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Circular No. 190/02/2023- GST


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F. No. CBIC-190354/316/2022-TRU Section-CBEC
Government of India
Ministry of Finance
Department of Revenue
(Tax Research Unit)
***

North Block, New Delhi
Dated the –13
th
January, 2023

To,
The Principal Chief Commissioners/ Chief Commissioners/ Principal
Commissioners/ Commissioner of Central Tax (All) /The Principal Director Generals/
Director Generals (All)

Subject: Clarifications regarding applicability of GST on certain services – reg.

Madam/Sir,

Representations have been received seeking clarifications on the following issues:
1. Applicability of GST on accommodation services supplied by Air Force Mess to its
personnel;
2. Applicability of GST on incentive paid by Ministry of Electronics and Information
Technology (MeitY) to acquiring banks under Incentive scheme for promotion of RuPay
Debit Cards and low value BHIM-UPI transactions.
The above issues have been examined by GST Council in the 48
th
meeting held on 17
th

December, 2022. The issue -wise clarifications are given below:

2. Applicability of GST on accommodation services supplied by Air Force Mess to its
personnel:

2.1 Reference has been received requesting for clarification on whether GST is payable on
accommodation services supplied by Air Force Mess to its personnel.

2.2 All services supplied by Central Government, State Government, Union Territory or local
authority to any person other than business entities (barring a few specified services such as
services of postal department, transportation of goods and passengers etc.) are exempt from GST
vide Sl. No. 6 of notification No. 12/2017 – Central Tax (Rate) dated 28.06.2017. Therefore, as
recommended by the GST Council, it is hereby clarified that accommodation services provided
by Air Force Mess and other similar messes, such as, Army mess, Navy mess, Paramilitary and
Police forces mess to their personnel or any person other than a business entity are covered by
Sl. No. 6 of notification No. 12/2017 – Central Tax (Rate) dated 28.06.2017 provided the
services supplied by such messes qualify to be considered as services supplied by Central
Government, State Government, Union Territory or local authority.

Circular No. 190/02/2023- GST


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3. Applicability of GST on incentive paid by MeitY to acquiring banks under Incentive
scheme for promotion of RuPay Debit Cards and low value BHIM-UPI transactions:

3.1 Representations have been received requesting for clarification on whether GST is
applicable on the incentive paid by MeitY to acquiring banks under the Incentive scheme for
promotion of RuPay Debit Cards and low value BHIM-UPI transactions.

3.2 Under the Incentive scheme for promotion of RuPay Debit Cards and low value BHIM-
UPI transactions, the Government pays the acquiring banks an incentive as a percentage of value
of RuPay Debit card transactions and low value BHIM-UPI transactions up to Rs.2000/-.

3.3 The Payments and Settlements Systems Act, 2007 prohibits banks and system providers
from charging any amount from a person making or receiving a payment through RuPay Debit
cards or BHIM-UPI.

3.4 The service supplied by the acquiring banks in the digital payment system in case of
transactions through RuPay/BHIM UPI is the same as the service that they provide in case of
transactions through any other card or mode of digital payment. The only difference is that the
consideration for such services, instead of being paid by the merchant or the user of the card, is
paid by the central government in the form of incentive. However, it is not a consideration paid
by the central government for any service supplied by the acquiring bank to the Central
Government. The incentive is in the nature of a subsidy directly linked to the price of the service
and the same does not form part of the taxable value of the transaction in view of the provisions
of section 2(31) and section 15 of the CGST Act, 2017.

3.5 As recommended by the Council, it is hereby clarified that incentives paid by MeitY to
acquiring banks under the Incentive scheme for promotion of RuPay Debit Cards and low value
BHIM-UPI transactions are in the nature of subsidy and thus not taxable.

4. Difficulties, if any, in implementation of this circular may be brought to the notice of the
Board.


Yours faithfully,



(Anna Sosa Thomas)
Technical Officer, TRU II
Email: anna.thomas@gov.in