Changes In GST Law Effective From 1 October 2023- Part V

On 31st July, 2023, CBIC issued Notification No. 28/2023-Central Tax. It was mentioned in the said notification that the provisions of sections 137 to 162 (except sections 149 to 154) of the Finance Act, 2023 shall come into force w.e.f. 01st of October, 2023.

Also, it specified that the provisions of sections 149 to 154 of the said Act shall come into force w.e.f. 01st of August, 2023.

To understand sections 137 to 139 of the Finance Act, read our blog “Effective GST Changes w.e.f. October 01, 2023- Part I”.

To understand sections 140 to 146 of the Finance Act, 2023, read our blog “Effective GST Changes w.e.f. October 01, 2023- Part II”.

To understand sections 147 to 156 of the Finance Act, 2023, read our blog “Effective GST Changes w.e.f. October 01, 2023- Part III”.

To understand sections 157 to 159 of the Finance Act, 2023, read our blog “Effective GST Changes w.e.f. October 01, 2023- Part IV”.

Lets discuss section 160 to 162 of the Finance Act, 2023 in this part!

Section 160 of the Finance Act, 2023

Section 160 deals with amendments in section 2 of the IGST Act, 2017.

Section 2 of the IGST Act, 2017 covers definitions under IGST Act. Sub-section 16 covers the definition of a non-taxable online recipient.

Earlier, the definition of “non-taxable online recipient” was as follows:

"non-taxable online recipient" means any Government, local authority, governmental authority, an individual, or any other person not registered and receiving online information and database access or retrieval services for any purpose other than commerce, industry, or any other business or profession, located in taxable territory. Explanation.--For this clause, the expression "governmental authority" means an authority or a board or any other body,--
(i) set up by an Act of Parliament or a State Legislature, or
(ii) established by any Government, with ninety percent. or more participation by way of equity or control, to carry out any function entrusted to a Panchayat under article 243G or to a municipality under article 243W of the Constitution;"

Now, this definition is amended as follows: "Non-taxable online recipient" means any unregistered person receiving online information and database access or retrieval services located in a taxable territory.

Explanation.-For the purposes of this clause, the expression "unregistered person" includes a person registered solely in terms of clause (vi) of section 24 of the Central Goods and Services Tax Act, 2017 (12 of 2017). This amendment has widened the scope of Online Information and Database Access or Retrieval Services (OIDAR). Previously, services from OIDAR providers located in non-taxable territories abroad, when received by the central government, state government, government authorities, or individuals for non-business purposes, were exempt under GST. Now, they will also be taxed.

Section 161 of the Finance Act, 2023

Section 162 deals with amendments in section 13 of the IGST Act, 2017.

Section 13 of the IGST Act, 2017 covers provisions related to the Place of supply of services where the location of the supplier or location recipient is outside India. Sub-section 9 is used to cover provisions related to the place of supply in the case of transportation of goods. It was read as follows:

“The place of supply of services of transportation of goods, other than by way of mail or courier, shall be the place of destination of such goods.”

This sub-section 9 is omitted w.e.f. 01-10-2023.

Also, CBIC has issued Circular No. 203/15/2023-GST which clarifies that after the said amendment to section 13(9) comes into effect i.e. 01.10.2023, the place of supply of services of transportation of goods, other than through mail and courier, in cases where the location of supplier of services or location of the recipient of services is outside India, will be determined by the default rule under section 13(2) of IGST Act, 2017. Accordingly, in cases where the location of the recipient of services is available, the place of supply of such services shall be the location of the recipient of services and in cases where the location of the recipient of services is not available in the ordinary course of business, the place of supply shall be the location of supplier of services. The same provisions will apply to transportation of goods by mail or courier.

It means, that if the exporter avails the service of transportation of goods outside India, he will have to pay GST on such services.

Conclusion

Numerous amendments in GST have come into effect as of October 1, 2023. These changes significantly impact the taxation landscape for various sectors, including transportation, Online Information and Database Access or Retrieval (OIDAR), and e-commerce operators. Also, various timelines and assessment procedures are updated to enhance procedural efficiency, compliance, and enforcement.