Applicability of Change in GST Rates of Various Services

The CBIC revised Notification No. 11/2017-Central Tax (Rate) dated June 28, 2017 as follows in Notification No. 06/2021 Central Tax (Rate) dated September 30, 2021.

1. Wherever Section 12AB is referenced in the notification dated June 28, 2017, it shall be added to Section 12AA.
2. For the temporary or permanent transfer or permitting the use or enjoyment of Intellectual Property Rights, a reduced rate of 18 percent will be levied, rather than the previous rates of 12 percent and 18 percent.
3. Services by means of job work in relation to the manufacture of alcoholic liquor for human consumption will be taxed at a reduced rate of 18 percent, rather than the previous cost of 5 percent.
4. For services in the printing of goods such as newspapers, books (including Braille books), journals, and magazines, a rationalised cost of 18 percent will be charged, rather than the previous rate of 12 percent.
5. Admission to theme parks, water parks, and any other location with joy rides, merry go rounds, go carting, or ballet will be charged at an 18 percent rate;
6. Services such as entrance to casinos or race clubs, or any place with casinos or race clubs, as well as sporting events such as the Indian Premier League, would be charged at a rate of 28 percent.
7. A new service code 996541 will be developed for “Multimodal Transport of Goods from One Location to Another Location in India.”

New Rates' Applicability:

Section 14 of the CGST Act, 2017, which is reprinted as follows, governs the applicability of tax rates in the event of a change in tax rate in respect of a supply of goods or services.

1. if the products or services, or both, were provided prior to the change in tax rate

1.The time of supply shall be the date of receipt of payment or the date of issue of invoice, whichever is earlier, where the invoice for the same has been issued and payment is also received after the change in rate of tax; or
2. Where an invoice is produced prior to a change in tax rate, but payment is received after the change in tax rate, the time of supply is the date of invoice issuing; or
3. In the event that money is received prior to the change in tax rate, but the invoice is issued after the change in tax rate, the time of supply is the date of payment receipt;

2. if the goods or services, or both, were provided after the tax rate was changed,––

1.The time of supply is the date of receipt of payment if the payment is received after the change in tax rate but the invoice is issued before the change in tax rate; or
2. The time of supply is the date of receipt of payment or the date of issue of invoice, whichever is earlier, where the invoice has been issued and payment has been received prior to the change in tax rate; or
3. The time of supply is the date of invoice issuing if the invoice is issued after the change in tax rate but the payment is received before the change in tax rate.

The foregoing provisions are shown with an example in which there are two possible outcomes: service completion occurs before or after the change in tax rate. We must keep track of three events: the date of service completion, the date of invoice, and the date of payment. The effective date of the tax rate change would be October 1, 2021.

Scenario 1 (prior to the change in tax rate)
– Service completion – September 25, 2021

Date of Invoice: February 10, 2021
The deadline for payment is March 10, 2021.
Time of Supply – Invoice Date- 02/10/2021 (earlier)

Date of Invoice: September 26, 2021
The deadline for payment is March 10, 2021.
26/09/2021 – Time of Supply – Invoice Date (whichever is closest to Completion)

Date of Invoice: 03/10/2021
Date of Payment: September 26, 2021
Date of Supply – Payment Date (whichever is closest to Completion): September 26, 2021

Scenario 2 (After the adjustment in tax rate)
– Service Completion – 02/10/2021

Date of Invoice: September 25, 2021
The deadline for payment is March 10, 2021.
Time of Supply – Payment (whichever comes first) – 03/10/2021

Date of Invoice: September 26, 2021
The deadline for payment is September 27, 2021.
26/09/2021 – Time of Supply – Invoice Date (Earlier)

Date of Invoice: 03/10/2021
Date of Payment: September 26, 2021
Time of Supply – Invoice Date (whichever occurs first) – 03/10/2021