Notification No. 18/2018 – Integrated Tax (Rate) Explained

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Notification No. 18/2018 - Integrated Tax (Rate): Seeks to insert explanation in an item in notification No. 8/2017-Integrated Tax (Rate) by exercising powers conferred under section 6(3) of IGST 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 6 of the Integrated Goods and Services Tax Act, 2017 (13 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.8/2017- Integrated 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. 683(E), dated the 28^thJune, 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. 8/2017 - Integrated Tax(Rate), dated the 28^th June, 2017 was published in the Gazette of India, Extraordinary, vide number G.S.R. 683 (E), dated the 28^th June, 2017 and was last amended by notification No. 1/2018-Integrated Tax (Rate), dated the 25^th January, 2018 vide number G.S.R. 69(E), dated the 25^th January, 2018.

📚 Frequently Asked Questions (FAQs): Notification No. 18/2018 – Integrated Tax (Rate)

Q1: What is Notification No. 18/2018 – Integrated Tax (Rate)?

Answer:
It inserts an explanation in Notification 8/2017 clarifying that sovereign functions of Government are not treated as “business” for that item. 18

Q2: Under which section was this issued?

Answer:
Under Section 6(3) of the IGST Act, 2017. 18

Q3: From when is this applicable?

Answer:
Effective from 27 July 2018. 18

Q4: Does this change any IGST rate?

Answer:
No. It is only a clarification.

Q5: What does “business” exclude now?

Answer:
Activities undertaken by Central Government, State Government or local authority as public authorities. 18

Q6: Does this mean all Government services are exempt?

Answer:
No. Only those activities done as public authorities under the specified item.

Q7: What about Government renting commercial property?

Answer:
That may still qualify as business activity and attract GST.

Q8: Does this affect reverse charge mechanism?

Answer:
Yes. It clarifies when RCM should not apply.

Q9: Is this applicable to private contractors?

Answer:
It applies to supplies involving Government under that notification.

Q10: What if I already paid RCM wrongly?

Answer:
You may evaluate refund or adjustment options under GST law.

Q11: How to check whether activity is sovereign function?

Answer:
Check relevant statute and nature of activity (tax collection, regulatory function, etc.).

Q12: Does Section 2(17) definition still apply?

Answer:
Yes, but this notification carves out a specific clarification for this item.

Q13: Should this be reported in GST returns?

Answer:
Yes, correct classification affects RCM reporting in GSTR-3B.

Q14: Does it impact GST registration?

Answer:
Indirectly, if Government entity crosses threshold for taxable supplies.
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