Taxability of Government Services Under GST Regime
Government services are the back bone of an economy. These services are provided by the government to the people living in its jurisdiction. These services provide stability to the economy to grow and develop more. Also, the major private sector services are also dependent on the govt services. The motive of govt services is responding to the people’s needs, providing services in more effective, efficient and economic way and also to maintain the good relationship between the government and the public of the country, so that the citizens of the country are satisfied with the government. Government services are divided into the different sectors, these sectors are as follow:-
- Education and learning
- Health and wellness
- Electricity, water and local services
- Money and taxes
- Justice, law and grievances
- Travel and tourism
- Business and self-employment
- Births, deaths, marriages and childcare
- Pension, and benefits
- Transport and infrastructure
- Citizenship visa and passports
- Agriculture and rural environment
- Science, IT and communications
- Youth, sports and culture
In earlier taxation regime, many govt services were tax exempted. Now under the GST, many govt services are exempted. The reason is to reduce the burden on the pockets of citizens and to promote govt services. It means government exemption from taxes are for the benefit of the citizens of the country. Here are the GST rates on govt services :-
The government body and organization are liable to pay taxes on their services under clause (b) of sub-section (2) of section 7 of the CGST Act, 2017.
|Government schools and colleges (education)
Government hospitals (health)
Sports activities(training and coaching)
Electricity (depends on KWh usage)
Government airplane ticket in economy class
|Government airplane ticket other than economy class||12%|
Government banking services
Ease Of Government Procedure
In pre-GST regime, the taxes are divided into the different-different taxes like service tax, sales tax, excise duty etc, but under the GST regime there is only one tax on all the govt services which make the government procedure easier and also uniformity of taxes are there.
As only one tax procedure is followed under the GST thus is helping in transparent government procedures. There are no hidden taxes now. Due to which the government organization becomes more trust worthy and more and more public will go for the govt services.
Promotes Government Services
The citizens of the country have trust and faith in the government to provide good services to its citizens. With the help of GST, by the ease of procedures, it promotes govt services, so that more and more people would spend their money on the govt services, which improves the image of government and also enhances the goodwill of the government.
Other Additional Information :-
- If taxable services are provided by the department of the government to another department of the government are also taxable.
- Exempt Services provided by the government department to the another department are also exempted from GST. No matter whether it is for central government or for the state government. However, GST is not exempted from the postal services, aircraft services and railway services.
Would services in relation to supply of motor vehicles to government be taxable?
Supply of a motor vehicle meant to carry more than twelve passengers by way of giving on hire to a state transport undertaking is exempted from tax. The exemption is applicable to services provided to state transport undertaking and not to other departments of Government or local authority. Generally, such State transport undertakings/corporations are established by law with a view to providing public transport facility to the commuters
Are the services provided by the police or security agencies of government to Public Sector Units (PSUs) or corporate entities or sports events held by private entities be taxable?
Yes. Services provided by Police or security agencies of Government to PSU/private business entities are not exempt from GST. Such services are taxable supplies and the recipients are required to pay the tax under reverse charge mechanism for the applicable rate on the amount of consideration paid to Government for such supply of services.
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The author of above article is Sameer Batra, BBA Professional.
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