The GST department may soon be able to provide a host of clarifications on certain tricky issues in tax rates, including assisted reproductive technology (ART) or in vitro fertilization (IVF) exemptions, as well as the eligibility of GST fee-paying gas tankers.
A committee of Center and State tax officials, called the Fitment Committee, has informed the GST council that health care services provided by a clinical institution, licensed physician or paramedics are exempt from the goods and services tax system and are providing a clarification. regarding GST waivers for ART/IVFs.
The GST Act defines health care as any service through diagnosis or treatment or care of illness, injury, deformity, abnormality or pregnancy in a recognized system of medicines in India.
It also includes services by transporting the patient to and from a clinical facility, but does not include hair transplantation or cosmetic or plastic surgery, except when performed to repair the anatomy or functions of the body affected as a result of birth defects, to repair or reconstruct developmental disorders. abnormalities, injury or trauma.
The condition of infertility is treated using ART procedures such as IVF. Such services fall under the definition of health services for the purposes of the above waiver notice, the assembly committee said adding clarification can be issued accordingly through a circular.
The committee’s recommendations to be posted before the GST council meeting on June 28-29 also clarify the issue of the applicability of GST in the payment of fees to the gas tankers.
The committee gives its advice on tax rates, after analyzing the wishes of stakeholders, at each meeting of the Council.
The panel has received requests for clarification as some gas carriers have requested payment from GST at a rate of 18 percent on the fees paid to them for such appearances.
It noted that the supply of all goods and services is taxable unless they are exempt or declared as ‘no supply’.
Services provided by the gas carriers in lieu of fees would incur GST liability.
“However, the threshold exemption limit would apply to the total turnover of the service provider. Liability would arise in the event that the threshold exemption limit for services is exceeded,” it said adding clarification can be given accordingly.
Currently, entities providing services are required to register under GST if their total turnover exceeds Rs 20 lakh (for normal category states) and Rs 10 lakh (for special category states).
Furthermore, the committee also proposed a clarification on whether the sale of space for advertising in souvenirs would result in a tax rate of 5 percent or 18 percent.
The editing committee said that the sale of space for advertisements in print media carries a 5 percent tax. The activities carried out by various institutions/organizations for the purpose of selling space for souvenir advertisements would be taxed at 5 percent and the stated position in the GST legislation will be clarified accordingly, it said.
The panel recommends the status quo in GST rates for 113 goods and 102 services, but also called for a cut in taxes on ostomy appliances from 12 percent to 5 percent, from 12 percent.
It also suggested that tax rates for orthopedic implants (trauma, spine and arthroplasty implants in the body); Orthotics (splints, braces, belts & calipers); Prostheses (artificial limbs) are cut to a uniform 5 percent, from the current differential rate of 12 and 5 percent.
The committee also recommended lowering the GST on cable car travel from 18 percent to 5 percent, with ITC, Himachal Pradesh submitting this request to the GST council in September last year.
Clarification would also be given on GST rates on electric vehicles, stating that EVs, whether battery-powered or not, would receive a 5 percent tax.
The committee has proposed to the GST Council to postpone a decision on the taxability of cryptocurrency and other virtual digital assets. It suggested that a law on cryptocurrency regulation is awaited and it would be essential to identify all relevant facilities associated with the crypto ecosystem, in addition to classifying whether they are goods or services.
The committee felt that a deeper study was needed on the issues involved in the crypto ecosystem. It has been decided that Haryana and Karnataka will study all aspects and present a paper to the Assembly Committee in due course.
Fintech players are aiming for a maturity clause of at least one year on the RBI guideline for lines of credit by PPI issuers.
With the RBI cracking down on credit facilities provided by issuers of non-bank prepaid payment instruments, industry players are seeking payment deferral through at least a one-year expiration clause, industry sources said on Friday.
Earlier this week, the RBI ordered issuers of non-bank prepaid payment instruments (PPI) to stop providing lines of credit on such PPI cards and asked them to stop the practice immediately.
“A number of fintech players have entered the market with these PPI cards and it has really taken off in the last two years, especially after Covid. So a number of people were brought to the new credit and the Buy Now Pay Later (BNPL) proposition of the business, the regulator had red flags and said it is unchecked,” said a source.
“The lending industry has some standards for taking out credit, but here it was like getting the prepaid credit card just in time. So the regulator came down hard to stop this practice,” the source said.
Industry associations such as the Digital Lenders Association of India (DLAI), Fintech Association for Consumer Empowerment (FACE) and others fear that their customer base would be affected by the RBI directive.
“So they want to have some sort of grandfather or sunset clause. They believe they should be given a minimum of one year to make the transition possible, or they can grow into the credit business. They want the Treasury Department and the RBI to allow them a bit of a sunset clause,” another source said.
Sunset clauses are specific provisions in laws and they expire after a set timeline.
According to the RBI’s directions on PPIs issued by non-banks, such instruments may be loaded or topped up in cash, debited from a bank account, credit and debit cards and may only be in Indian rupees.
“The PPI-MD (Master Directions) does not allow the loading of PPIs from credit lines. Such practice, if followed, should be stopped immediately. Any failure to comply in this regard could result in criminal action under the provisions of the Payment and Settlement Systems Act, 2007,” RBI instructed the non-bank PPI issuers.
The fintech players engaged in the PPI-based business model have been raising money in the recent past to expand their business, but it is more of a credit extension. The regulator believes that if you do not treat such lines of credit as a personal loan and there is a loss on it, then it is called First Loss Default Guarantee (FLDG).
FLDG is an arrangement whereby a third party compensates lenders if a borrower defaults.
“The regulator says there is no control because there is no regulation about it. Whereas if an NBFC or a bank does it, the RBI will control it. So the issue is about how to achieve transparency and how to bring it under the purview of the regulator,” the sources said.
Raman Kumar, founder and chairman of the AI-based credit-enabled fintech platform CASHe, said his company does not offer PPI cards to its customers, adding that the company stayed away from this product because the regulations were not clear.
“RBI has already announced that they will allow a select group of NBFCs to issue credit cards, just like banks. We are waiting for the detailed rules to be announced before submitting our application to the RBI,” said Kumar.
CASHe offers consumer loan products such as quick personal loans and partnership-based BNPL lines of credit to the salaried millennials.
Since its launch in 2017, the fintech platform has registered more than 20 million (2 crore) app downloads and disbursed loans of over Rs 4,000 crore to more than 4 lakh borrowers.