GST Calendar –Compliances for the month of January ’2025

GST Calendar –Compliances for the month of January ’2025

Nature of Compliances	Due Date
GSTR-7 (Tax Deducted at Source ‘TDS’)	February 10, 2025
GSTR-8 (Tax Collected at Source ‘TCS’)	February 10, 2025
GSTR-1	February 11, 2025
IFF- Invoice furnishing facility (Availing QRMP)	February 13, 2025
GSTR-6 Input Service Distributor	February 13, 2025
GSTR-2B (Auto Generated Statement)	February 14, 2025
GSTR-3B	February 20, 2025
GSTR-5 (Non-Resident Taxable Person)	February 20, 2025
GSTR-5A (OIDAR Service Provider)	February 20,2025
PMT-06 (who have opted for QRMP scheme)	February 25, 2025

GST-Circular No. 245/02/2025-28 January 2025

 55th GST Council Meeting, the following clarifications have been provided:

1. Services Provided by Payment Aggregators (PAs)

1. PAs serve as intermediaries, enabling e-commerce platforms and merchants to accept payments from customers through various instruments. This eliminates the need for merchants to set up independent payment processing systems. PAs collect customer payments, hold them for a brief period, and subsequently transfer them to merchants within a specified timeframe.
2. As per Sl. No. 34 of Notification No. 12/2017-Central Tax (Rate) dated 28 June 2017 (Exemption Notification), a GST exemption is granted to an ‘acquiring bank.’ The explanation to this entry defines an ‘acquiring bank’ to also include ‘… any other person who facilitates payments to entities accepting such cards.’
3. Accordingly, the following clarifications have been made:
   i. RBI-regulated PAs fall within the scope of the term ‘acquiring bank’ as per the explanation provided under Sl. No. 34 of the Exemption Notification.
   ii. Therefore, services rendered by RBI-regulated PAs for settling payments of up to INR 2,000 per transaction made using credit cards, debit cards, charge cards, or other payment instruments qualify for GST exemption under Sl. No. 34 of the Exemption Notification.
   iii. However, this exemption applies exclusively to the function of payment settlement, specifically concerning the handling of funds, and does not cover Payment Gateway services.

2. Regularization of GST on Research and Development (R&D) Services

1. With effect from 10 October 2024, Sl. No. 44A was added to the Exemption Notification, exempting R&D services from GST when supplied by Government Entities, research associations, universities, colleges, or other institutions notified under Section 35(1)(ii) or 35(1)(iii) of the Income Tax Act, 1961, provided the consideration is in the form of grants.
2. It has now been clarified that GST payments made on R&D services provided by Government Entities, where grants from Government Entities serve as the consideration (as per Sl. No. 44A of the Exemption Notification), will be regularized on an ‘as is where is’ basis for the period from 1 July 2017 to 9 October 2024.

3. Penal Charges by Regulated Entities (REs) such as Banks and Non-Banking Financial Companies

1. The Reserve Bank of India (RBI), through its directive issued on 18 August 2023, mandated that REs must stop levying penal interest for borrowers’ failure to comply with key loan terms. Instead, penal charges were to be imposed with the objective of promoting credit discipline. Effective from 1 January 2024, these instructions do not extend to credit cards, external commercial borrowings, trade credits, or structured obligations governed by product-specific guidelines.
2. In light of this, the CBIC has confirmed that GST will not be applicable to penal charges imposed by REs under the above-mentioned directive. As these charges are considered fees for non-compliance with contract terms, they are already covered under Circular No. 178/10/2022-GST.

4. Regularization of GST on Certain Skilling Services

1. Prior to 9 October 2024, Training Partners approved by the National Skill Development Corporation (NSDC) were exempt from GST under Sl. No. 69 of the Exemption Notification for providing specific skilling services.
2. However, this exemption was withdrawn starting 10 October 2024 through Notification No. 08/2024-Central Tax (Rate) dated 8 October 2024 (NN 8/2024). Subsequently, the exemption was reinstated via Notification No. 6/2025-Central Tax (Rate) dated 16 January 2025 (NN 6/2025) under Sl. No. 69 of the Exemption Notification.
3. In this context, it has been clarified that GST payments on services delivered by NSDC-approved Training Partners, which were exempt before 10 October 2024, will be regularized on an ‘as is where is’ basis for the period between 10 October 2024 and 15 January 2025.

5. Whether Delhi Development Authority (DDA) Qualifies as a Local Authority

1. As per Sl. No. 5 of Notification No. 13/2017-Central Tax (Rate) dated 28 June 2017 (RCM Notification), services provided by a local authority to a business entity are subject to taxation under the Reverse Charge Mechanism (RCM).
2. The definition of ‘local authority’ under Section 2(69) of the Central Goods and Services Tax Act, 2017 (CGST Act) refers to an entity comparable to an elected self-governing body, such as a Municipal Committee, which is responsible for overseeing and managing municipal or local funds.
3. In this context, it has been clarified that the DDA does not fulfill the criteria outlined under Section 2(69) of the CGST Act. Therefore, it cannot be considered a ‘local authority’ under GST regulations.

6. Regularization of GST Obligation on Ancillary Services Provided by Electricity Transmission or Distribution Utilities

1. Notification No. 08/2024 introduced Sl. No. 25A in the Exemption Notification, exempting GST on services such as renting out metering equipment, conducting tests on meters, transformers, and capacitors, facilitating new electricity connections, relocating meters or service lines, reissuing duplicate bills, and other supplementary services associated with electricity transmission and distribution carried out by utilities for their consumers.
2. Subsequently, Notification No. 06/2025 amended the wording in Entry 25A of the Exemption Notification to replace ‘transmission and distribution’ with ‘transmission or distribution,’ ensuring consistency with Sl. No. 25, effective from 16 January 2025.
3. In this regard, the CBIC has validated GST payments for past transactions related to ancillary or supplementary services linked to electricity transmission or distribution (as classified under Sl. No. 25A of the Exemption Notification) for the period spanning from 10 October 2024 to 15 January 2025, on an ‘as is where is’ basis.

Gujarat HC Rules That GST Is Not Applicable on Assignment of Leasehold Rights

This tax update highlights a recent judgment by the Gujarat High Court concerning the applicability of GST on the transfer of leasehold rights from a lessee (assignor) to a third party (assignee).

Key Findings of the High Court:

• Although the CGST Act does not explicitly define “immovable property,” its definition in other statutes includes benefits arising from land.
• The petitioner transferred leasehold rights, which go beyond mere possession of the physical land and building. These rights include the authority to possess, earn income from, transfer, or reclaim ownership from an unauthorized holder.
• Under a lease agreement, the title of the land remains with the Gujarat Industrial Development Corporation (GIDC), with all rights reverting to it upon lease expiration. However, when leasehold rights are assigned, the assignor relinquishes all claims over the property in favor of the assignee.
• The Service Tax regime did not impose tax on development rights arising from land. Since leasehold rights represent a more substantial interest in land than development rights, the same principle should apply under GST.
• The transaction involves not just the leased land from GIDC but also any buildings constructed on it, classifying it as a capital asset in the form of immovable property.
• Based on these considerations, the High Court ruled that the assignment of leasehold rights does not attract GST.

Analysis & Implications:

• This ruling provides much-needed clarity, reinforcing that leasehold rights should be treated as part of immovable property and not subject to GST.
• Businesses should evaluate whether similar principles can be applied to assess the taxability of development rights under GST.
• In contrast, the Telangana High Court, in the case of Prahitha Construction Private Limited, ruled that the transfer of development rights constitutes a “service” and is therefore taxable under GST.
• Taxpayers who have previously paid GST on such transactions may explore refund claims, though they should consider the two-year limitation period for filing refund applications.
• The possibility of the Department appealing this ruling before the Supreme Court remains uncertain.

This judgment marks a significant precedent in determining GST liability on leasehold assignments and could influence future tax assessments and legal interpretations.

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