Private starts-ups and other MSMEs are receiving notices to pay 18 per cent taxes under the CGST Act on funding received from the Ministry of Defence for research and development (R&D). Government officials say this amounts to “taxing innovation” as it disincentivises Prime Minister Narendra Modi’s focus on ‘aatmanirbharta’ in the military sector.
The GST Council’s decision to exempt research and development (R&D) grants to educational institutions from GST is a transformative move for India’s higher education. It reduces financial burdens while fostering public-private partnerships, boosting innovation, and enhancing the scope for global competitiveness. All these will go a long way in strengthening India’s research ecosystem and supporting the ‘Atmanirbhar Bharat’ vision.
The AAR, Gujarat, in M/s. Hilti Manufacturing India Pvt. Ltd. held that, services provided by the assessee to the entities located outside India is covered under section 13(2) of the IGST Act. Accordingly, such services would qualify to be treated as export of service.
