GST Rates on Services

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No. CLE-HO/POL/GST/17-18
June 7, 2017

Members of the Council

Sub : GST  Rates on Services

Dear Member

The GST Council has recently notified the GST rate schedule for services and also the list of services under Reverse Charge i.e. services where the recipient of services is required to pay the tax. The details are given below.

Rate of Tax on Major Services

Goods Transport Agency

a) Services of Goods Transport Agency (GTA) in relation to transportation of goods (other than household goods for personal use) – 5% GST with no Input Tax Credit . As per reverse charge schedule (copy enclosed), the recipient of this service has to pay 100% tax.

Works Contract

b)  Composite Supply of Works Contract as defied in Clause 119 of Section 2 of CGST Act. – 18% GST with full Input Tax Credit.

Definition of works contract :  Clause (119) of Section 2 of CGST Act :  “Works Contract” means 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;

Other Services

c) All services not specified in enclosed rate schedule – 18% GST with full Input Tax Credit.

Foreign Agency Commission

The place of supply of ‘Intermediary service’ ( which includes Agency Services) is the location of the Service Provider, in terms of Sec 13(2) read with Sec 13(8) of IGST.  Hence, Foreign Commission Agency service does not fall under the definition of  ‘import of services’ under section 2(11) of IGST Act.  Since the place of supply of service is outside India, and the location of the Supplier is also outside India, the transaction is neither an Interstate supply nor an Intra State supply and hence outside the ambit of GST.

With kind regards

R. Ramesh Kumar
Executive Director

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