Key Highlights of Circular 245: GST Clarifications and Exemptions

Summary of Circular 245

GST on Penal Charges by Regulated Entities (REs):

Clarification: No GST is payable on penal charges levied by REs such as banks and NBFCs for non-compliance with loan terms as per RBI’s directive. These charges are levied for breach of contract, not as consideration for tolerating an act.

GST Exemption for Payment Aggregators (PAs):

Clarification: PAs are considered ‘acquiring banks’ for the purpose of GST exemption under Sl. 34 of notification 12/2017-CTR when settling amounts up to ₹2000 per transaction using payment cards. This applies only to the settlement function, not to payment gateway services.

Regularization of GST on R&D Services by Government Entities:

 Exemption: Research and development services against grants from government entities are exempt from GST from 10.10.2024. For the period from 01.07.2017 to 09.10.2024, GST payments are regularized on an ‘as is where is’ basis.

Skilling Services by NSDC Approved Training Partners:

Clarification: The GST exemption for skilling services provided by NSDC approved Training Partners has been reinstated effective from 16.01.2025. GST payment for the period from 10.10.2024 to 15.01.2025 is regularized on an ‘as is where is’ basis.

GST on Facility Management Services to MCD:

Clarification: Facility management services provided to MCD for its headquarters are not exempt from GST as they are not related to municipal functions under Article 243W of the Constitution.

Status of Delhi Development Authority (DDA):

Clarification: DDA does not qualify as a local authority under GST law, hence services supplied by DDA are not under reverse charge mechanism for business entities.

GST on Renting Commercial Property (RCM for Composition Levy):

↳ Regularization: GST on commercial property rental by unregistered to registered persons under composition levy is regularized on ‘as is where is’ basis for the period from 10.10.2024 to 15.01.2025.

GST on Support Services by Electricity Utilities:

Regularization: Certain ancillary services by electricity utilities are exempt from GST, and payment for the period from 10.10.2024 to 15.01.2025 is regularized on an ‘as is where is’ basis.

GST on Services by Goethe Institute/Max Mueller Bhawans:

Regularization: GST payment for services provided by these institutions from 01.07.2017 to 31.03.2023 is regularized on an ‘as is where is’ basis due to previous misconceptions about exemption status.