GST Council Meetings Update

1. The key decisions taken by the GST Council in its 28th meeting held on 26th July, 2018 are as under:

  • Vide Notification No. 14/2018-Integrated Tax (Rate) dated 26thJuly2018, hotel industry has been given a major relief by providing that the rate of tax on accommodation service shall be based on transaction value instead of declared tariff.
  • Vide Notification No. 14/2018- Integrated Tax (Rate) dated 26thJuly 2018, entry relating to composite supply of food and drinks in restaurant, mess, canteen, eating joints and such supplies to institutions (educational, office, factory, hospital) on contractual basis has been Rationalize and taxable at the rate of 5%. Further, it has been clarified that scope of outdoor catering defined under entry 7(v) is restricted to supplies in case of outdoor/indoor functions that are event based and occasional in nature.
  • Vide Notification No. 15/2018- Integrated Tax (Rate) dated 26th July, 2018, Services provided by an unincorporated body or a non-profit entity registered under any law for the time being in force, engaged in promotion of trade, commerce, industry, agriculture, art, science, literature, culture, sports, education, social welfare, charitable activities and protection of environment, to its own members against consideration in the form of membership fee up to an amount of one thousand rupees (Rs 1000/-) per member per year shall be liable to GST at NIL rate of Tax.
  • In order to reduce compliance cost, it has been decided that Registered persons would not be liable to pay GST under Reverse charge basis, on purchases/inward supplies received from an unregistered supplier. Reverse charge mechanism on account of supplies received from Unregistered suppliers would be suspended till 30.09.2019.(Vide Notification No. 22/2018- Central Tax (Rate) dated 26thJuly, 2018, Suspension/Deferment of Reverse Charge Mechanism (on account of procurements from Un-registered suppliers) has been extended from 30th September, 2018 to 30th September, 2019)

    Amendments in Goods & Services Tax Rates:

    Tax rate change in case of number of goods and services have been proposed by the GST Council, some relevant of which are encapsulated as under: 

    Services: The GST Council has made numerous decisions relating to changes in GST rates and clarification on levy of GST on services.

     Some of the important recommendations relating to Changes in GST rates and Newly Inserted are as follows:

Services Old Rage New Rate Condition

(i) Supply, by way of or as part of any service, of goods, being food or any other article for human consumption or any drink, provided by a restaurant, eating joint including mess, canteen, whether for consumption on or away from the premises where such food or any other article for human consumption or drink is supplied, other than those located in the premises of hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes having declared tariff of any unit of accommodation of seven thousand five hundred rupees and above per unit per day or equivalent.  

Explanation 1.- This item includes such supply at a canteen, mess, cafeteria or dining space of an institution such as a school, college, hospital, industrial unit, office, by such institution or by any other person based on a contractual arrangement with such institution for such supply, provided that such supply is not event based or occasional.

Explanation 2.- “Declared tariff” includes charges for all amenities provided in the unit of accommodation (given on rent for stay) like furniture, air conditioner, refrigerators or any other amenities, but without excluding any discount offered on the published charges for such unit. 

        18 5 Provided that credit of input tax charged on goods and services used in supplying the service has not been taken 
(ia) Supply, of goods, being food or any other article for human consumption or any drink, by the Indian Railways or Indian Railways Catering and Tourism Corporation Ltd. or their licensees, whether in trains or at platforms.           18  5  

Other points of Consideration

  • Exemption of GST on import of services by Foreign Diplomatic Missions/ UN & other International Organisations based on reciprocity;
  • The words “declared tariff” wherever they occur, the words “value of supply” shall be substituted;
  • Services provided by Individual Direct Selling Agent (DSAs), other than by a company, partnership firm or LLP, to a Banking Company or NBFC located in Taxable Territory is to be covered under Reverse Charge Mechanism (RCM) and Banking Company/NBCC shall be liable to discharge GST on reverse Charge Basis;
  • Services provided by a Municipality under Article 243W not to be treated as Goods or Services under GST Laws;

New Simplified Return Format

  • CBIC released a Draft format of Monthly and Quarterly Simplified GST returns.This brief note lists the salient features of the new GST return format and business process for the information of trade and industry and other stakeholders.

Government also offer to General public to leave comment or give suggestions on such new format of return.

The above stated amendments have been made effective from July27, 2018 vide various Notifications issued by the Government.

2. The key decisions taken by the GST Council in its 27th meeting held on 08th May,2018 are as under:

GST Return Simplification:

  • GSTR 1 and GTR 3B will continue and GSTR-2 and GSTR-3 to remain suspended till September, 2018.
  • The B2B dealers will have to fill invoice wise details of the outward supply made by them, based on which the system will automatically calculate his tax liability. The input tax credit will be calculated automatically by the system based on invoices uploaded by his sellers.
  • New Single-return plan will go live after 6 months. Thus, there will be only 12 returns a year, instead of 36 returns.
  • Single return on quarterly basis for Composition dealers and dealers with ‘NIL’ transaction.

Reversal of Input Tax Credit:

  • No automatic reversal of ITC for Buyer on non-payment of tax by Seller, i.e. recovery shall be made from the defaulter/ seller, till 30 Sept. 2018. From 1 Oct. 2018, this provisional system of allowing Input Tax Credit to Buyer will not be applicable and the ITC will be based on system calculation, i.e. based on sale transactions and tax details reported by the suppliers.

Incentive to promote Digital Transactions:

  • Keeping in view the need to move towards a less cash economy, the Council has discussed in detail the proposal of a concession of 2% in GST rate [where the GST rate is 3% or more, 1% each from applicable CGST and SGST rates] on B2C supplies, for which payment is made through cheque or digital mode, subject to a ceiling of Rs. 100 per transaction, so as to incentivize promotion of digital payment.
  • The council has recommended for setting up of a Group of Ministers from State Governments to look into the proposal and make recommendations, before the next Council meeting, keeping in mind the views expressed in GST Council Incentives on digital payments.

3. The key decisions taken by the GST Council in its 26th meeting held on 10th March, 2018 are as under:

Relief provided to Exporters:

  • Exporters presently availing various export promotion schemes shall continue to avail such exemptions on their imports up to 01.10.2018, since implementation of the e-Wallet scheme has been deferred by up to 6 months, i.e. up to 01.10.2018. Please note that in 22nd GST Council Meeting, an "e-Wallet" facility was proposed to be brought into effect from 01.04.2018, as a permanent solution to the problem of working capital blockage. The said e-wallet would be credited with a notional amount in the form of an advance refund which would be used to pay GST.
  • Further, the GST Council reviewed the progress in the grant of refunds to exporters and directed GSTN to further expedite the process for their immediate sanction and disbursal.

   Deferment of Reverse Charge Mechanism (on account of procurements from Un-registered suppliers):

  • Reverse charge mechanism on account of supplies received from Unregistered suppliers has been decided to be suspended for another 3 months i.e. upto 30.06.2018. Accordingly, registered persons would not be liable to pay GST under Reverse charge basis, on purchases/inward supplies received from an unregistered supplier upto 30.06.2018.

No consensus on GST return simplification process:

  • The GST council discussed the new model for GST return filing system. A new model was discussed extensively and Group of Ministers on IT has been tasked to finalize the same. However, till the said model gets finalized, the existing system of filing of GST returns in Form GSTR-3B and GSTR-1 is decided to be continued for a further period of 3 months, i.e. up to June 2018

TDS/TCS provisions postponed up to 30th June 2018:

  • Operationalization of TDS and TCS provisions under Sections 51 and 52 respectively of the CGST Act, 2017 have been decided to be postponed until 30.06.2018.

E-way bill system to come into force w.e.f. 1st April 2018:

The GST Council has decided to implement the E-way bill mechanism for inter-state movement of goods from 01.04.2018. It was also decided that generation of e-way bills for movement of goods within a state will be adopted in a phased manner, starting with a few states initially, w.e.f a date to be announced in future but not later than 01.06.2018

4. The key decisions taken by the GST Council in its 25th meeting held on 18th January 2018 are as under:

  • Changes in Late Fee amount payable under GST law 

    • Late fee payable by any taxpayer for failure to furnish return in FORM GSTR-1 (outward supply details), FORM GSTR-5 (non-resident taxable person) or FORM GSTR 5A (OIDAR)  has been reduced to INR 50/- per day (INR 25 per day each under CGST & SGST Act). However, for the taxpayer having ‘NIL’ tax liability for the particular month, late fee charges shall be INR 20/- per day (INR 10 per day each under CGST & SGST Act).
    • Similarly, late fee payable in case of failure to furnish the return in FORM GSTR-6 (Input Service Distributor) has also been reduced to INR 50/- per day (INR 25 per day each under CGST & SGST Act).
  • Amendments in Goods & Services Tax Rates:

Tax rate change in case of number of goods and services have been proposed by the GST Council, some relevant of which are encapsulated as under:

Goods: GST Council in its meeting has revised GST rate on around 29 goods. Further, the Council has increased GST rates on a few goods as well. The council has also recommended the reduction in Compensation Cess on certain goods.

Some of the items along with amended GST rates are as under:

 Product list Chapter/Heading/Sub-heading/Tariff Item Old Rate of GST  Amended  Rate       of GST 
Old and used motor vehicles [medium and large cars and SUVs] on the margin of the supplier, subject to the condition that no input tax credit of central excise duty/value-added tax or GST paid on such vehicles has been availed by him

87

28%  18%
Buses, for use in public transport, which exclusively run on biofuels.

8702

28%  18%
All types of old and used motors vehicles [other than medium and large cars and SUVs] on the margin of the supplier of subject to the conditions that no input tax credit of central excise duty /value-added tax or GST paid on such vehicles has been availed by him.

87

28%  12%
Drinking water packed in 20 litters bottles

2201

18% 12%

- Tamarind Kernel Powder

- Mehendi paste in cones

- LPG supplied for supply to household domestic consumers by private LPG distributors

13

1404/3305

2711

18% 5%
Velvet Fabric ( Provided no Input Tax Credit)

5801 37 20

12% 5%
Diamonds and precious stones

7102

3% 0.25%
Cigarette filter rods

5601 22 00

12% 18%

Services: The GST Council has made numerous decisions relating to exemptions/changes in GST rates / ITC eligibility criteria, rationalization of rates/exemptions and clarification on levy of GST on services.

Some of the important recommendations relating to GST exemptions/ Changes in GST rates are as follows:

  • Exemption from levy of GST on service of transportation of goods from India to a place outside India, by air or sea, till 30-9-2018.
  • Exemption from levy of GST on legal services provided to Government, Local Authority, Governmental Authority and Government Entity.
  • Exemption from GST on the supply of services by way of providing information under the RTI Act, 2005.
  • In case of housekeeping services rendered by small housekeeping service providers who provide housekeeping service through E-commerce operators, GST at the rate of 5% without ITC is applicable. In this regard, it is pertinent to note that the definition/meaning of Small housekeeping service providers are yet to be notified. 
  • Threshold limit for exemption from levy of GST for all the theatrical performances like Music, Dance, Drama, Orchestra, Folk or Classical Arts and all other such activities in any Indian language in theatre has been increased from Rs.250 to Rs. 500 per person and extension of the threshold exemption to services by way of admission to a planetarium has also been recommended at the meeting.
  • The council proposed to exempt GST on pure services (excluding works contract service or other composite supplies involving supply of any goods) provided to GovernmentEntityFurther, 

definition of pure services has been proposed to be amended so as to include composite supply involving predominantly supply of services i.e. upto 25% of supply of goods.

  • In case of tour operator services, the council decided to allow ITC  of input services in the same line of business at the GST rate of 5%.

GST rates on various services have been amended. Some of such services along with amended GST rates are as under:

Services Old Rate  New Rate Condition
Construction, erection, commissioning or installation of original works pertaining to metro and monorail projects 18% 12% NA
Tailoring services 18% 5% NA
Services by way of admission to theme parks, water parks, joy rides, merry-go-rounds, go-carting and ballet 28% 18% NA

Works Contract Services (WCS) provided by sub-contractor to the main contractor providing WCS to Central Government, State Government, Union territory, a local authority, a Governmental Authority or a Government Entity, which attract GST of 12%

Similarly, in case of WCS attracting 5%GST, their sub-contractor would also be liable to pay 5%
18% 12%/5% NA
Transportation of petroleum crude and petroleum products Transportation of petroleum crude and petroleum products 5%/12%

Without ITC/

With ITC
GST rate of Job work Service for manufacture of leather goods (Chapter 42) and footwear (Chapter 64)  18% 5% NA

Other points of Consideration

  • Council has clarified that elephant/ camel joy rides shall not be classified as transportation services and shall attract GST @ 18% with threshold exemption to small Services providers.
  • Relaxations in respect of Cancellation of Registration
  • Cancellation of registration by voluntary registrants can be applied before the expiry of one year from effective date of registration.
  • Cancellation of registration for migrated taxpayers in Form REG-29 has been extended by further three months till 31st March 2018.