Serving food in educational institutions, including mid-day meals, irrespective of the funding of such meals by corporate or government, has been exempted from goods and services tax, the Central Board of Indirect Taxes and Customs (CBIC) said.
The exemption covers mid-day meals provided in schools, pre-schools and Anganwadis.
“This will help reduce the cost on account of GST, for the educational institutions involved in providing such meals thereby saving on the corpus of such institutes,” said Abhishek Jain, tax partner at EY.
The clarification is part of series of circulars issued following decisions taken by the GST Council, the Board has also clarified that loans taken by the government from banks or financial institutions to be given to public sector units will be GST exempt.
The Board also clarified that any consideration received for the construction of roads, bridges or highways is not exempt from GST. Exemption has been provided only to provision of access to the said roads, highways, etc irrespective that the consideration for the same has been received as tolls or annuity payments.
Experts added that the government can consider issuing a further detailed clarification on the subject matter and perhaps the contractors can clearly outline what quantum of consideration pertains to construction and what pertains to access of road or highways in their agreements.
Among other clarifications, the Board said that laterals or parts to be used solely or principally with sprinklers or drip irrigation system, would attract a GST of 12%, even if supplied separately.
The Board added that services supplied to a government entity by way of construction such as of a ropeway will attract GST at the rate of 18%, instead of a concessional rate of 12%.
GST is also exempt on fee charged on services – conducting examinations, admissions and input services related to testing such as admit cards, online testing – provided by central or state boards including the National Board of Education. Other services such as providing accreditation to an institution will be charged at 18% GST.
The composite supply of service by way of milling of wheat into wheat flour, alongwith fortification, by any person to a state government for distribution of such wheat flour under the Public Distribution System is eligible for exemption, provided that value of goods supplied in such composite supply does not exceed 25% of the value of composite supply. In case the value surpasses 25%, then GST rate of 5% will apply, the Board said.
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