Simplified Explanation of Notification No. 11/2022-Central Tax (Rate)

Rescission of GST Exemption for Certain Institutions

Overview:

Notification No. 11/2022-Central Tax (Rate) rescinds an earlier notification that provided GST exemptions on certain supplies to specified institutions. This change will affect the tax treatment of these supplies going forward.

Key Details:

1. Rescission Overview:
   • Previous Notification: Notification No. 45/2017-Central Tax (Rate), dated November 14, 2017, granted GST exemptions on supplies of goods to certain institutions.
   • Action Taken: Notification No. 11/2022 rescinds (or cancels) this earlier notification.
   • Effective Date: July 18, 2022.
2. Implications of the Rescission:
   • Before Rescission: Certain supplies of goods to specified institutions were exempt from GST under Notification No. 45/2017.
   • After Rescission: This exemption no longer applies. Businesses supplying goods to these institutions will now need to charge GST on such supplies.

Example:

• Before Rescission:

• • A supplier of medical equipment to a government hospital enjoyed GST exemption based on Notification No. 45/2017. This means the supplier did not need to charge GST on these supplies.

• After Rescission (Effective July 18, 2022):

• • Following the rescission, the supplier will now be required to charge GST on medical equipment supplied to the government hospital. The GST must be collected and paid to the government, as the previous exemption is no longer in effect.

Purpose:

• Regulatory Update: The rescission reflects a policy change where the government has decided to remove the GST exemption for supplies to certain institutions.
• Uniform Tax Treatment: This ensures that supplies of goods to these institutions are treated in the same manner as supplies to other entities under GST law.