18% GST on ice-cream parlours effective only from Oct 6, 2021

Ice-cream parlours can breathe easy as the Finance Ministry has said that the 18 per cent GST will not take retrospective effect. It also said that fees for entrance exams, issuance of migration certificates etc and charges for preferred location of land will not attract GST.

Based on the recommendations by the GST Council in its June meeting, the Finance Ministry came out with a set of circulars clarifying taxation issues on various goods and services, on Wednesday.

Earlier circular

Last September, the GST Council recommended levying of GST on ice-cream parlours at the rate of 18 per cent with ITC, and not 5 per cent without ITC.The argument was that since they sell already manufactured goods, they are not restaurants and so attract GST at the higher rate.

Accordingly, a circular was issued in October last year for imposition of higher rate, but there was no clarity whether it would be prospectively or retrospectively applied. This created some confusion that the higher rate could be levied from July 1, 2017.

Now, it has been clarified that the higher rate would be effective from October 6, 2021.

“Since the decision is only to regularise the past practice, no refund of GST shall be allowed, even if already paid at 18 per cent,” a circular issued on Wednesday said.

Land lease, education, IVF

The same circular clarified that the amount or fee charged from prospective students for entrance or admission, or for issuance of eligibility certificate to them in the process of their entrance/admission as well as the fee charged for issuance of migration certificates by educational institutions is covered by the exemption under the GST notification.

The circular clarified that location charges or preferential location charges paid upfront in addition to the lease premium for long term lease of land constitute part of upfront amount charged for long term lease of land and are eligible for the same tax treatment, and therefore eligible for exemption. “It is clarified that sale of developed land is also sale of land. and accordingly [it] does not attract GST,” it said. However, it may be noted that any service provided for development of land, like levelling, laying of drainage lines (as may be received by developers) shall attract GST at applicable rate for such services.

On the issue of applicability of GST on services in the form of Assisted Reproductive Technology (ART)/ In vitro fertilisation (IVF), the circular said: “It is clarified that services by way of IVF are also covered under the definition of health care services for the purpose of exemption from notification.”