25th GST Council Meeting – Key Decisions

 

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The 25th GST Council Meeting was held at New Delhi on 18.1.2018 which was chaired by Finance Minister, Arun Jaitley. Prior to 25^th GST Council meeting it was expected that the three monthly returns that taxpayers currently have to file – GSTR 1, 2 and 3 – could be combined into one to be filed monthly or quarterly. Further, the task of invoice matching may be handed over to the back-end team at GST Network, eliminating the need for the vendor to approve the invoice himself before the purchaser receives his credit, etc. 
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The Council has recommended many relief measures regarding GST rates ongoods and services covering many sectors and  commodities.  The Council has also recommended issuance of certain clarifications on issues relating to GST rates and taxability of certain goods and services.
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 The major decision of the apex decision making body of the new indirect tax regime in 25^th meeting are:

• The GST rate on 29 items have been reduced and 53 Services have been exempted from GST, in addition to some other major changes in services sector.
• GST Council decides to divide Rs 35,000 Crs. IGST collections between Centre & States, provisionally.
• Fitment Committee recommendations accepted to reduce rates on 29 goods + 53 services; New rates to come into force from 25.1.2018.
• Sarna Committee report on handicraft items accepted; Fitment Committee to decide tariff for 40 such items.
• Uploading of Sale Invoices in GSTR-3B has been stopped, till alternative is worked out and approved at next meeting through video conferencing. The Council will hold a video conference in 10 days to discuss simplification of the returns filing process.
• e-Way Bill – 15 States to roll out intra-State system from 1.2.2018.
• GST rate on used cars has been reduced to 12%.
• If WCS attracts 5% GST, their sub-contractor also be liable for 5% GST

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Services Sector – The major changes in GST Rates/structure are:
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Rate reduced to 18% from 28%

• Admission to theme parks, water parks, joy rides, merry-go-rounds, go-carting and ballet.

Rate Reduced To 12% From 18%

• Construction of metro and monorail projects.
• Common effluent treatment plants.

Rate reduced to 5% from 18%
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Works contract services where GST rate reduced to 12% from 18% – Services 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%. If WCS attracts 5% GST, their sub-contractor also be liable for 5% GST
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Other Services Changes

• GST rate on transportation of petroleum crude and petroleum products (MS, HSD, ATF) from 18% to 5% without ITC and 12% with ITC.
• Job work services rate for manufacture of leather goods and footwear @ 5%
• Mining or exploration services of petroleum crude and natural gas and for drilling services @ 12%
• Concessional GST @ 12% on the services provided by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of building used for providing mid-day meal scheme by an entity registered under Section 12AA of IT Act.

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Services Exempted
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1. Providing information under RTI Act, 2005.
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2. Legal services provided to government, local authority, governmental authority and government entity.
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3. Transportation of goods from India to a place outside India by air (Sunset clause up to September 30, 2018).
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4. Transportation of goods from India to a place outside India by sea (provided that value of such service may be excluded from the value of exempted services for the purpose of reversal of input tax credit) (Sunset clause up to Sept 30, 2018).
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5. Naval Insurance Group Fund’s services by way of  life insurance to personnel of Coast Guard under the group insurance scheme of the central government retrospectively w.e.f. July 1, 2017.
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6. Dollar denominated services provided by financial intermediaries located in International Financial Service Center SEZ.
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7. Government or local authority by way of lease of land, and supply of land or undivided share of land by way of lease or sub lease where such supply is a part of specified composite supply of construction of flats etc. and to carry out suitable amendment in the provision relating to valuation of construction service involving transfer of land or undivided share of land, so as to ensure that buyers pay the  same effective  rate of GST on property built on leasehold and freehold land.
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8. To exempt services relating to admission to, or conduct of examination provided to all educational institutions, as defined in the notification.
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9. To exempt services by educational institution by way of conduct of entrance examination against consideration in the form of entrance fee.
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10. To exempt reinsurance services in respect of some exempted insurance schemes.
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11. Fumigation in a warehouse of agricultural produce.
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12. Subscription of online educational journals/periodicals by educational institutions.
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13. Renting of transport vehicles provided to a person providing services of transportation of students, faculty and staff to an educational institution providing education up to higher secondary or equivalent.
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14. To exempt services provided by and to Fédération Internationale de Football Association (FIFA) and its subsidiaries directly or indirectly related to any of the events under FIFA U-20 World Cup in case the said event is hosted by India.
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15. To exempt government’s share of profit petroleum and to clarify that cost petroleum is not taxable per se.
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16. To exempt IGST payable under Section 5(1) of the IGST Act, 2017 on supply of services covered by item 5(c) of Schedule II of the CGST Act, 2017 to the extent of  aggregate of the duties and taxes leviable under Section 3(7) of the Customs Tariff Act, 1975 read with Sections 5 & 7 of IGST Act, 2017 on part of consideration declared under Section 14(1) of the Customs Act, 1962 towards royalty and license fee includible in transaction value as specified under Rule 10 (c) of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007.
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Other Changes in services
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1. Extension of GST exemption on Viability Gap Funding (VGF) for a period of 3 years from the date of commencement of RCS airport from the present period of one year.
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2. GST on the small housekeeping service providers, notified under Section 9 (5) of GST Act, who provide housekeeping service through ECO, at 5% without ITC.
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3. ITC of input services in the same line of business at the GST rate of 5% in case of tour operator service.
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4. The exemption limit of Rs 5,000 per month per member enhanced to Rs 7,500 in respect of services provided by Resident Welfare Association to its members against their individual contribution.
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5. Entry 3 of notification No. 12/2017-CT(R) to be amended so as to exempt pure services provided to government entity.
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6. To expand pure services exemption under S. No. 3 of 12/2017-C.T. (Rate) so as to include composite supply involving predominantly supply of services i.e. up to 25% of supply of goods.
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7. The limit enhanced to Rs 2 lakh against Sl. No. 36 of exemptionnotification No. 12/2017-C.T. (Rate) which exempts services of life insurance business provided under life micro insurance product approved by IRDAI upto maximum amount of cover of Rs 50,000.
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The List of Goods where GST Rates have been  revised:
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 Rate Reduced To 18% From 28%

• Buses for public transport, which run on bio-fuels
• Old & used motor vehicles (medium & large cars and SUVs) on the margin of the supplier
• Rate cut if no ITC of central excise duty/VAT/GST availed

Rate reduced to 12% from 28%

• Old and used motor vehicles other than medium and large cars and SUVs
• Rate cut if no input tax credit of central excise duty/VAT/GST available.

Rate reduced to 12% from 18%

• Sugar boiled confectionery
• Drinking water packed in 20 liter bottles
• Fertilizer grade phosphoric acid
• Bio-diesel
• 12 categories of bio-pesticides
• Bamboo wood building joinery
• Drip irrigation system including laterals, sprinklers
• Mechanical Sprayer

Rate reduced to 5% from 18%

• Tamarind kernel powder
• Mehendi paste in cones
• LPG supplied for supply to household domestic consumers by private LPG distributors
• Scientific and technical instruments, apparatus, equipment, accessories, parts, components, spares, tools, mock ups and modules, raw material and consumables required for launch vehicles and satellites and payloads

Rate reduced to 5% from 12%

• Articles of straw, of esparto or of other plaiting materials; basket ware and wickerwork

Rate reduced to 5% from 12% (With no refund of un-utilised ITC)

• Velvet fabric

Rate reduced To 0.25% From 3%

• Diamonds and precious stones

Rate Increased to 12% from 5%

• Cigarette filter rods

Rate increased to 5% from Nil

• Rice bran (other than de-oiled rice bran)

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REGARDS
ACA SOURAV BAGARIA