The GST council met for its 37th meeting in Goa on 20th September 2019 where several key decisions were taken and recommendations were made to grant certain reliefs to taxpayers and also to make revision of rates of GST on several supplies. Numerous issues of industries and economy at large were addressed by the council and recommendations have accordingly been made.
Our analysis of such recommendations, which are to be made applicable w.e.f. 1st October 2019 by way of issue of notifications/ circulars in this regard, is divided into 5 categories-
- Recommendations w.r.t. Law and Procedures;
- Recommendations w.r.t. GST Rate of Services;
- Recommendations w.r.t. GST Rate of Goods;
- Recommendations w.r.t. Reverse Charge Mechanism; and
- Other recommendations.
Each of the aforementioned categories is discussed hereunder-
- Recommendations w.r.t. Law and Procedures:
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S.No.
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Particulars
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1.
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Filing of Form GSTR – 9 for FY 17-18 and 18-19 is to be made optional for taxpayers having aggregate turnover upto Rs. 2 crore.
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2.
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Filing of Form GSTR – 9A for FY 17-18 and 18-19 is to be waived for composition taxpayers.
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3.
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New return systems which were earlier proposed from October 2019 will now be introduced from April 2020. Due date of furnishing the return in Form GSTR-1 and Form GSTR-3B for the period October 2019 to March 2020 to be intimated later.
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4.
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A Committee of Officers to be constituted to examine the simplification of Forms for Annual Return and reconciliation statement.
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5.
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Since the appellate tribunals are not operational as of now, last date for filing of appeals against orders of Appellate Authority before the GST Appellate Tribunal is to be extended.
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6.
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Restrictions to be imposed 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 (Form GSTR – 1) of CGST Act, 2017.
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7.
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Issuance of circulars for uniformity in application of law across all jurisdictions:
a. procedure to claim refund in FORM GST RFD-01A subsequent to favourable order in appeal or any other forum;
b. 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; and
c. 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.
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8.
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Circular No.105/24/2019-GST dated 28.06.2019, which was issued in respect of post-sales discount is to be rescinded ab-initio. Post sale discounts are governed by the provisions of Section 15(3)(b) of CGST Act, 2017 and such circular provided clarifications regarding taxability on the part of supplier and ITC on the part of registered recipient for post-sale discounts.
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9.
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Integrated refund system with disbursal by single authority to be introduced from 24th September, 2019.
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10.
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In principle decision to link Aadhar with registration of taxpayers under GST and examine the possibility of making Aadhar mandatory for claiming refunds.
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11.
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In principle decision to prescribe reasonable restrictions on passing of credit by risky taxpayers including risky new taxpayers.
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- Recommendations w.r.t. Rate of Services:
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S.No.
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Particulars
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1.
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Reduction in rate of hotel accommodation service:-
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2.
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Reduction in rate of outdoor catering services other than in premises having daily tariff of unit of accommodation of Rs. 7501/- from present 18% with ITC to 5% without ITC. The rate shall be mandatory for all kinds of catering. Catering in premises with daily tariff of unit of accommodation is Rs. 7501/- and above shall remain at 18% with ITC.
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3.
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For Job work services in relation to diamond – Reduction in rate from 5% to 1.5%.
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4.
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For machine job work such as in engineering industry, except job work in relation to bus body building – Reduction in rate from 18% to 12%.
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5.
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Prospective exemption for 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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6.
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Validity of conditional exemption of GST on export freight by air or sea to be extended by another year, i.e. till 30.09.2020.
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7.
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Exemption to 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.
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8.
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Grant of liquor licence by State Governments against payment of license fee to be notified as “no supply”.
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9.
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Exemption to services related to FIFA Under-17 Women’s World Cup 2020 similar to existing exemption given to FIFA U17 World Cup 2017.
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10.
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Exemption to “BANGLA SHASYA BIMA” (BSB) crop insurance scheme of West Bengal Government.
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11.
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Exemption to 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.
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- Recommendations w.r.t. Rate of Goods:
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S.No.
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Goods
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Old Rate
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Recommended Rate
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1.
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Parts of Slide Fasteners
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18%
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12%
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2.
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Marine Fuel 0.5% (FO)
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18%
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5%
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3.
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Wet Grinders
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12%
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5%
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4.
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Dried Tamarind
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5%
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Nil
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5.
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Plates and cups made up of leaves/ flowers/bark.
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5%
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Exempt
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6.
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Cut and polished semi- precious stones.
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3%
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0.25%
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7.
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Goods, falling under chapter 86 of tariff like railway wagons, coaches, rolling stock.
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5%
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12%
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8.
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Caffeinated Beverages.
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18%
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28% +12% Compensation Cess
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9.
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Polypropylene/Polyethylene Woven and Non- Woven Bags and sacks, whether or not laminated, of a kind used for packing of goods.
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5%/ 12%/ 18%
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12%
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10.
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Passenger vehicles of engine capacity 1500 cc in case of diesel and length not exceeding 4000mm designed for carrying more than 10 persons but upto 13 persons.
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15% Compensation Cess
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3% Compensation Cess
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11.
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Specified goods for petroleum operations undertaken under Hydrocarbon Exploration Licensing Policy (HELP).
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Applicable Rate
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5%
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12.
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Imports of specified defense goods not being manufactured indigenously.
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Applicable Rate
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Exempt
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13.
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Supply of goods and services to FIFA and other specified persons for organizing the Under-17 Women’s Football World Cup in India.
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Applicable Rate
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Exempt
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14.
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Supply of goods and services to Food and Agriculture Organization (FAO) for specified projects in India.
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Applicable Rate
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Exempt
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15.
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Import on Silver/Platinum by specified nominated agencies.
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Applicable Rate
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Exempt
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16.
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Supply of Silver/Platinum by specified nominated agency to exporters for exports of Jewellery.
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Applicable Rate
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Exempt
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Further, certain clarifications are also recommended by the council with regards to applicability of GST rate in respect of certain goods –
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S.No.
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Goods
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Clarified GST Rate
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1.
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Imported stores for Navy
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Exempt
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2.
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Parts like Solar Evacuation tubes for solar power based devices like solar water heater, solar steam, generation systems
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5%
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3.
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All “mechanical sprayers” falling under HS Code 8424
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12%
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4.
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Exclusive parts and accessories suitable for use solely or principally with a medical device (falling under headings 9018, 9019, 9021 or 9022)
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12%
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5.
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Almond milk
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18%
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- Recommendations w.r.t. Reverse Charge Mechanism:
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S.No.
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Particulars
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1.
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Reverse Charge to be made applicable on services of “Renting of vehicles” where the supplier being a person other than body corporate (LLP, proprietorship) charges GST @ 5% and services are provided to body corporates.
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2.
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Reverse Charge to be made applicable on “Securities lending services” at 18%. It is also to be clarified that GST on such services 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 CGST/SGST/UTGST have been paid, such taxpayers will not be required to pay tax again.
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3.
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Registered authors are to be allowed an option to pay GST on royalty charged from publishers under forward charge and observe regular GST compliance. Earlier, such services were covered under the ambit of Reverse Charge.
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- Other recommendations :
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S.No.
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Particulars
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1.
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Place of supply of specified R&D services provided by Indian pharma companies to foreign service recipients to be “location of service recipient”.
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2.
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Place of supply of chip design software R&D services provided by Indian companies to foreign clients by using sample test kits in India to be the “location of the service recipient”.
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