Services supplied by the Central Government, State Government, Union territory or local authority to a business entity excluding –

1. Renting of immovable property, and
2. Services specified below

1. Services by the Department of Posts by way of speed post, express parcel post, life insurance, and agency services provided to a person other than Central Government, State Government or Union territory or local authority;
2. Services in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport;
3. Transport of goods or passengers

The exception under the Services by Government or Local Authority

1. Services by Central Government, State Government, Union territory, local authority or governmental authority related to the Immovable Property
2. Services by the Central Government, State Government, Union territory or local authority excluding the following services: –

1. services by the Department of Posts by way of speed post, express parcel post, life insurance, and agency services provided to a person other than the Central Government, State Government, Union territory;
2. services in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport;
3. transport of goods or passengers; or
4. any service, other than services covered under entries (a) to (c) above, provided to business entities.

Definition of Local Authority

Local authority means 

1. a Panchayat
2. a Municipality
3. a Municipal Committee, a Zilla Parishad, a District Board, and any other authority legally entitled
4. a Cantonment Board
5. a Regional Council or a District Council
6. a Development Board or a Regional Council constituted under Constitution

Definition of Union Territory

Union territory means the territory of

1. the Andaman and Nicobar Islands
2. Lakshadweep
3. Dadra and Nagar Haveli and Daman and Diu
4. Ladakh
5. Chandigarh; and
6. other territory

Are all local bodies constituted by a State or Central Law regarded as local authorities for the purposes of the GST Acts?

No. The definition of ‘local authority’ is very specific and means only those of bodies which are mentioned as ‘local authority’. It would not include other bodies that are merely described as a ‘local body’ by a local law.

For example, are Delhi Development Authority, Ahmedabad Development Authority, Bangalore Development Authority, Chennai metropolitan Development Authority, Bihar Industrial Area Development Authority, etc. Such developmental authorities formed under the Town and Planning Act are not qualified as local authorities for the purpose of the GST Acts.

Who is the Business Entity?

Business Entity means any person carrying out business as per the Notification No. 12/2017-Central Tax (Rate) dated 28-June-2017.

Exemption under the Services by Government or Local Authority

1. Services by Central Government, State Government, Union territory, local authority or governmental authority by way of any activity in relation to any function entrusted to a municipality under article 243 W of the Constitution.
2. Services by the Central Government, State Government, Union territory or local authority excluding the following services-

1. services by the Department of Posts by way of speed post, express parcel post, life insurance, and agency services provided to a person other than the Central Government, State Government, Union territory;
2. services in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport;
3. transport of goods or passengers; or
4. any service, other than services covered under entries (a) to (c) above, provided to business entities.
5. Services provided by the Central Government, State Government, Union territory or local authority to a business entity with an aggregate turnover of up to twenty lakh rupees (ten lakh rupees in case of a special category state) in the preceding financial year.

For the purposes of this entry, it is hereby clarified that the provisions of this entry shall not be applicable to-

1. services, –

1. by the Department of Posts by way of speed post, express parcel post, life insurance, and agency services provided to a person other than the Central Government, State Government, Union territory;
2. in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport;
3. of transport of goods or passengers; and
4. services by way of renting of immovable property.
5. Services provided by the Central Government, State Government, Union territory or local authority to another Central Government, State Government, Union territory or local authority:

Provided that nothing contained in this entry shall apply to services-

1. by the Department of Posts by way of speed post, express parcel post, life insurance, and agency services provided to a person other than the Central Government, State Government, Union territory;
2. in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport;
3. of transport of goods or passengers.
4. Services provided by Central Government, State Government, Union territory or a local authority where the consideration for such services does not exceed five thousand rupees:

Provided that nothing contained in this entry shall apply to-

1. services by the Department of Posts by way of speed post, express parcel post, life insurance, and agency services provided to a person other than the Central Government, State Government, Union territory;
2. services in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport;
3. transport of goods or passengers
4. Services provided by the Central Government, State Government, Union territory or local authority by way of-

1. registration required under any law for the time being in force;
2. Testing, calibration, safety check or certification relating to protection or safety of workers, consumers or public at large, including fire license, required under any law for the time being in force.

7. Services provided by the Central Government, State Government, Union territory or local authority. By way of issuance of passport, visa, driving license, birth certificate or death certificate.
8. Services provided by the Central Government, State Government, Union territory or local authority by way of assignment of right to use natural resources to an individual farmer for cultivation of plants and rearing of all life forms of animals, except the rearing of horses, for food, fiber, fuel, raw material or other similar products.
9. Services provided by the Central Government, State Government, Union territory by way of deputing officers after office hours or on holidays for inspection or container stuffing or such other duties in relation to import export cargo on payment of Merchant Overtime charges

Renting of Immovable Property

Supply of Services	Supplier of service	Recipient of Service
Services supplied by the Central Government, State Government, Union territory or local authority to a business entity excluding, -renting of immovable property, andservices specified belowservices by the Department of Posts by way of speed post, express parcel post, life insurance, and agency services provided to a person other than Central Government, State Government or Union territory or local authority;services in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport;transport of goods or passengers.	Central Government, State Government, Union territory or local authority	Any business entity located in the taxable territory.

Renting of Immovable Property means allowing, permitting or granting access, entry, occupation, use or any such facility, wholly or partly, in an immovable property, with or without the transfer of possession or control of the said immovable property and includes letting, leasing, licensing or other similar arrangements in respect of immovable property.

Scope of Renting of Immovable Property

The Services supplied by the Central Government, State Government, Union territory or local authority by way of renting of immovable property to a person registered under GST are covered under reverse charge. Therefore, any person registered under GST receiving renting of immovable property services from Central Government, State Government, Union territory or local authority is liable to pay tax under reverse charge mechanism.

If the service by way of renting of immovable property is supplied to any person not registered under the GST Act, then the tax shall be paid by the Central Government, State Government, Union territory or local authority, as the case may be, under forward charge.

What is the Rate of Tax under renting of Immovable Property?

The rate of tax for these services shall be 18% IGST (or 9% CGST and 9% SGST)