23RD GST COUNCIL MEETING DATED 10TH NOVEMBER, 2017 – ALL CHANGES IN ONE MEGA COMPILATION

23RD GST COUNCIL MEETING DATED 10TH NOVEMBER, 2017 – ALL CHANGES IN ONE COMPILATION

By CA Ankit Gulgulia (Jain)

As expected the 23rd GST Council has taken several liberative measures to enhance the overall GST Experience and make it a more compliable and less tax burdensome. Below is the Detailed Compilation of all the changes that will effectuate because of decisions in this meeting. Relevant notifications are not referred to since they are pending yet to come out. The Changes mentioned below are all applicable from 15th November, 2017 unless otherwise mentioned.

Return Filing

1. a) The return filing process is to be further simplified in the following manner:

All taxpayers would file return in FORM GSTR-3B along with payment of tax by 20th of the succeeding month till March, 2018.

For filing of details in FORM GSTR-1 till March 2018, taxpayers would be divided into two categories. Details of these two categories along with the last date of filing GSTR 1 are as follows:

(a)Taxpayers with annual aggregate turnover upto Rs. 1.5 crore need to file GSTR-1 on quarterly basis as per following frequency:

(b) Taxpayers with annual aggregate turnover more than Rs. 1.5 crore need to file GSTR-1 on monthly basis as per following frequency:

The time period for filing GSTR-2 and GSTR-3 for the months of July, 2017 to March 2018 would be worked out by a Committee of Officers. However, filing of GSTR-1 will continue for the entire period without requiring filing of GSTR-2 & GSTR-3 for the previous month / period.

Late Fees Relaxation

A large number of taxpayers were unable to file their return in FORM GSTR-3B within due date for the months of July, August and September, 2017. Late fee was waived in all such cases. It has been decided that where such late fee was paid, it will be re-credited to their Electronic Cash Ledger under “Tax” head instead of “Fee” head so as to enable them to use that amount for discharge of their future tax liabilities. The software changes for this would be made and thereafter this decision will be implemented.

For subsequent months, i.e. October 2017 onwards, the amount of late fee payable by a taxpayer whose tax liability for that month was ‘NIL’will be Rs. 20/- per day (Rs. 10/- per day each under CGST & SGST Acts) instead of Rs. 200/- per day (Rs. 100/- per day each under CGST & SGST Acts).

Manual Filing for Advance Ruling

A facility for manual filing of application for advance ruling is being introduced for the time being.

Address of the Relevant AAR and Contact Details are as under:-

Further Benefits to Service Providers

Exports of services to Nepal and Bhutan have already been exempted from GST. It has now been decided that such exporters will also be eligible for claiming Input Tax Credit in respect of goods or services used for effecting such exempt supply of services to Nepal and Bhutan.

In an earlier meeting of the GST Council, it was decided to exempt those service providers whose annual aggregate turnover is less than Rs. 20 lakhs (Rs. 10 lakhs in special category states except J & K) from obtaining registration even if they are making inter-State taxable supplies of services. As a further measure towards taxpayer facilitation, it has been decided to exempt such suppliers providing services through an e-commerce platform from obtaining compulsory registration provided their aggregate turnover does not exceed twenty lakh rupees. As a result, all service providers, whether supplying intra-State, inter-State or through ecommerce operator, will be exempt from obtaining GST registration, provided their aggregate turnover does not exceed Rs. 20 lakhs (Rs. 10 lakhs in special category States except J & K).

Extension of Dates for Filing Several Forms including TRAN-1

Taking cognizance of the late availability or unavailability of some forms on the common portal, it has been decided that the due dates for furnishing the following forms shall be extended as under:

Revised due dates for subsequent tax periods will be announced in due course.

Benefits for Diplomatic Missions/UN organizations

In order to lessen the compliance burden on Foreign Diplomatic Missions/ UN Organizations, a centralized UIN will be issued to every Foreign Diplomatic Mission/ UN Organization by the Central Government and all compliance for such agencies will be done by the Central Government in coordination with the Ministry of External Affairs.

Changes recommended in Composition Scheme

1. Uniform rate of tax @ 1 % under composition scheme for manufacturers and traders (for traders, turnover will be counted only for supply of taxable goods). No change for composition scheme for restaurant.
2. Supply of services by Composition taxpayer upto Rs 5 lakh per annum will be allowed by exempting the same
3. Annual turnover eligibility for composition scheme will be increased to Rs 2 crore from the present limit of Rupees 1 crore under the law. Thereafter, eligibility for composition will be increased to Rs. 1.5 Crore per annum.

Note:- The changes recommended by GST Council at (iii) above will be implemented only after the necessary amendment of the CGST Act and SGST Acts.

Reduction in Tax Rates of 28% Items

Major recommendations of the Council are summarised below.

(I) Pruning of list of 28% rated goods: The Council has recommended reduction in GST rate from 28% to 18% on goods falling in 178 headings at 4-digit level (including 4 tariff heading that are partially pruned). After these changes, only 50 items will attract GST rate of28%.

Goods on which the Council has recommended reduction in GST rate from 28% to 18% include:

• Wire, cables, insulated conductors, electrical insulators, electrical plugs, switches, sockets, fuses, relays, electrical connectors
• Electrical boards, panels, consoles, cabinets etc for electric control or distribution
• Particle/fibre boards and ply wood. Article of wood, wooden frame, paving block
• Furniture, mattress, bedding and similar furnishing
• Trunk, suitcase, vanity cases, brief cases, travelling bags and other hand bags, cases
• Detergents, washing and cleaning preparations
• Liquid or cream for washing the skin
• Shampoos; Hair cream, Hair dyes (natural, herbal or synthetic) and similar other goods; henna powder or paste, not mixed with any other ingredient;
• Pre-shave, shaving or after-shave preparations, personal deodorants, bath
• preparations, perfumery, cosmetic or toilet preparations, room deodorisers
• Perfumes and toilet waters
• Beauty or make-up preparations
• Fans, pumps, compressors
• Lamp and light fitting
• Primary cell and primary batteries
• Sanitary ware and parts thereof of all kind
• Articles of plastic, floor covering, baths, shower, sinks, washbasins, seats,
• sanitary ware of plastic
• Slabs of marbles and granite
• Goods of marble and granite such as tiles
• Ceramic tiles of all kinds
• Miscellaneous articles such as vacuum flasks, lighters,
• Wrist watches, clocks, watch movement, watch cases, straps, parts
• Article of apparel & clothing accessories of leather, guts, furskin, artificial fur and other articles such as saddlery and harness for any animal
• Articles of cutlery, stoves, cookers and similar non electric domestic
• appliances
• Razor and razor blades
• Multi-functional printers, cartridges
• Office or desk equipment
• Door, windows and frames of aluminium.
• Articles of plaster such as board, sheet,
• Articles of cement or concrete or stone and artificial stone,
• Articles of asphalt or slate,
• Articles of mica
• Ceramic flooring blocks, pipes, conduit, pipe fitting
• Wall paper and wall covering
• Glass of all kinds and articles thereof such as mirror, safety glass, sheets,
• glassware
• Electrical, electronic weighing machinery
• Fire extinguishers and fire extinguishing charge
• Fork lifts, lifting and handling equipment,
• Bull dozers, excavators, loaders, road rollers,
• Earth moving and levelling machinery,
• Escalators,
• Cooling towers, pressure vessels, reactors
• Crankshaft for sewing machine, tailor’s dummies, bearing housings, gears
• and gearing; ball or roller screws; gaskets
• Electrical apparatus for radio and television broadcasting
• Sound recording or reproducing apparatus
• Signalling, safety or traffic control equipment for transports
• Physical exercise equipment, festival and carnival equipment, swmgs, shooting galleries, roundabouts, gymnastic and athletic equipment
• All musical instruments and their parts
• Artificial flowers, foliage and artificial fruits
• Explosive, anti-knocking preparation, fireworks
• Cocoa butter, fat, oil powder,
• Extract, essence ad concentrates of coffee, miscellaneous food preparations
• Chocolates, Chewing gum / bubble gum
• Malt extract and food preparations of flour, groats, meal, starch or malt extract
• Waffles and wafers coated with chocolate or containing chocolate
• Rubber tubes and miscellaneous articles of rubber
• Goggles, binoculars, telescope,
• Cinematographic cameras and projectors, image projector,
• Microscope, specified laboratory equipment, specified scientific equipment such as for meteorology, hydrology, oceanography, geology
• Solvent, thinners, hydraulic fluids, anti-freezing preparation

Goods on which the Council has recommended reduction in GST rate from 28% to 12% are:

• Wet grinders consisting of stone as grinder
• Tanks and other armoured fighting vehicles

Goods on which the Council has recommended reduction in GST rate from 18% to 12% are:

• Condensed milk, refined sugar and sugar cubes, Pasta, Curry paste, mayonnaise and salad dressings, mixed condiments and mixed season mg, Diabetic food
• Medicinal grade oxygen
• Printing ink
• Hand bags and shopping bags of jute and cotton
• Hats (knitted or crocheted)
• Parts of specified agricultural, horticultural, forestry, harvesting or threshing machinery
• Specified parts of sewing machine
• Spectacles frames
• Furniture wholly made of bamboo or cane

Goods on which the Council has recommended reduction in GST rate from 18% to 5% are:

• Puffed rice chikki, peanut chikki, sesame chikki, revdi, tilrevdi, khaza, kazuali, groundnut sweets gatta, kuliya
• Flour of potatoes put up in unit container bearing a brand name
• Chutney powder
• Fly ash
• Sulphur recovered in refining of crude
• Fly ash aggregate with 90% or more fly ash content

Goods on which the Council has recommended reduction in GST rate from 12% to 5% are:

• Desiccated coconut
• Narrow woven fabric including cotton newar [ with no refund of unutilised input tax credit]
• Idli, dosa batter
• Finished leather, chamois and composition leather
• Coir cordage and ropes, jute twine, coir products
• Fishing net and fishing hooks
• Worn clothing
• Fly ash brick

Goods on which the Council has recommended reduction in GST rate from 5% to NIL are:

• Guar meal
• Hop cone ( other than grounded, powdered or in pellet form)
• Certain dried vegetables such as sweet potatoes, maniac
• Unworked coconut shell
• Fish frozen or dried (not put up in unit container bearing a brand name)
• Khandsari sugar

Miscellaneous

• GST rates on aircraft engines from 28%/l 8% to 5%, aircraft tyres from 28% to 5% and aircraft seats from 28% to 5%.
• GST rate on bangles of lac/shellac from 3% GST rate to Nil.

Exemption from IGST/GST in certain specified cases:

• Exemption from IGST on imports of lifesaving medicine supplied free of cost by overseas supplier for patients, subject to certification by DGHS of Centre or State and certain other conditions
• Exemption from IGST on imports of goods (other than motor vehicles) under a lease agreement ifIGST is paid on the lease amount.
• To extend IGST exemption presently applicable to skimmed milk powder or concentrated milk, when supplied to distinct person under section 25(4) for use in production of milk for distribution through dairy cooperatives to where such milk is distributed through companies registered under the Companies Act.
• Exemption from IGST on imports of specified goods by a sports person of outstanding eminence, subject to specified conditions
• Exemption from GST on specified goods, such as scientific or technical instruments, software, prototype supplied to public funded research institution or a university or IISc, or IITs or NIT.
• Coverage of more items, such as temporary import of professional equipment by accredited press persons visiting India to cover certain events, broadcasting equipments, sports items, testing equipment, under A TA carnet system. These goods are to be re-exported after the specified use is over.

Interstate Movement of Cranes etc is not Supply and hence no GST Applicable

To clarify that inter-state movement of goods like rigs, tools, spares and goods on wheel like cranes, not being in the course of furtherance of supply of such goods, does not constitute a supply. This clarification gives major compliance relief to industry as there are frequent inter-state movement of such kind in the course of providing services to customers or for the purposes of getting such goods repaired or refurbished or for any self-use. Service provided using such goods would in any case attract applicable tax.

New Reverse Charge and Taxability

To prescribe that GST on supply of raw cotton by agriculturist will be liable to be paid by the recipient of such supply under reverse charge.

Supply of e-waste attracts 5% GST rate. Concerned notification to be amended to make it amply clear that this rate applies only to e-waste discarded as waste by the consumer or bulk consumer.

Changes relating to GST rates on certain services

Exemptions / Changes in GST Rates / ITC Eligibility Criteria

All stand-alone restaurants irrespective of air conditioned or otherwise, will attract 5% without ITC. Food parcels (or takeaways) will also attract 5% GST without ITC.

Restaurants in hotel premises having room tariff of less than Rs 7500 per unit per day will attract GST of 5% without ITC.

Restaurants in hotel premises having room tariff of Rs 7500 and above per unit per day (even for a single room) will attract GST of 18% with full ITC.

• Outdoor catering will continue to be at 18% with full ITC.
• GST on services by way of admission to “protected monuments” to be exempted.

GST rate on job work services in relation to manufacture of those handicraft goods in respect of which the casual taxable person has been exempted from obtaining registration, to be reduced to 5% with full input tax credit.

Rationalization of certain exemption entries

The existing exemption entries with respect to services provided by Fair Price Shops to the Central Government, State Governments or Union Territories by way of sale of food grains, kerosene, sugar, edible oil, etc. under Public Distribution System (PDS) against consideration in the form of commission or margin, is being rationalized so as to remove ambiguity regarding list of items and the category of recipients to whom the exemption is available.

In order to maintain consistency, entry at item (vi) of Sr. No.3 of notification No. 11/2017-CT(R) will be aligned with the entries at items (ii), (iii), (iv) and (v) of SI.No.3. [The word “services” in entry (vi) will be replaced with “Composite supply of Works contract as defined in clause 119 of Section 2 of CGST Act, 2017.

Note that :- “Services” (now this will replaced by “Composite supply of Works contract”)  provided to the Central Government, State Government, Union Territory, 13[a local authority, a Governmental Authority or a Government Entity] by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of Civil Structure for other than business / commerce, residential complex etc

Clarification on Intellectual Property Rights

In order to obviate dispute and litigation, it is proposed that irrespective of whether permanent transfer of Intellectual Property is a supply of goods or service-

(i) permanent transfer of Intellectual Property other than Information Technology software attracts GST at the rate of 12%; and

(ii) permanent transfer of Intellectual Property in respect of Information Technology software attracts GST at the rate of 18%.

Few Other Clarifications

• It is being clarified that credit of GST paid on aircraft engines, parts & accessories will be available for discharging GST on inter-state supply of such aircraft engines, parts & accessories by way of inter-state stock transfers between distinct persons as specified in section 25 of the CGST Act.
• A Circular will be issued clarifying that processed products such as tea (i.e. black tea, white tea etc.), processed coffee beans or powder, pulses (de-husked or split), jaggery, processed spices, processed dry fruits & cashew nuts etc. fall outside the definition of agricultural produce given in notification No. 11/2017-CT(R) and 12/2017-CT(R) and therefore the exemption from GST is not available to their loading, packing, warehousing etc.
• A suitable clarification will be issued that (i) services provided to the Central Government, State Government, Union territory under any insurance scheme for which total premium is paid by the Central Government, State Government, Union territory are exempt from GST under SI. No. 40 of notification No. 12/2017-Central Tax (Rate); (ii) services provided by State Government by way of general insurance (managed by government) to employees of the State government/ Police personnel, employees of Electricity Department or students are exempt vide entry 6 of notification No. 12/2017-CT(R) which exempts Services by Central Government, State Government, Union territory or local authority to individuals.

Download the Revised HSN Wise List of Items at the Link hereunder:-

https://www.dropbox.com/s/o2is67fql4fsfyg/GST%20Revised%20Rate.pdf?dl=1

Before Parting….

It is very heartening to see that way GST Council has responded by due liberalization of several rates and procedural compliances. The Process of Simplification is ongoing process and this council meeting will surely be a Milestone in this Journey.

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