CBIC Notifies GST Exemption for R&D Services Supplied by Government Entities and Educational Institutions w.e.f. 10th Oct 2024 [Read Notification]

The Central Board of Indirect Taxes and Customs ( CBIC ), vide notification no. 08/2024-Central Tax (Rate) has notified theGoods and Services Tax ( GST ) exemption for the Research and Development services supplied by the Government entities and the educational institutions. The notification shall come into force on 10th October 2024.

In its 54th meeting on September 09, 2024, the GST Council has recommended GST exemption for R&D to promote research and development activities in India.

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The Council proposed exempting the supply of research and development services provided by government entities, research associations, universities, colleges, or other institutions, particularly those notified under clauses (ii) or (iii) of sub-section (1) of section 35 of the Income Tax Act, 1961.

The recommendation specifically targeted R&D services funded by government or private grants, helping to reduce the financial burden on these vital institutions and incentivize further research.

Acting on this recommendation, the Central Board of Indirect Taxes and Customs ( CBIC ) issued Notification No. 08/2024-Central Tax (Rate) on October 08, 2024. This notification officially exempts the supply of R&D services, provided these services are funded through grants, from GST.

Complete Supreme Court Judgment on GST from 2017 to 2024 with Free E-Book Access, Click here

The exemption covers a wide range of research entities, including government organizations, research associations, and academic institutions like universities and colleges. To qualify for the exemption, the service provider must be notified under clauses (ii) or (iii) of section 35(1) of the Income Tax Act, 1961 at the time of the service provision.

According to the notification:

 “(B) after serial number 44 and the entries relating thereto, the following serial numbers and entries relating thereto in columns (2), (3), (4) and (5) shall be inserted, namely: -

(1)	(2)	(3)	(4)	(5)
“44A	Heading 9981	Research and development services against consideration received in the form of grants supplied by – (a) a Government Entity; or (b) a research association, university, college or other institution, notified under clauses (ii) or (iii) of sub-section (1) of section 35 of the Income Tax Act, 1961.	Nil	Provided that the research association, university, college or other institution, notified under clauses (ii) or (iii) of subsection (1) of section 35 of the Income Tax Act, 1961 is notified at the time of supply of the research and development service.”

The Head 9981 deals with the Research and development services.

To Read the full text of the Notification CLICK HERE

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