37TH GST council meeting analysis
37TH GST COUNCIL MEETING RECOMMENDATIONS:
The 37th GST council meeting which was held on 20.09.2019 made the following recommendations:
LAW & PROCEDURE RECOMMENDATIONS Annual Return related recommendations (FY 2017-18 to FY 2018-19)
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➢ Filing of Annual Return (GSTR 9) for taxpayers having aggregate turnover up to Rs. 2 crores made optional for the periods 2017-18 and 2018-19 ➢ Filing of Annual Return (GSTR-9A) waived off for Composition dealers for 2017-18 and |
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2018-19 ➢ A lot of taxpayers are still facing hardships while filing Annual Return GSTR-9 and Reconciliation Statement GSTR-9C. A Committee of Officers shall now be constituted to examine the simplification of Forms for Annual Return and reconciliation statement. |
Appeal related recommendations
➢ Currently, an appeal before the GST Appellate Tribunal is to be made within 3 months from the date of communication of order against which appeal is to be made. However, as the Appellate tribunal is yet to be formed the time limit for filing appeal shall also be extended.
Return related recommendations
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➢ In order to ensure timely filing of details of Outward Supplies by the supplier, the government shall imposition restrictions on availment of input tax credit by the recipients when the supplier has not furnished Form GSTR 1. Thus, the recipient would now have to more attention to the credibility of its suppliers under GST to avoid loss |
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of input tax credits. ➢ The new return system which was proposed to be implemented from October’19 onwards shall now be delayed to April’2020. Until then GSTR-1 and GSTR-3B shall continue. |
Refund related recommendations
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an integrated system which is proposed to be implemented from 24th September 2019. ➢ Having Aadhaar number mandatory for claiming of refund has been considered as a possibility. |
IT enabled and intermediary services
Post sales discount
Article 370 related recommendations
Registration related recommendations
➢ Circular No. 107/26/2019-GST dated 18.07.2019 was issued to provide clarity in regard to supply of Information Technology enabled Services (ITeS services) and intermediary services. A fresh circular shall now be issued superseding the said circular.
➢ Rescinding of Circular No.105/24/2019-GST dated 28.06.2019, ab-initio, which was issued in respect of post-sales discount.
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➢ With the removal of Article 370, Ladakh and Jammu and Kashmir are now Union territories. Suitable amendments in CGST Act, UTGST Act shall be made considering |
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the same. |
➢ It has been decided to make Aadhar card linking with GST registration mandatory in the future.
Input Tax Credit related recommendations
➢ Taxpayers having risky profiles including new risky taxpayers shall be able to pass on credits after reasonable restrictions. This has been proposed in order to tackle fake invoicing and fraudulent refunds.
RECOMMENDATION ON GST RATE CHANGE ON SERVICES
It is proposed to issue notifications giving effect to the following recommendations of the Council from 1st October, 2019:
Reduction in GST Rates
➢ Hotel Accommod
➢ Outdoor catering :
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o To reduce rate of GST on catering services having daily tariff of unit of accommodation of less than or equal to Rs. 7500 from present 18% with ITC to 5% without ITC. o CateringinpremiseswithdailytariffofunitofaccommodationforRs7501and |
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above shall remain at 18% with ITC. |
➢ Job work service:
(i) To reduce rate of GST from 5% to 1.5% on supply of job work services in relation to diamonds.
(ii) To reduce rate of GST from 18% to 12% on supply of machine job work such as in engineering industry, except supply of job work in relation to bus body building which would remain at 18%.
Exemption sector wise:
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➢ Warehousing: To exempt 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. |
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➢ Transportation by Air or vessel: Exemption on services by way of transportation of goods by a vessel / aircraft from customs station of clearance in India to a place outside India is to be extended till 30.09.2020 as against earlier 30.09.19. ➢ Insurance: |
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(i) To exempt “BANGLA SHASYA BIMA” (BSB) crop insurance scheme of West Bengal Government.
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(ii) To exempt 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.
➢ Export of services:
(i) Where an intermediary is residing in India and providing services to a supplier of goods or recipient of goods when both the supplier and recipient are located outside the taxable territory, then services provided by such intermediary shall
be exempt.
(ii) Place of supply for certain R&D services provided by Indian Pharma companies to foreign service recipients to be the place of effective use and enjoyment i.e. location of service recipients
➢ FIFA 2020 : To exempt services related to FIFA Under-17 Women’s World Cup 2020 similar to existing exemption given to FIFA U17 World Cup 2017.
Other recommendations
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➢ Liquor licence: Clarification has been given that grant of liquor licence by State Governments against payment of license fee shall be treated as “no supply”. ➢ Royalty: Currently GST on royalty is paid by publishers under RCM. Now a registered author shall have an option to pay GST on royalty charged from publishers under forward charge and observe regular GST compliance. ➢ Security lending services: – Although securities is kept out of the definition of Goods under GST, GST shall be payable @18% on security lending services. GST is to be paid |
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under forward charge till notification date and on reverse charge after the issuance of the notification. IGST shall be payable on payment for such services and in cases where CGST/SGST/UTGST have been paid, such taxpayers will not be required to pay tax again. ➢ Reverse charge on renting of vehicles:- GST is payable under RCM @5% by body corporates in case of renting of vehicles from registered person other than body corporate (LLP, proprietorship). ➢ Petroleum and Natural Gas services:- Clarification is to be provided with respect to scope of the entry “services of exploration, mining or drilling of petroleum crude or natural gas or both”. ➢ Passenger Service Fee (PSF) and User Development Fee (UDF):- Clarification is to be provided on the taxability of Passenger Service Fee (PSF) and User Development Fee (UDF) levied by airport operators. |
RECOMMENDATION ON GST RATE CHANGE ON GOODS
The rate changes shall be made effective with effect from 1st October 2019:
A. Decrease in rates
➢ 18% to 12% on parts of Slide Fasteners
➢ 18% to 5% on Marine Fuel 0.5% (FO)
➢ 12% to 5% on Wet Grinders (consisting stone as a grinder)
➢ 5% to Nil on: –
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(i) Dried tamarind
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(ii) Plates and cups made up of leaves/ flowers/bark
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➢ 3% to 0.25% on cut and polished semi- precious stones Hydrocarbon Exploration Licensing Policy (HELP) B. Increase in rates |
C. Change in rates:- ➢ 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%) D. Exemptions from GST/IGST on: –
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➢ Imported stores for Navy would be entitled to exemption from IGST E. GST concession in certain cases for specific period: – ➢ 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. |
F. Reduction in cess: – Passenger vehicles of engine capacity 1500 cc in case of diesel, 1200 cc in case of petrol and 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%)
Measures for Export Promotion
➢ Exemption from GST/IGST: –
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(i) at the time of import on Silver/Platinum by specified nominated agencies
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(ii) supply of Silver/Platinum by specified nominated agency to exporters for exports of Jewellery
➢ Diamond India Limited (DIL): 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.
Other recommendations
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➢ Aerated drink manufacturers: Aerated drink manufacturers shall be excluded from composition scheme. ➢ Goods used for petroleum operations:- 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 certified by Director General Hydrocarbon(DGH) as non- serviceable. |
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➢Tobacco Products: There shall be imposed certain restrictions on refund of compensation cess on tobacco products (in case of inverted duty structure) ➢ Spare parts imported by foreign airlines:- Prescribing 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. |
Classification Recommendations
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➢ Leguminous vegetables:- 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. ➢ Mechanical Spayers :-All “mechanical sprayers” falling under HS Code 8424 would attract 12% GST. ➢ Solar Parts:- Parts like Solar Evacuation tubes for solar power based devices like solar |
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water heater, solar steam, generation systems, would be eligible to 5% GST rate. ➢ Parts of Medical device:- Exclusive parts and accessories suitable for use solely or principally with a medical device (falling under headings 9018, 9019, 9021 or 9022) would fall in respective headings and attract GST at the concessional rate of 12%. ➢ Almond Milk:- Almond milk is classifiable under HS code 22029990 and attracts GST rate of 18%. |
This publication contains information for general guidance only. It is not intended to address the circumstances of any particular individual or entity. Although the best of endeavour has been made to provide the provisions in a simpler and accurate form, there is no substitute to detailed research with regard to the specific situation of a particular individual or entity. S. Khaitan & Associates or any of its officials do not accept any responsibility for loss incurred by any person for acting or refraining to act as a result of any matter in this publication
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Shubham Khaitan
Kolkata, India
