods and Services Tax (GST) system in India has been continuously evolving since its landmark rollout on July 1, 2017. In the financial year 2025-26, the GST Network (GSTN) and the Central Board of Indirect Taxes and Customs (CBIC) have introduced a sweeping range of new features, tools, and compliance enhancements on the GST Portal (www.gst.gov.in). These upgrades are specifically designed to reduce compliance burden, improve transparency, minimise tax evasion, and make the overall filing experience smoother for over 1.5 crore registered taxpayers across India. Whether you are a small business owner in Surat, a CA managing 200+ GST clients in Mumbai, an exporter in Chennai, or a startup CFO in Bengaluru — understanding these new features is not optional. Non-compliance or missed deadlines now attract steeper scrutiny thanks to AI-powered tools embedded in the portal. This comprehensive blog covers every significant update introduced on the GST portal for FY 2025-26, from revamped return filing to e-invoicing expansion, ITC intelligence, the new GST Sahay portal, and much more. 📌 Key Fact India’s GST collection crossed ₹2.10 lakh crore in a single month for the first time in April 2025 — a record high, partly driven by increased compliance enabled by the new portal features. 1. Overview of GST Portal Changes in FY 2025-26 The GSTN has undertaken its most comprehensive technology overhaul since 2020. The upgrades span the following key domains: Return Filing Simplification & Auto-Population Expanded e-Invoicing Applicability Enhanced Input Tax Credit (ITC) Management New Compliance & Risk Management Tools Revamped Registration & Amendment Processes AI-Driven Scrutiny & Mismatch Detection New API-Based Integration for ERP Systems GST Sahay — MSME Credit Facilitation Improved Refund Processing System Upgraded Mobile App & e-Services 1.1 Technology Backbone of the New GST Portal The GST portal has migrated to a cloud-native architecture in 2025, significantly improving uptime and page-load performance. GSTN has partnered with multiple cloud providers to ensure 99.9% availability, especially during peak filing dates (10th, 11th, 13th, 20th, and last day of every month). The new infrastructure can now handle over 50 lakh concurrent user sessions — a 5x improvement over the earlier system. 2. Revamped GST Return Filing System for 2025-26 Return filing is the backbone of GST compliance. In FY 2025-26, GSTN has overhauled the entire return ecosystem to make it intuitive, automated, and error-resistant. 2.1 Full Auto-Population of GSTR-3B from GSTR-1 and GSTR-2B Previously, taxpayers had to manually enter outward supply data in GSTR-3B. From April 2025, GSTR-3B is now fully auto-populated based on: GSTR-1 filed by the taxpayer (outward supply details) GSTR-2B generated from supplier filings (ITC eligibility) GSTR-1A amendments reconciled in real-time This eliminates dual data entry and significantly reduces mismatches. Taxpayers only need to review and submit — with an option to override specific fields with a documented reason. 2.2 GSTR-1A — The New Amendment Return A new return called GSTR-1A has been operationalised in FY 2025-26. This allows taxpayers to amend their GSTR-1 data after filing but before the due date of GSTR-3B. Key benefits: Correct invoice-level errors without impacting the buyer’s ITC Add missed B2B invoices before the GSTR-3B deadline Revise e-invoice amendments in a structured manner 2.3 Quarterly Return Monthly Payment (QRMP) Scheme Enhancements Taxpayers with an annual aggregate turnover up to ₹5 crore who opted for QRMP now enjoy the following new features: IFF (Invoice Furnishing Facility) now includes credit/debit note amendments Auto-computed Fixed Sum Method (FSM) payment challan SMS-based filing confirmation for QRMP taxpayers Turnover threshold re-validation auto-alert system 2.4 GSTR-9 and GSTR-9C Enhancements Annual return filing for FY 2024-25 (filed in 2025-26) now comes with: Pre-filled GSTR-9 with comparative data from all monthly returns Automated reconciliation tool highlighting ± ₹1,000 discrepancies GSTR-9C self-certification now includes a digital audit trail Turnover threshold for mandatory GSTR-9C filing remains ₹5 crore 3. E-Invoicing Expansion and New Applicability Rules E-Invoicing (electronic invoicing) was a game-changer introduced in 2020 for large businesses. In 2025-26, it has been expanded further: 3.1 New Turnover Threshold From August 1, 2025, e-invoicing is mandatory for all registered taxpayers with aggregate annual turnover exceeding ₹5 crore (previously ₹10 crore). This brings an estimated 15-20 lakh additional businesses under the e-invoicing umbrella. ⚠️ Important Update From FY 2025-26, taxpayers between ₹5 crore and ₹10 crore turnover must generate IRN (Invoice Reference Number) for every B2B transaction. Failure to do so may result in the buyer being unable to claim ITC. 3.2 E-Invoicing for SEZ & Government Supplies Special Economic Zone (SEZ) units and supplies to government departments now mandatorily require e-invoicing where the supplier’s turnover exceeds the threshold. The earlier exemption for these categories has been withdrawn effective April 1, 2025. 3.3 Dynamic QR Code Enhancements For B2C transactions, the existing requirement of a Dynamic QR Code on invoices above ₹5 lakh has been extended. The QR code now also captures: State-wise place of supply data HSN-level breakup for compliance verification UPI payment deep link embedded in the QR 3.4 E-Invoicing Sandbox Environment GSTN has launched a live Sandbox environment where businesses can test their e-invoicing integration before going live. This is especially beneficial for MSMEs newly brought under the threshold, allowing them to test their billing software integration with no risk to live data. 4. Input Tax Credit (ITC) Management — New Intelligence Layer ITC management has historically been the most contentious area of GST. FY 2025-26 introduces a dedicated ITC Intelligence module on the GST portal. 4.1 GSTR-2B Enhancements GSTR-2B, the auto-drafted ITC statement, now features: Real-time ITC ledger showing eligible, ineligible, and blocked credit Rule 86B compliance auto-check (restricts use of ITC exceeding 99% of tax liability where cash turnover exceeds ₹50 lakh) ITC reversal on non-payment to supplier beyond 180 days — auto-computed and reflected in GSTR-3B MSME supplier flag — highlights ITC from suppliers registered under MSME Act for priority tracking 4.2 ITC Reconciliation Tool A brand-new ITC Reconciliation Tool has been introduced within the portal. Features include: Match GSTR-2A vs

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Anti-Profiteering Under GST

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Anti-Profiteering Under GST: A Complete 2026 Guide for Indian Businesses 1. What Is Anti-Profiteering Under GST? Anti-Profiteering under GST refers to the legal mandate that requires businesses to pass on the benefit of any reduction in tax rates or increased ITC availability to the final consumer through a commensurate reduction in prices. If a business retains the financial benefit for itself instead of passing it on, it is said to have ‘profiteered’ — which is prohibited under Indian law. Legal Foundation The legal backbone of anti-profiteering in India is Section 171 of the Central Goods and Services Tax (CGST) Act, 2017. This section explicitly states: “Any reduction in rate of tax on any supply of goods or services or the benefit of input tax credit shall be passed on to the recipient by way of commensurate reduction in prices.” — Section 171, CGST Act, 2017 Why Was This Provision Introduced? Before GST, businesses often absorbed tax reductions as additional profit margins rather than reducing consumer prices. The Government of India introduced anti-profiteering to: Protect consumer interests across the country Maintain the integrity of the GST rate reduction process Ensure transparency in pricing for goods and services Build trust in the GST system among the general public Prevent businesses from exploiting transitional or rate-change periods 2. Key Provisions of Anti-Profiteering Rules, 2017 The Central Government notified the Anti-Profiteering Rules, 2017 under the CGST Act. These rules lay down the procedure, authority structure, and penalty mechanism for dealing with profiteering complaints in India. Rule 126 – Power to Determine Methodology and Procedure Under Rule 126, the National Anti-Profiteering Authority (NAA) was empowered to determine the methodology and procedure for investigation of profiteering complaints. The methodology included comparing pre-GST and post-GST prices, calculating the net benefit not passed on, and computing the total amount to be refunded to consumers. Rule 127 – Duties of the National Anti-Profiteering Authority The NAA was responsible for: Determining whether a supplier has profiteered from GST rate reductions or ITC benefits Ordering reduction in prices Ordering refund of amounts collected by way of profiteering (with 18% interest) Imposing penalties on defaulting suppliers Cancelling GST registration in extreme cases Rule 128 – Application to Standing Committee / Screening Committee A consumer or any interested party can file an anti-profiteering complaint through the Standing Committee on Anti-Profiteering (national level) or through State-level Screening Committees. The application must include details of goods/services, the pre and post tax price difference, and the alleged profiteering amount. 3. National Anti-Profiteering Authority (NAA) — Overview & 2026 Update The National Anti-Profiteering Authority was established in November 2017 under Section 171 of the CGST Act. It was set up as a quasi-judicial body to investigate complaints of profiteering and ensure compliance with anti-profiteering provisions. Constitution of NAA The NAA was headed by a Chairman of the rank of Principal Secretary / Additional Secretary to the Government of India, along with four Technical Members from the Indian Revenue Service (IRS). 2026 Update — Transition to Competition Commission of India (CCI) IMPORTANT 2026 UPDATE: The National Anti-Profiteering Authority (NAA) was initially given a 2-year tenure (extended multiple times). As per the CGST (Amendment) Act and subsequent government notifications, the anti-profiteering function has been transferred to the Competition Commission of India (CCI) effective from October 1, 2024. From this date, all anti-profiteering complaints and investigations are handled by the CCI. Pending NAA cases were transferred to CCI for disposal. Role of CCI in Anti-Profiteering (2024–2026) The Competition Commission of India now handles all anti-profiteering matters and brings with it stronger investigative infrastructure, legal expertise, and enforcement capabilities. The CCI leverages its existing framework under the Competition Act, 2002, in conjunction with the CGST Act provisions to adjudicate anti-profiteering cases. CCI has its own Director General (Investigation) for conducting detailed inquiries CCI can impose penalties, direct price corrections, and order consumer refunds CCI has powers similar to a civil court for examination of witnesses and document production The shift to CCI has been welcomed as it brings more institutional credibility and resources 4. What Constitutes Profiteering Under GST? Not every price increase after a GST rate change constitutes profiteering. However, businesses must be careful to distinguish between legitimate cost increases and retention of GST benefits. Profiteering occurs when: Scenario A — Tax Rate Reduction When the GST Council reduces the GST rate on a particular product or service, and the supplier does not reduce the selling price commensurately. For example: Parameter Before GST Rate Cut After GST Rate Cut Base Price (INR) ₹1,000 ₹1,000 GST Rate 18% 12% GST Amount (INR) ₹180 ₹120 Final Price (INR) ₹1,180 ₹1,060 (Compliant) Profiteering If Charged — ₹1,180 (Retained ₹60) Scenario B — Increased ITC Availability Under GST, businesses can claim ITC on purchases. When ITC availability increases (e.g., due to GST coverage of previously exempt goods), the net cost of production reduces. The supplier must pass this benefit to consumers. If the supplier retains it, that constitutes profiteering. What Does NOT Constitute Profiteering? The law recognises that prices can legitimately increase due to: Rise in raw material or input costs Increased labour costs or overhead expenses Changes in market conditions unrelated to GST New compliance costs Genuine product/service upgrades 5. How to File an Anti-Profiteering Complaint in 2026? Any consumer, registered dealer, or association can file an anti-profiteering complaint. Since the transition of authority to CCI in 2024, the filing procedure has been updated. Step-by-Step Complaint Procedure Identify the supplier and specific goods/services where profiteering is alleged Collect evidence: invoices before and after the GST rate change, price lists, advertisements File a written application with the State Screening Committee (for local cases) or the CCI (for national-level cases) The Screening Committee examines the application and if a prima facie case exists, refers it to the CCI’s Director General The Director General (Investigation) conducts an inquiry and submits a report to CCI CCI reviews the report and issues show-cause notice to the accused supplier The supplier is given an opportunity to be heard

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GST for Charitable Trusts & Societies

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GST for Charitable Trusts & Societies A Complete 2026 Guide | Registration, Exemptions, Compliances & Penalties Why GST Matters for Charitable Trusts & Societies Charitable trusts and registered societies occupy a unique position in India’s legal and fiscal framework. Formed with noble objectives — education, healthcare, poverty alleviation, religious activities — these entities enjoy special treatment under income tax laws via Sections 11, 12, 12A, 12AB, and 80G of the Income Tax Act, 1961. However, many trustees and managing committees mistakenly assume that the same exemptions automatically extend to Goods and Services Tax (GST). This assumption can be dangerously costly. The GST Act, 2017 treats a charitable trust or society largely like any other person engaged in supply of goods or services. Whether or not the entity is profit-oriented is largely irrelevant for GST applicability. In 2026, with GST councils tightening compliance, registration thresholds under scrutiny, and GSTN matching becoming smarter, charitable organisations cannot afford to remain ignorant of their GST obligations. This comprehensive guide — prepared by the team at CleverCoins, your trusted CA firm based in Mumbra, Thane — explains every aspect of GST applicable to charitable trusts and societies in India as of 2026. Understanding the Legal Status of Charitable Trusts Under GST What is a Charitable Trust Under GST Law? Under the CGST Act, 2017, a ‘person’ includes a Hindu Undivided Family, company, firm, cooperative society, local authority, government, trust (including a public religious trust), every artificial juridical person, and any body corporate. Therefore, a charitable trust is a ‘person’ for GST purposes and is liable for registration if its aggregate turnover crosses the threshold limit. Who Governs Charitable Trusts in India? Charitable trusts are typically registered under: The Indian Trusts Act, 1882 (for private trusts) State-level Public Trusts Acts (e.g., Maharashtra Public Trusts Act, 1950) The Societies Registration Act, 1860 (for societies) Section 25 / Section 8 of Companies Act (for not-for-profit companies) FCRA, 2010 (for receiving foreign contributions) Regardless of which law governs the organisation’s formation, GST registration and compliance is mandatory once turnover crosses prescribed limits. GST Registration: When Is It Mandatory? Threshold Limit for Registration (2026) Category Threshold (Aggregate Turnover) Applicable to Trusts? Supply of Goods ₹40 Lakh (General States) Yes, if engaged in sale/supply Supply of Services ₹20 Lakh (General States) Yes, most common for trusts Special Category States ₹10 Lakh (J&K, Himachal, etc.) Yes Interstate Supply ₹1 (Any Amount) Mandatory registration E-Commerce Operators ₹0 (Zero Threshold) Not common for trusts ⚠️ Important 2026 Note: If a charitable trust earns income from renting out its hall, selling books, organizing paid seminars, or offering educational/hospital services — all these constitute ‘supply’ under GST and count towards aggregate turnover. Voluntary Registration Even if turnover is below the threshold, a trust may opt for voluntary GST registration. This is beneficial when: The trust receives grants or CSR funds from GST-registered corporate donors and wants to issue proper tax invoices The trust wants to claim Input Tax Credit (ITC) on purchases/construction The trust imports goods or services from outside India Mandatory Registration Regardless of Turnover A charitable trust MUST mandatorily register under GST if: It makes any inter-state supply of taxable goods or services It is required to pay GST under Reverse Charge Mechanism (RCM) It receives OIDAR (Online Information and Database Access or Retrieval) services from outside India What Constitutes ‘Supply’ for a Charitable Trust? The most critical concept for charitable organisations is understanding what qualifies as ‘supply’ under Section 7 of the CGST Act, 2017. Supply includes all forms of supply of goods or services — sale, transfer, barter, exchange, rental, lease, or disposal made or agreed to be made for consideration. Taxable Activities Typically Undertaken by Trusts Activity GST Applicable? Rate (2026) Renting out auditorium/hall for commercial events Yes 18% GST Sale of religious books, magazines Depends on HSN 5% / Nil Sale of prasad (food items) Exempt if religious Nil Paid coaching / tuition classes Yes (if not recognized school) 18% GST Hospital services (non-clinical support) Yes 18% GST Running a cafeteria/canteen Yes 5% / 12% Receiving corpus donations No (not a supply) Nil Free charitable activities No (no consideration) Nil Organizing paid conferences/seminars Yes 18% GST Donations and Voluntary Contributions — Not a Supply Pure donations — where the donor receives no benefit in return — are NOT treated as supply and hence are outside the GST net. However, if a donor receives any benefit such as naming rights, advertisement space, or a specific service in return, the transaction may be treated as ‘composite supply’ and attract GST. GST Exemptions Available to Charitable Trusts Schedule III of the CGST Act and various Exemption Notifications under GST specifically exempt certain services provided by charitable organisations. Below are the key exemptions applicable in 2026: Exemption Notification No. 12/2017-CT (Rate) — Services Sr. Exempted Service Condition 1 Services by a charitable trust registered under Section 12AA/12AB Services must be in nature of charitable activities as defined 2 Religious services — conducting religious ceremonies, renting of precincts of a religious place meant for general public Entity must be a religious trust / charitable trust 3 Services by educational institutions to students, faculty and staff Institution must be recognised board / university 4 Healthcare services by clinical establishments Covers diagnosis, treatment, cure 5 Services by way of training / coaching by sports authority Must be recognised national/state body 6 Renting of rooms in a religious place to devotees Charges must not exceed ₹1,000/day 📌 CleverCoins Expert Note: The exemption for ‘charitable activities’ under GST is narrower than income tax. Just because a trust is registered under Section 12A/12AB does NOT mean all its activities are automatically GST-exempt. Each activity must independently qualify. Definition of ‘Charitable Activities’ under GST As per Notification No. 12/2017-Central Tax (Rate), ‘charitable activities’ include: Public health by way of care or counselling of terminally ill persons or persons with severe physical or mental disability, or persons addicted to dependence-forming substances or alcoholics Advancement of religion, spirituality or yoga Advancement of

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GST ON ALCOHOL & TOBACCO IN INDIA

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GST ON ALCOHOL & TOBACCO IN INDIA A Complete 2026 Guide to Tax Structure, Rates & Compliance goods and services that fall squarely under the Goods and Services Tax (GST) regime introduced In India, alcohol and tobacco occupy a unique position in the taxation framework. Unlike most on 1st July 2017, both alcohol for human consumption and tobacco products are treated with significant distinctions. This blog offers an exhaustive, up-to-date overview of how GST, excise duties, VAT, and Compensation Cess apply to alcohol and tobacco in India as of 2026. Whether you are a business owner, a tax consultant, a hospitality professional, or simply a curious citizen, this guide will help you understand the layered tax structure, the rationale behind it, ITC eligibility, compliance requirements, and the latest GST Council notifications that shape this sector. Why Do Alcohol & Tobacco Receive Special Tax Treatment Under GST? The GST framework is built on the principle of one nation, one tax. However, the framers of the Constitution (101st Amendment) Act, 2016 deliberately kept certain goods outside the purview of GST. The rationale for treating alcohol and tobacco differently includes: Revenue Dependency of State Governments: Alcohol for human consumption is a significant source of revenue for states. In FY 2024-25, state excise revenues from alcohol exceeded Rs. 3.5 lakh crore nationally. Bringing alcohol under GST would disturb this revenue stream. Public Health Policy: Both products are classified as ‘sin goods’ — items deemed harmful to public health. Higher taxes act as a deterrent to consumption. Political Sensitivity: Alcohol policy has historically been a state subject, and states are unwilling to cede control to a central authority. Dual Control Architecture: The Constitution enables Parliament to levy GST on goods produced in India, but Article 246A read with Entry 54 of State List preserves state power over alcohol taxation. GST on Alcohol for Human Consumption — Detailed Analysis 2026 Is Alcohol Exempt from GST? Yes, alcoholic liquor for human consumption is completely outside the scope of GST under Section 9(1) of the CGST Act, 2017. This means no CGST, SGST, or IGST is applicable on the sale or manufacture of alcoholic beverages for human consumption. However, the following are taxable under GST: Industrial alcohol / denatured alcohol — attracts 18% GST Rectified spirit used for industrial purposes — 18% GST Ethanol used as fuel (blending with petrol) — 5% GST (as per Notification No. 06/2021-Central Tax (Rate)) Services related to alcohol (restaurants, bars, clubs) — 5% GST without ITC or 18% GST with ITC depending on the establishment What Taxes Apply to Alcohol for Human Consumption? In the absence of GST, states levy multiple taxes: Tax Type Levied By Applicable On State Excise Duty State Government Manufacture & Sale VAT (Value Added Tax) State Government Retail Sale Additional Excise / Special Fees State Government Import/Export from state Import Pass Fee / Transport Fee State Excise Dept. Inter-state movement Licence Fees State Excise Dept. Retailers / Bars / Hotels State-wise Excise Duty & VAT on Alcohol — Illustrative Rates 2025-26 Each state sets its own excise duty structure. Here is an illustrative comparison: State Excise Duty (Beer) Excise Duty (IMFL) VAT on Liquor Maharashtra Rs. 8–10/litre ~Rs. 150–400/litre 25%–35% Karnataka Rs. 7–12/litre ~Rs. 180–350/litre 20%–32% Delhi Rs. 10–15/litre ~Rs. 200–450/litre 25% Rajasthan Rs. 5–8/litre ~Rs. 120–300/litre 22%–28% Tamil Nadu Rs. 8–11/litre ~Rs. 160–380/litre 26%–30% Note: These figures are illustrative and based on publicly available state budget documents and excise notifications. Exact rates vary by brand, category (IMFL, Country Liquor, Beer, Wine), and strength of alcohol. Input Tax Credit (ITC) on Alcohol Business Since alcohol for human consumption is outside the GST regime, businesses in the alcohol supply chain (breweries, distilleries, liquor retailers) cannot claim ITC on GST paid on their inputs, capital goods, or services. This creates a cascading tax effect which has been a long-standing criticism of the current structure. However, a bar/restaurant that sells both food and alcohol can claim ITC only on inputs attributable to the taxable food portion. GST on Restaurants & Bars Serving Alcohol Standalone restaurants: 5% GST on food & non-alcoholic beverages only; no GST on alcohol itself Hotel restaurants with room tariff above Rs. 7,500/night: 18% GST on food; alcohol billed separately under state VAT Clubs and bars: GST applies on membership fees and food; alcohol billed under state VAT/excise GST on Tobacco Products — Comprehensive Breakdown 2026 Is Tobacco Under GST? Yes. Unlike alcohol, tobacco and tobacco products ARE subject to GST. However, they also attract an additional Compensation Cess, making them among the most heavily taxed products in India. The GST structure for tobacco was established under Schedule IV of the GST (Compensation to States) Act, 2017. GST Rate Structure for Tobacco Products — 2026 Product GST Rate Compensation Cess Total Tax Load Cigarettes (< 65mm) 28% 5% + Rs. 2076/1000 sticks Approx. 52%+ Cigarettes (65–75mm) 28% 5% + Rs. 3668/1000 sticks Approx. 55%+ Cigarettes (> 75mm) 28% 5% + Rs. 4170/1000 sticks Approx. 60%+ Beedi (Machine Made) 28% Rs. 16/1000 sticks ~28.5% Beedi (Hand-Rolled) 28% NIL 28% Chewing Tobacco (unbranded) 28% 160% ~188% Chewing Tobacco (branded) 28% 160% ~188% Pan Masala (with tobacco) 28% 51% (ad valorem) ~79% Pan Masala (without tobacco) 18% NIL 18% Hookah / Flavoured Tobacco 28% 72% (ad valorem) ~100% Khaini / Zarda 28% 160% ~188% Snuff (dry / moist) 28% 72% ~100% Cigars & Cheroots 28% 21% or Rs. 4170/1000 sticks (higher) Approx. 50%+ Source: GST Rate Schedule — Schedule IV (Sin Goods), GST Council Notifications (updated 2026). Rates may be revised by GST Council. What is Compensation Cess on Tobacco? The Compensation Cess was introduced under the GST (Compensation to States) Act, 2017 to compensate states for revenue loss due to GST implementation for the first 5 years. Although the initial 5-year window ended in June 2022, the GST Council extended the cess collection beyond June 2026 to repay loans taken during COVID-19 to compensate states. As of 2026, the Compensation Cess on tobacco continues to be levied. National

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GST on Works Contract for Government

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GST on Works Contract for Government Complete Guide to GST Rates, RCM, TDS & Compliance in 2026 Why GST on Government Works Contract Matters Government infrastructure spending in India crossed ₹11 lakh crore in the Union Budget 2025-26, making construction contracts with Central and State Governments one of the largest segments of GST activity in the country. Whether you are a civil contractor building a highway, a structural engineer renovating a government hospital, or an MSME supplying composite services to a municipality — understanding GST on Works Contract is non-negotiable. A Works Contract under GST is a composite supply involving a mix of service and supply of goods where the principal supply is construction, erection, installation, completion, fitting out, repair, maintenance, renovation, alteration, or commissioning of an immovable property. The moment a government entity — Central Government, State Government, Local Authority, or Governmental Authority — is involved, special GST rules kick in. This blog is your complete guide — covering definitions, applicable GST rates, Reverse Charge Mechanism (RCM), TDS under GST, Input Tax Credit (ITC) restrictions, e-invoicing obligations, and practical tips for compliance in 2026. 2. What Is a Works Contract Under GST? Section 2(119) of the CGST Act, 2017 defines a Works Contract as a contract for building, construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning of any immovable property wherein transfer of property in goods (whether as goods or in some other form) is involved in the execution of such contract. Key Elements of a Works Contract There must be a contract (oral or written) It must relate to immovable property It must involve a transfer of property in goods Services must be the dominant or composite supply It is treated as ‘supply of service’ under Schedule II of CGST Act ⚠️ Important Legal Note Under GST, a Works Contract is ALWAYS treated as a Supply of Service (Entry 6(a) of Schedule II, CGST Act), even if it involves both goods and services. This means GST on Works Contract is charged as a service, not as goods. 3. Who Are ‘Government’ Entities Under GST? The special GST treatment for works contracts applies when the recipient is one of the following entities: Category Examples Central Government NHAI, Ministry of Railways, CPWD, Defence Ministry State Government PWD, State Road Corporations, State Irrigation Depts. Union Territory Chandigarh Admin, J&K UT, Ladakh UT, Daman & Diu Local Authority Municipal Corporations, Panchayats, Cantonment Boards Governmental Authority NMMC, DMIC, Smart City SPVs — majority govt. ownership Government Entity PSUs, Statutory Bodies where govt. equity > 50% The distinction between ‘Governmental Authority’ and ‘Government Entity’ is critical for GST rate determination. Governmental Authorities are set up by an Act of Parliament / State Legislature or are constituted as a government undertaking to carry out a function entrusted by the Constitution. Government Entities are bodies established by the government with 90%+ government ownership/control. 4. GST Rates on Works Contract for Government in 2026 GST rates on government works contracts are governed by Notification No. 11/2017 – Central Tax (Rate) dated 28th June 2017 as amended up to 2026. The rates vary based on the nature of work and the type of government recipient. 4.1 — Works Contracts Attracting 12% GST (6% CGST + 6% SGST) Sr. Nature of Works Contract Recipient GST Rate 1 Construction of roads, bridges, tunnels, dams, airports, railways, irrigation works Govt/Local Auth./Govt. Entity 12% 2 Construction of original works pertaining to: ports, wharves, waterways navigation Govt/Govt. Authority 12% 3 Construction of affordable housing under PMAY / PMAY-U Govt/Central Agencies 12% 4 Construction of low-cost houses under Indira/Rajiv Awaas Yojana State Govt. 12% 5 Construction of civil structures for monorail or metro projects Govt/Local Authority 12% 6 Construction of single residential unit other than mass residential complex Govt/Authority 12% 7 Composite supply of goods + services where goods < 25% of contract value Govt/Authority 12% 4.2 — Works Contracts Attracting 18% GST (9% CGST + 9% SGST) Sr. Nature of Works Contract GST Rate 1 All other works contracts not specifically covered at lower rate 18% 2 Repair, maintenance, renovation or alteration works for government 18% 3 Sub-contracted works from a main contractor for govt. project 18% 4 Construction of commercial complexes within govt. premises 18% 5 Works involving electrical, mechanical, HVAC installation for govt. 18% 💡 Key Rate Rule — 2026 Update Post-Budget 2024 & GST Council recommendations effective 2024-25: → 12% rate is ONLY for pure works contracts on original construction. → Maintenance, Repair & Operations (MRO) contracts attract 18% GST. → Sub-contractors providing works to main contractors for govt. projects are NOT eligible for 12% — they attract 18% GST (as per CBIC circular). → If contract involves goods > 25% of total contract value, it may be split and taxed at respective goods + service rates. 5. Reverse Charge Mechanism (RCM) on Government Works Contracts Under Section 9(3) of the CGST Act, the Government may specify certain supplies where the tax is to be paid by the recipient instead of the supplier. Additionally, under Section 9(4), when a registered person receives supplies from an unregistered supplier, RCM may apply. 5.1 — When Does RCM Apply? When an unregistered contractor supplies works contract service to a registered Government entity (Section 9(4)) When specified in Notification No. 13/2017-CT(R) for specific government-related services When sub-contractors supply to main contractors who are working under government projects (basis of contract structure) 🔄 RCM — Practical Scenarios Scenario 1: Unregistered labour contractor works on a PWD project → PWD pays GST under RCM. Scenario 2: Small mason (turnover < ₹40L) does plastering for NHAI main contractor → Main contractor pays GST under RCM on that bill. Scenario 3: Registered contractor supplies to registered Govt. entity → Forward charge (no RCM). NOTE: Govt. entities that pay RCM can claim ITC only if they are engaged in business activities. 5.2 — RCM Compliance Checklist Verify registration status of all sub-contractors before award Pay RCM liability on 20th

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GST on Manpower Supply Services

Leave a Comment / GST / Usama Shaikh

GST on Manpower Supply Services A Complete 2026 Guide for Indian Businesses | Updated as per GST Law & Notifications GST on Manpower Supply Services In India’s ever-evolving GST framework, ‘Manpower Supply Services’ occupies a uniquely important and often misunderstood position. Whether you are an HR outsourcing company supplying contract labour to a factory, a placement agency providing skilled professionals to an IT firm, or a security agency deploying guards at a mall — all these transactions attract GST and come with specific compliance obligations. As of 2026, the GST Council has issued several clarifications and amendments that affect how manpower supply services are taxed, who is liable to pay, and under what circumstances the Reverse Charge Mechanism (RCM) applies. This comprehensive guide by CleverCoins — your trusted tax consultancy in Mumbra, Thane — will walk you through every aspect of GST on manpower supply services so that your business stays fully compliant and avoids costly penalties. 💡 Key Takeaway Manpower supply services are taxable at 18% GST (CGST 9% + SGST 9% or IGST 18%). However, when the supplier is an unregistered person or a Government entity, special RCM rules may apply. Understanding these nuances is critical for every employer and contractor in India. 2. What is Manpower Supply Service Under GST? Under GST law, ‘Manpower Supply’ refers to the supply of manpower — on a temporary or permanent basis — by one person to another. The supplier provides workers who work under the direction and control of the recipient. 2.1 Defining the Key Terms The distinction between ‘supply of manpower’ and ‘supply of service using manpower’ is critical: Manpower Supply (Taxable) Contract Work / Job Work Supplier provides workers Supplier provides a service outcome Workers under recipient’s control Workers under supplier’s control E.g., security guards, housekeeping staff, IT contractors E.g., CA firm auditing, plumber fixing pipes 18% GST applicable GST rate depends on nature of underlying service 2.2 Common Types of Manpower Supply in India (2026) Security & Facility Management Services Housekeeping, Sanitation & Cleaning Services IT/ITES Staffing and Contract Labour Industrial Labour Supply (Construction, Manufacturing) Nursing & Para-Medical Staff Supply to Hospitals Drivers, Data Entry Operators, Accountants on Deployment Loading/Unloading Labour for Logistics Companies 3. GST Rate and SAC Code for Manpower Supply Services The applicable GST rate and Service Accounting Code (SAC) for manpower supply services as of 2026 are as follows: Service Description SAC Code GST Rate Supply of Manpower (General) 998519 18% (CGST 9% + SGST 9%) Security Guard Services 998521 18% Housekeeping / Cleaning Services 998532 18% Supply of Nursing Staff 999311 18% Labour Supply for Construction 995423 18% Temporary Staffing / HR Outsourcing 998513 18% ⚠️ Important Note on GST Rate There is NO reduced rate for general manpower supply. All manpower supply services attract 18% GST unless specifically exempted (e.g., supply to Government under RCM by a person other than a body corporate — covered in Section 5). Always verify the SAC code with your CA before filing. 4. Reverse Charge Mechanism (RCM) on Manpower Supply Services One of the most discussed aspects of GST on manpower supply is the Reverse Charge Mechanism (RCM). Under RCM, the liability to pay GST shifts from the supplier to the recipient of the service. 4.1 When Does RCM Apply? As per Notification No. 13/2017-Central Tax (Rate) dated 28 June 2017 (as amended up to 2026), RCM applies to manpower supply in the following scenario: 🔄 RCM Trigger for Manpower Supply Service: Any service supplied by any person other than a body corporate (i.e., an individual, HUF, firm, or AOP) to a registered business (body corporate). Effective from: 1 October 2019 (re-inserted vide Notification No. 29/2019-CT(Rate)) Who Pays GST: The recipient (body corporate) pays GST under RCM. Applicable Rate: 18% (to be paid by the recipient directly to Government). ITC: RCM GST paid by the recipient IS eligible as Input Tax Credit (ITC) subject to conditions. 4.2 Understanding ‘Body Corporate’ vs ‘Non-Body Corporate’ Body Corporate (FCM applies to supplier) Non-Body Corporate (RCM on recipient) Private Limited Company Individual proprietor Public Limited Company Partnership firm / LLP One Person Company (OPC) HUF (Hindu Undivided Family) Foreign Company Association of Persons (AOP) So, if a Partnership Firm (say ‘Sharma Labour Contractors’) supplies 50 workers to a Private Limited Company (say ‘ABC Manufacturing Pvt. Ltd.’), the RECIPIENT — ABC Manufacturing Pvt. Ltd. — must pay 18% GST under RCM, NOT the partnership firm. 4.3 RCM — Numerical Illustration 📊 Example Calculation (RCM) Supplier: Mr. Rajan (Proprietor) — Manpower Contractor Recipient: XYZ Pvt. Ltd. (Body Corporate) Value of Manpower Supply Contract: ₹5,00,000 per month GST Rate: 18% (under RCM, paid by recipient) CGST @ 9%: ₹45,000 SGST @ 9%: ₹45,000 Total GST to be paid by XYZ Pvt. Ltd. to Government: ₹90,000 ITC Eligibility: XYZ Pvt. Ltd. can claim ₹90,000 as ITC in GSTR-3B (subject to conditions) 5. GST Exemptions on Manpower Supply — Government Contracts Not all manpower supply services are taxable. The GST law provides specific exemptions, particularly for services supplied to or by the Government. 5.1 Exemption for Pure Labour Contracts to Government As per Entry No. 3 of Notification No. 12/2017-CT(Rate) (Exemption Notification), the following service is exempt from GST: ✅ GST Exempt Service Pure Labour Services (i.e., no goods involved) supplied to Government, Local Authority, or a Governmental Authority, for the construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of a civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession. Note: This exemption is strictly for PURE LABOUR contracts. If any material is also supplied along with labour, this exemption does NOT apply. 5.2 Services by Way of Pure Labour Contracts — Residential Dwellings Pure labour contracts for construction of low-cost housing under schemes like PMAY (Pradhan Mantri Awas Yojana) are also exempt as per Notification No. 12/2017, provided they are supplied to a Government authority. 5.3 Supply of Services to Governmental Entities — RCM

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Supply vs Non-Supply Under GST What Counts as a Supply? What Doesn’t? Know Every Rule, Exception & Case

GST ON RENT RCM vs FORWARD CHARGE

GST for Start-ups – Compliance Calendar

GST on Bitcoins & Cryptocurrency

GST PORTAL NEW FEATURES 2025-26

Anti-Profiteering Under GST

GST for Charitable Trusts & Societies

GST ON ALCOHOL & TOBACCO IN INDIA

GST on Works Contract for Government

GST on Manpower Supply Services

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