India:
Decisions In The 37th GST Council Meeting
27 September 2019
Nexdigm Private Limited
To print this article, all you need is to be registered or login on Mondaq.com.
The 37th GST Council meeting was held on 20 September 2019 in
Goa. The Council deliberated on a host of issues and devised
various steps to provide relief to businesses. The key decisions of
the Council have been captured in this alert.
Law and procedural changes
- Annual return in GSTR-9 has been made
optional for businesses with an aggregate turnover of up to INR 20
million.
- A committee has been appointed to
examine the possibility of simplification of annual return and
audit/reconciliation statement forms i.e. GSTR-9 and GSTR-9C
respectively.
- The Council has decided to impose
restrictions on availing input tax credit (ITC) by recipients in
cases where the supplier has not filed his GSTR-1. However, further
clarification is awaited on the modalities of this
restriction.
- The new return filing system earlier
proposed to be implemented in a phased manner from October 2019 has
been postponed to April 2020.
- In a big relief, the GST Council has
rescinded two contentious circulars issued in the recent past:
- Supply of Information Technology
enabled Services (ITeS)
- The Circular had sought to clarify
what qualifies as intermediary services in the ITeS sector. A new
Circular in supersession of the said Circular will be issued
shortly.
- Taxability of post-sales
discounts
- The Circular, inter alia, had
clarified that discounts provided by the original supplier of goods
to his dealers, so that the dealers can offer a special reduced
price to the customers, should be chargeable to GST in the hands of
the dealer. The said Circular has been rescinded ab initio.
- A single authority integrated refund
system for quick disbursal of refund claims will be introduced from
24 September 2019.
Rationalization of GST rates
Goods
Commodity |
Old rate |
Revised rate |
Marine fuel 0.5% (FO) |
18% |
5% |
Cut and polished semi-precious stones |
3% |
0.25% |
Specified goods for petroleum operations under Hydrocarbon
Exploration Licensing Policy |
Various rates |
5% |
Caffeinated beverages |
18% |
28% + 12% Compensation cess |
Import of specified defense goods not being manufactured
indigenously |
Various rates |
Exempt |
Exclusive parts and accessories for use with a medical device
(specific Chapter headings) |
Various rates |
12% |
Services
Service |
Old rate |
Revised rate |
Hotel accommodation - Daily tariff above INR 7500 |
28% |
|
Hotel accommodation - Daily tariff of more than INR 1000 but up
to INR 7500 |
18%/12% (based on tariff) |
12% |
Outdoor catering other than in premises having a daily tariff
of a unit of accommodation of more than INR 7500 |
18% |
5% without ITC |
Machine job work in the engineering industry (other than bus
bodybuilding) |
18% |
12% |
Intermediary services when both supplier and recipient of goods
are located outside the taxable territory |
18% |
Exempt |
Other GST rate related changes
- It has been clarified that fishmeal
is exempt from GST for the period 1 July 2017 to 30 September 2019.
However, any tax collected for this period should be deposited with
the government.
- Compensation cess on passenger
vehicles having certain specifications and designed to carry more
than 10 but up to 13 persons to be reduced from 15% to 1% for
petrol and 3% for diesel vehicles respectively.
- The option provided to pay GST at the
rate of 18% on transactional value at the time of disposal of
specified goods for petroleum operations (on which concession GST
rate of 5% is paid on purchase) provided that the goods are
certified by Director General Hydrocarbon as
'non-serviceable'.
- Warehousing services for cereals,
pulses, fruits, nuts, vegetables, etc. exempted from GST.
- The validity of conditional exemption
on export freight extended till 30 September 2020.
- In order to extend export benefits to
certain research & development (R&D) services provided to
foreign clients, the place of supply in case of the following
services has to be treated as location of the foreign service
recipient:
- Specified R&D services provided
by Indian pharma companies;
- R&D services in relation to chip
design software by using sample test kits.
SKP's Comments
The dipping GDP growth rate had given enough indications that
the government would attempt to provide a stimulus to the economy
through GST rate reductions in key sectors in order to boost
consumption. However, the announcements have been more in the form
of ease of compliance requirements rather than big-ticket rate
changes. Despite several demands, there has been no significant
rate reduction in the automobile sector which is undergoing a huge
downturn.
This shall certainly give confidence to the trade and industry
that the government would be ready to step in whenever any
arbitrary provisions are detrimental to businesses. Many such
announcements, however, shall come to light on 1 October when the
notifications making these effective shall be issued.
Note:The changes in relation to GST rates should be
effective from 1 October 2019.
|
|
|
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
POPULAR ARTICLES ON: Tax from India
Section 168A Of CSGT Act, 2017 – INVOKABLE OR NOT?
TLC Legal
A large number of Show Cause Notices (SCN) have been issued under Section 73 of the Central/State Goods And Services Tax Act, 2017 ("CGST"/"SGST") for the Financial Year 2017-18 in the month of September 2023.