Notification No. 17/2018 – Central Tax (Rate) Explained

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Notification No. 17/2018 - Central Tax (Rate): Seeks to insert explanation in an item in notification No. 11/2017-Central Tax (Rate) by exercising powers conferred under section 11(3) of CGST Act, 2017.

GST: [TO BE PUBLISHED IN THE GAZZETE OF INDIA, EXTRAORDINARY, PART II, SECTION 3, SUB-SECTION (i)]

G.S.R......(E).- In exercise of the powers conferred by sub-section (3) of section 11 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on the recommendations of the Council, and on being satisfied that it is necessary so to do for the purpose of clarifying the scope and applicability of the notification of the Government of India, in the Ministry of Finance (Department of Revenue) No.11/2017- Central Tax (Rate), dated the 28^thJune, 2017, published in the Gazette of India,

Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 690(E), dated the 28^th June, 2017, hereby inserts following Explanation in the said notification, in the Table, against serial number 3, in column (3), in item (vi), namely:-

“Explanation. - For the purposes of this item, the term ‘business’ shall not include any activity or transaction undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities.”.

2. This notification shall come into force with effect from 27^th of July, 2018.

(Gunjan Kumar Verma)
Under Secretary to the
Government of India

Note: - The principal notification No. 11/2017 – Central Tax(Rate), dated the 28^th June, 2017 was published in the Gazette of India, Extraordinary, vide number G.S.R. 690 (E), dated the 28^th June, 2017 and was last amended by notification No. 1/2018- Central Tax (Rate), dated the 25^th January, 2018 vide number G.S.R. 64(E), dated the 25^th January, 2018.

📚 Frequently Asked Questions (FAQs): Notification No. 17/2018 – Central Tax (Rate)

Q1: What is Notification No. 17/2018 – Central Tax (Rate)?

Answer:
It is a GST notification issued to clarify that government public authority functions are not treated as “business” for a specific GST service entry.

Q2: Under which section was this notification issued?

Answer:
Under Section 11(3) of the CGST Act, 2017.

Q3: Which notification was amended?

Answer:
Notification No. 11/2017 – Central Tax (Rate).

Q4: What does “business” exclude under this notification?

Answer:
Activities or transactions undertaken by the government as public authorities.

Q5: Does this mean government services are fully exempt?

Answer:
No. Only sovereign/public authority functions are excluded from being treated as business under this specific entry.

Q6: What is a public authority function?

Answer:
Functions performed under constitutional or statutory authority such as issuing certificates, law enforcement, welfare distribution.

Q7: Is renting property by government considered business?

Answer:
Yes, commercial activities like renting may still qualify as business.

Q8: Does GST apply on municipal services?

Answer:
Depends on nature of service. Sovereign functions are generally outside business definition under this clarification.

Q9: When did this notification come into effect?

Answer:
From 27 July 2018.

Q10: Does this impact reverse charge mechanism?

Answer:
Indirectly, as classification affects tax liability determination.

Q11: Should contractors charge GST on government contracts?

Answer:
Depends on whether the service relates to sovereign function or commercial activity.

Q12: Do such services need to be reported in GST returns?

Answer:
If taxable, yes. Proper reporting is required.
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Q13: Can input tax credit be claimed?

Answer:
If supply is taxable and conditions satisfied, ITC may be claimed.

Q14: Does this notification override the CGST Act?

Answer:
No. It clarifies interpretation within existing legal framework.

Q15: Where can businesses get expert GST advice?

Answer:
Consult professionals at
👉 Finodha GST Compliance Services.

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