Notification No. 23/2018 – Central Tax (Rate) Explained

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Notification No. 23/2018 - Central Tax (Rate): Seeks to insert explanation in an entry in notification No. 12/2017-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.12/2017- Central Tax (Rate), dated the 28^th June, 2017, published in the Gazette of India,

Extraordinary, Part II, Section 3, Sub- Section (i), vide number G.S.R. 691(E), dated the 28^th June, 2017, hereby inserts the following Explanation in the said notification, in the Table, against serial number 41, in column (3), namely:-

“Explanation.- For the purpose of this exemption, the Central Government, State Government or Union territory shall have 50 per cent. or more ownership in the entity directly or through an entity which is wholly owned by the Central Government, State Government or Union territory.”.

(Mohit Tewari)
Under Secretary to the
Government of India

Note: - The principal notification No. 12/2017 – Central Tax(Rate), dated the 28^th June, 2017 was published in the Gazette of India, Extraordinary, vide number G.S.R. 691 (E), dated the 28^th June, 2017 and was last amended by notification No. 14/2018- Central Tax (Rate), dated the 26^th July, 2018 vide number G.S.R. 678(E), dated the 26^th July, 2018.

📚 Frequently Asked Questions (FAQs): Notification No. 23/2018 – Central Tax (Rate)

Q1: What is Notification No. 23/2018 – Central Tax (Rate)?

Answer:
It is a GST notification issued on 20 September 2018 to clarify the definition of a government entity for exemption purposes under Notification 12/2017.

Q2: Which entry was clarified under this notification?

Answer:
Serial No. 41 of Notification 12/2017 – Central Tax (Rate).

Q3: What ownership percentage is required for exemption?

Answer:
At least 50% ownership by the Central Government, State Government, or Union Territory.

Q4: Does indirect ownership count?

Answer:
Yes. If the government owns 100% of a parent entity which owns over 50% in another entity, the exemption applies.

Q5: Under which section was this notification issued?

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

Q6: What is the purpose of this notification?

Answer:
To clarify the scope and applicability of exemption for services provided to government entities.

Q7: Does a company with 49% government ownership qualify?

Answer:
No. Ownership must be 50% or more.

Q8: Does this apply to government companies only?

Answer:
It applies to any entity where government ownership meets the 50% threshold, including corporations and authorities.

Q9: Is this notification applicable to goods or services?

Answer:
It relates to service exemptions under Notification 12/2017.

Q10: Do suppliers need to verify ownership before claiming exemption?

Answer:
Yes. Suppliers must confirm government ownership percentage before treating supplies as exempt.

Q11: What happens if exemption is wrongly claimed?

Answer:
The supplier may face:
GST demand
Interest
Penalties

Q12: Should exempt supplies be shown in GST returns?

Answer:
Yes. Exempt supplies must be reported in GST returns.
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Finodha GST Return Filing.

Q13: Do contractors to government entities need GST registration?

Answer:
Yes, if turnover exceeds threshold or registration is otherwise required.
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Finodha GST Registration.

Q14: Can input tax credit be claimed on exempt supplies?

Answer:
No. ITC is not available for inputs used in exempt supplies.

Q15: Where can I get professional help for GST exemption matters?

Answer:
You can consult experts at
👉 Finodha GST Compliance Services.

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