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rescinded two contentious circulars issued in the recent past: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 The said Circular has been rescinded ab initio.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 |
- 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.
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