The 37th Good and Service Tax (GST) Council Meeting under the Chairmanship of Union Finance & Corporate Affairs Minister Smt Nirmala Sitharaman was held in Panaji, Goa on September 20, 2019. It was attended by Union Minister of State for Finance & Corporate Affairs Shri Anurag Thakur, Chief Minister of Goa Shri Pramod Sawant, Finance Ministers of States & Union territories (UTs) and senior officers of the Ministry of Finance.
Decisions in respect to rates related to goods
The council took the various decisions in respect to rates related to goods which will be effective from October 1, 2019.
Reduction in GST rates
|Goods||Original Rate||Reduced rate (new)|
|Parts of Slide Fasteners||18%||12%|
|Marine Fuel 0.5% (FO)||18%||5%|
|Wet Grinders(consisting of stone as a grinder)||12%||5%|
|Dried tamarind & Plates and cups made up of leaves/ flowers/bark||5%||Nil|
|Cut and polished semi- precious stones||3%||0.25%|
|Specified goods for petroleum operations undertaken under Hydrocarbon Exploration Licensing Policy (HELP)||5%|
Exemptions from GST/ IGST
The following was exempted from GST/ Integrated Goods and Services Tax (IGST):
- Imports of specified defence goods not being manufactured indigenously (upto 2024).
- Supply of goods and services to FIFA (International Federation of Association Football ) and other specified persons for organizing the Under-17 Women’s Football World Cup 2020 in India.
- Supply of goods and services to Food and Agriculture Organisation (FAO) for specified projects in India.
Increase in GST rates
|Goods||Original Rate||Increased rate (new)|
|Goods falling under chapter 86 of tariff like railway wagons, coaches, rolling stock (without refund of accumulated ITC-Indian Tariff Code)||5%||12%|
|Caffeinated Beverages||18%||28% + 12% compensation cess|
Measures for Export Promotion
Exemption was given from GST/IGST:
i. At the time of import on Silver/Platinum by specified nominated agencies.
ii. Supply of Silver/Platinum by specified nominated agency to exporters for exports of Jewellery.
iii. Inclusion of Diamond India Limited (DIL) in the list of nominated agencies eligible for IGST exemption on imports of Gold/ Silver/Platinum so as to supply at Nil GST to Jewellery exporters.
iv. A uniform GST rate of 12% on Polypropylene/Polyethylene Woven and Non- Woven Bags and sacks, whether or not laminated, of a kind used for packing of goods (from present rates of 5%/12%/18%).
GST concession in certain cases for specific period
- Exemption to Fishmeal for the period 01.07.17 to 30.09.19. Any tax collected for this period shall be required to be deposited.
- 12% GST during the period 1.07.2017 to 31.12.2018, on pulley, wheels and other parts (falling under Heading 8483) and used as parts of agricultural machinery.
- Passenger vehicles of engine capacity 1500 cc in case of diesel, 1200 cc in case of petrol & length not exceeding 4000mm designed for carrying upto 9 persons attract compensation cess of 1% for petrol and 3% for diesel vehicle.
- Council recommended same compensation cess rate for vehicles having these specifications (length and engine capacity) but designed for carrying more than 10 persons but upto 13 persons. (Presently these vehicles attract compensation cess at the rate of 15%).
- It recommended lower 12% cess on 1,500 cc diesel, 1,200 cc petrol vehicles with capacity to carry up to 13 people.
Other miscellaneous changes
- Aerated drink manufacturers shall be excluded from composition scheme.
- Option to pay GST at the rate of 18% on transaction value at the time of disposal of specified goods for petroleum operations (on which concessional GST rate of 5% was paid at the time of original supply) provided that the goods are to be certified by Director General Hydrocarbon (DGH) as non-serviceable.
- Restriction on refund of compensation cess on tobacco products.
- It Prescribed modalities for allowing concessions on spare parts imported temporarily by foreign airlines for repair of their aircraft, while in India in transit in terms of the Chicago Convention on Civil Aviation.
- Certain other changes of technical nature for the sake of clarity in application of notification were made.
Clarifications as regards applicability of GST rate in respect of certain goods recommended by GST Council which inter-alia includes
- Mere heating of leguminous vegetables (gram/lentil) for removing moisture, or to soften and puff it or removing the skin, and not subjecting to any other processing or addition of any other ingredients (salt, oil etc.) would be classified under HS code 0713.
- All “mechanical sprayers” falling under HS Code 8424 would attract 12% GST.
- Parts like Solar Evacuation tubes for solar power based devices like solar water heater, solar steam generation systems, would be eligible to 5% GST rate.
- Exclusive parts and accessories suitable for use solely or principally with a medical device (falling under heading 9018, 9019, 9021 or 9022) would fall in respective headings and attract GST at the concessional rate of 12%.
- Almond milk is classifiable under HS code 22029990 and attracts GST rate of 18%.
- Imported stores for Navy would be entitled to exemption from IGST.
Decisions in respect to rates related to services
The council took the various decisions in respect to rates related to services which will be effective from October 1, 2019.
Rate reduction sector wise:
Hospitality and tourism:
i. Reduced rate of GST on hotel accommodation service is as follows:
|Transaction Value per Unit (Rs) per day||GST|
|Rs 1000 and less||Nil|
|Rs 1001 to Rs 7500||12%|
|Rs 7501 and more||18% (28% till now)|
ii. The GST rate on outdoor catering services other than in premises having daily tariff of unit of accommodation of Rs 7501 was reduced from present 18% with ITC to 5% without ITC. It is made mandatory for all kinds of catering.
iii. Catering in premises with daily tariff of unit of accommodation is Rs 7501 and above will remain at 18% with ITC.
Job work service
- On supply of job work services in relation to diamonds, GST rate was reduced from 5% to 1.5%
- On supply of machine job work such as in engineering industry, GST rate was reduced from 18% to 12%, except supply of job work in relation to bus body building which would remain at 18%.
Sector wise exemption
Exemption was given to prospectively services by way of storage or warehousing of cereals, pulses, fruits, nuts and vegetables, spices, copra, sugarcane, jaggery, raw vegetable fibres such as cotton, flax, jute etc., indigo, unmanufactured tobacco, betel leaves, tendu leaves, rice, coffee and tea.
The validity of conditional exemption of GST on export freight by air or sea was increased by another year, i.e. till 30.09.2020.
- Exemption was given to Bangla Shashya Bima Yojana (BSB) crop insurance scheme of West Bengal Government.
- Exemption of the services of life insurance business provided or agreed to be provided by the Central Armed Paramilitary Forces (under Ministry of Home Affairs) Group Insurance Funds to their members under the respective Group Insurance Schemes of these Central Armed Paramilitary forces.
- Exemption of the services provided by an intermediary to a supplier of goods or recipient of goods when both the supplier and recipient are located outside the taxable territory.
- Notification will be issued under Section 13(13) of IGST Act notifying the place of supply of specified R&D (research & development) services provided by Indian pharma companies to foreign service recipients, as the place of effective use and enjoyment of a service i.e. location of the service recipient.
- It clarified that the place of supply of chip design software R&D services provided by Indian companies to foreign clients by using sample test kits in India is the location of the service recipient and section 13(3)(a) of IGST Act, 2017 is not applicable for determining the place of supply in such cases.
- Registered authors were given an option to pay GST on royalty charged from publishers under forward charge and they need to observe regular GST compliance.
- Indication should be made on grant of liquor licence by State Governments against payment of license fees as a “no supply” to remove implementational ambiguity on the subject.
- Exemption of services related to FIFA Under-17 Women’s World Cup 2020 similar to existing exemption given to FIFA U17 World Cup 2017.
Rationalization/ Trade Facilitation measures
- Allowance to the payment of GST on securities lending service under reverse charge mechanism (RCM) at the merit rate of 18% and GST on securities lending service for period prior to RCM period shall be paid on forward charge basis. IGST shall be payable on supply of these services and in cases where Central GST (CGST)/ State GST (SGST)/ Union Territory GST (UTGST) have been paid, such taxpayers will not be required to pay tax again.
- Allow RCM to suppliers paying GST at 5% on renting of vehicles, from registered person other than body corporate (LLP, proprietorship) when services are provided to body corporate entities.
Recommendations related to laws & procedures
The council recommended the following Law & Procedure related changes :
i. Relaxation was given for filing the annual returns for Micro, Small & Medium Enterprises (MSMEs) for FY 2017-18 and FY 2018-19 as under:
- Waiver of the requirement of filing FORM GSTR-9A for Composition Taxpayers for the said tax periods;
- Filing of FORM GSTR-9 for those taxpayers who have aggregate turnover up to Rs. 2 crores was made optional for the said tax periods.
ii. A Committee of Officers will be formed to examine the simplification of Forms for Annual Return and reconciliation statement.
iii. Extension of last date for filing of appeals against the orders of Appellate Authority before the GST Appellate Tribunal as the Appellate Tribunals are yet not functional.
iv. In order to nudge taxpayers to timely file their statement of outward supplies, imposition of restrictions on availment of input tax credit by the recipients in cases where details of outward supplies are not furnished by the suppliers in the statement under section 37 of the CGST Act, 2017.
v. New return system will be introduced from April, 2020 (earlier proposed from October, 2019), in order to give ample opportunity to taxpayers and the system to adapt and accordingly specifying the due date for furnishing of return in FORM GSTR-3B and details of outward supplies in FORM GSTR-1 for the period October, 2019 – March, 2020.
vi. Issuance of circulars for uniformity in application of law across all jurisdictions:
- procedure to claim refund in FORM GST RFD-01A subsequent to favourable order in appeal or any other forum;
- eligibility to file a refund application in FORM GST RFD-01A for a period and category under which a NIL refund application has already been filed;
- clarification regarding supply of Information Technology enabled Services (ITeS services) (in supersession of Circular No. 107/26/2019-GST dated 18.07.2019) being made on own account or as intermediary.
vii. Rescinding of Circular No.105/24/2019-GST dated 28.06.2019, from the beginning,which was issued in respect of post-sales discount.
viii. Suitable amendments in CGST Act, UTGST Act, and the corresponding SGST Acts in view of creation of Union territories of Jammu & Kashmir and Ladakh.
ix. Integrated refund system with disbursal by single authority to be introduced from 24th September, 2019.
x. In principle decision to link Aadhaar with registration of taxpayers under GST and examine the possibility of making Aadhar mandatory for claiming refunds.
xi. In principle decision to prescribe reasonable restrictions on passing of credit by risky taxpayers including risky new taxpayers.
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