This is in reference to the 31st GST Council meeting held on 22nd December 2018 at New Delhi. The following policy recommendations made therein are mentioned below:
Recommendation related to GST Annual returns and Audit
- ITC in relation to invoices issued by the supplier during FY 2017-18 may be availed by the recipient till the due date for furnishing of FORM GSTR-3B for the month of March 2019, subject to specified conditions.
- Amendment of headings in the forms to specify that the return in FORM GSTR-9 & FORM GSTR-9A would be in respect of supplies etc. ‘made during the year’ and not ‘as declared in returns filed during the year.
- The due date for furnishing the annual returns in FORM GSTR-9, FORM GSTR-9A and reconciliation statement in FORM GSTR-9C for the FY 2017-2018 shall be further extended till 30.06.2019.
- All returns i.e. GSTR-1 (monthly / quarterly), GSTR-3B must be filed before the filing of the annual return in GSTR-9 and GSTR-9C.
- Taxpayers cannot claim Input Tax Credit through GSTR-9 and GSTR-9C.
- In GSTR-9, HSN code required to be declared only for those inward supplies whose value independently accounts for 10% or more of the total value of inward supplies.
- All invoices pertaining to previous financial Year declared in GSTR 1 of any month would be auto-populated in Table 8A of FORM GSTR-9.
- Value of “non-GST supply” shall also include the value of “no supply” and may be reported in Table 5D, 5E, and 5F of FORM GSTR-9.
- Additional payments, if any, required to be paid can be done through FORM GST DRC-03, but this payment can be made only in cash.
- Verification by a taxpayer who is uploading the reconciliation statement would be included in GSTR-9C.
Recommendation related to other GST returns
- Late fee has been completely waived for all taxpayers in case GSTR-1, GSTR-3B & GSTR-4 for the months/quarters July 2017 to September 2018, if furnished between 23rd December and 31st March 2019. This decision will provide great relief to the taxpayers who have not filed their GST return due to any reason.
- One more window for completion of the migration process is being allowed. The due date for the taxpayers who did not file the complete GST REG-26 but received only a Provisional ID (PID) till 31st December 2017 for furnishing the requisite details to the jurisdictional nodal officer shall be extended till 31st January 2019. Further, the due date for furnishing GSTR-3B and GSTR-1 for the period July 2017 to February 2019 /quarters July 2017 to December 2018 by such taxpayers shall be extended till 31st March 2019.
- New return filing system shall be introduced on a trial basis from 1st April 2019 and on a mandatory basis from 1st July 2019,
- The due date for submitting FORM GST ITC-04 (Intimation of Goods sent and received from job worker) for the period July 2017 to December 2018 shall be extended till 31st March 2019. Earlier this due date was 24th January 2019.
- The due date for furnishing FORM GSTR-8 by e-commerce operators for the months of October, November, and December 2018 shall be extended till 31st January 2019.
- Generation of E-way Bill shall be restricted for taxpayers who have not filed the returns for two consecutive tax periods. This provision shall be made effective once GSTN / NIC make available the required functionality.
- There would be a single cash ledger for each tax head. The modalities for implementation would be finalized in consultation with GSTN and the Accounting authorities.
Recommendation related to GST Refund
- Single authority for disbursement of the refund amount sanctioned by either the Centre or the State tax authorities will be set up on a pilot basis. The modalities for the same shall be finalized shortly.
- All the supporting documents/invoices in relating to claim for refund in FORM GST RFD-01A shall be uploaded electronically on the common portal at the time of filing of the refund application itself. This will remove the requirement of the taxpayer to physically visit a tax office for submission of a refund application. GSTN will enable this functionality on the common portal shortly.
- It has been recommended to allow the following types of refunds through online application for a refund in FORM GST RFD-01A:
- Refund on account of Assessment/Provisional Assessment/Appeal/Any Other Order;
- Tax paid on an intra-State supply which is subsequently held to be inter-State supply and vice-versa;
- Excess payment of Tax; and
- Any other refund
- Applications for the refund in FORM GST RFD-01A (except for refund of excess balance in the cash ledger) which have not been submitted in the jurisdictional tax office within 60 days of the generation of ARN, the claimants shall be sent communications on their registered email ids containing information on where to submit the said refund applications. If the applications are not submitted within 15 days of the date of the email, the said refund applications shall be summarily rejected, and the debited amount shall be re-credited to the electronic credit ledger of the claimant. This will apply to the refund applications which are generated on the common portal before the rollout of the functionality described in point (3) above.
- It has been recommended to issue clarifications on certain refund related matters like a refund of ITC accumulated on account of inverted duty structure, disbursal of refunds within the stipulated time, the time allowed for availing of ITC on invoices, refund of accumulated ITC of compensation cess etc.
Approvals given for amendments in GST Act
The GST Council in its 31st meeting gave in principle approval to the following amendments in the GST Acts:
- To cope up with the cases of conflicting decisions by two or more State Appellate Advance Ruling Authorities on the same issue, it has been recommended to create a Centralized Appellate Authority for Advance Ruling (AAAR).
- Amendment of section 50 of the CGST Act to provide that interest should be charged only on the net tax liability of the taxpayer i.e. after taking into account the admissible input tax credit, i.e. interest would be leviable only on the amount payable through the electronic cash ledger.
It should be noted that changes made by CGST (Amendment) Act, 2018, IGST (Amendment) Act, 2018, UTGST (Amendment) Act, 2018 and GST (Compensation to States) Amendment Act, 2018 and the corresponding changes in SGST Acts would be notified with effect from 01st February 2019.
Approval given for the formation of Group of Ministers
The GST Council has approved the proposal to form 7 Member Group of Ministers (GoM) to study the revenue trend, including analyzing reasons for deviation of revenue collection in some of the States. The study would include the underlying reasons for fluctuation of revenue collection targets from original assumptions designed while creating the GST system.
The GOM will be assisted by the committee of experts from Central Government, State Governments and the NIPFP (National Institute of Public Finance and Planning), who would study and share the findings with GoM. The GoM, in turn, would give its recommendation to the GST Council.
The members of the GoM and the Committee of experts would be announced in due course of time.
Certain important issues referred by GST Council to various Committees / GoM
The GST Council decided to refer the following issues to Committees / GoM. GST council in its next meeting would take a view on these issues:
- Extending the Composition scheme to small service providers. The rate of tax and threshold limit to be proposed – Law Committee and Fitment Committee.
- Tax rate on lotteries – Committee of States.
- Taxation of residential property in the real estate sector – Law Committee and Fitment Committee
- Threshold limit of exemption under GST regime – GoM on MSMEs.
Recommendations for change in the rate of Goods and clarifications related to Goods
GST Council took the following decisions relating to changes in GST rates and clarification on Goods. The same would be given effect to through Gazette notifications/ circulars which shall have force of law.
|Goods||Previous Rate||New Rate|
|Pulleys, transmission shafts, and cranks, gearboxes etc., falling under HS Code 8483||
|Monitors and TVs of up to screen size of 32 inches|
|Re-treaded or used pneumatic tyres of rubber|
|Power banks of lithium-ion batteries. Lithium-ion batteries are already at 18%. This will bring parity in GST rate of power bank and lithium-ion battery|
|Digital cameras and video camera recorders|
|Video game consoles and other games and sports requisites falling under HS code 9504.|
|Parts and accessories for the carriages for disabled persons||28%||5%|
|Cork roughly squared or debagged||
|Articles of natural cork|
|Fly ash Blocks|
|Vegetables, (uncooked or cooked by steaming or boiling in water), frozen, branded and put in a unit container||
|Vegetable provisionally preserved (for example by sulphur dioxide gas, in brine, in sulphur water or in other preservative solutions), but unsuitable in that state for immediate consumption|
Below is others rate reduction/exemption recommended–
- GST on the supply of gold by Nominated Agencies to exporters of article of gold Jewelry has been exempted.
- Exemption from GST on proceeds received by Government from an auction of gifts received by President, Prime Minister, Governor or Chief Minister of a State and public servants, the proceeds of which are used for the public or charitable cause.
- Exemption from IGST/Compensation cess on vehicles imported for temporary purposes under the Customs Convention on the Temporary Importation of Private Road Vehicles (carnet de passages-en-douane).
- Rate of 5%/ 18% to be applied based on the transaction value of footwear
- Uniform GST rate of 12% on Flexible Intermediate Bulk Container (FIBC) from existing 5%/12% (depending on the value)
Clarifications on GST on solar power generating plant and other renewable energy plants
- Council has recommended that in case of EPC Contracts (solar power generating plant and other renewable energy plants), the 70% of the gross value shall be deemed as the value of supply of said goods attracting 5% rate and the remaining portion (30%) of the aggregate value of such EPC contract shall be deemed as the value of supply of taxable service attracting standard GST rate i.e. 18%.
- GST rate of 5% rate has been prescribed on renewable energy devices & parts for their manufacture (biogas plant/solar power based devices, solar power generating system (SGPS) etc).
- Certain disputes have arisen regarding GST rates where specified goods attracting 5% GST are supplied along with services of construction etc and other goods for a solar power plant.
Other Clarifications on GST rates on Goods
- Movement of Rigs, Tools & Spares and all goods on wheels on own account where such movement is not intended for further supply of such goods but for the provision of service does not involve a supply (e.g., movement of testing equipment etc.) will not be liable to GST.
- Fabric even if embroidered or has stitching of lace and tikki etc., and even if sold in three-piece fabric as ladies suit set, will be classifiable as fabric and would attract 5% GST
- Scope of concessional rate of 5% GST rate for specified equipment for waste to energy plant.
Recommendations for change in the rate of services and clarifications related to services
GST Council took the following decisions relating to changes in GST rates and clarification on services. The same would be given effect to through Gazette notifications/ circulars which shall have a force of law.
- GST rate on cinema tickets will be as below:
- Tickets value above Rs. 100- GST-18% (Previous Rate-28%)
- Ticket value up to Rs. 100- GST -12% (Previous Rate-18%)
- GST rate on third party insurance premium of goods carrying vehicles shall be reduced from 18% to 12%
- Services supplied by banks to Basic Saving Bank Deposit (BSBD) account holders under PradhanMantri Jan DhanYojana (PMJDY) shall be exempted.
- Services supplied by rehabilitation professionals recognized under Rehabilitation Council of India Act, 1992at medical establishments, educational institutions, rehabilitation centers established by Central Government / State Government or Union Territories or entity registered under section 12AA of the Income-tax Act shall be exempted.
- Services provided by GTA to Government departments / local authorities which have taken registration only for the purpose of deducting tax under Section 51 shall be excluded from payment of tax under RCM and the same shall be exempted.
- Exemption on services provided by Central or State Government or Union Territory Government to their undertakings or PSUs by way of guaranteeing loans taken by them from financial institutions is being extended to guaranteeing of such loans taken from banks.
- Air travel of pilgrims by non-scheduled / charter operations, for religious pilgrimage facilitated by the Government of India under bilateral arrangements, shall attract the same rate of GST as applicable to similar flights in Economy class (i.e. 5% with ITC of input services)
Rationalizations of GST Services
- Parliament and State legislatures shall be extended the same tax treatment with regard to payment of tax under RCM (reverse charge mechanism) as available to Central and State Governments.
- Security services (supply of security personnel) provided to a registered person, except Government Departments which have taken registration for TDS and entities registered under composition scheme, shall be put under RCM
- Services provided by unregistered Business Facilitator (BF) to a bank and agent of Business correspondent (BC) to a BC shall be put under RCM.
Clarifications on GST Services
- This has been clarified that effect from 31.01.2019 degrees/diploma awarded by IIMs under IIM Act, 2017 will be exempt from GST;
- It is clarified that services provided by IFC and ADB are exempt from GST in terms of provisions of IFC Act, 1958 and ADB Act, 1966.
- It has been clarified that under section 11(3) of the CGST Act, 2017 that scope of entry for multi-modal transport with GST rate of 12% inserted w.e.f. date 26.07.2018, covers only transport of goods from a place in India to another place in India, that is, only domestic multi-modal transport;
- Nature of business establishment making a supply of food, drinks and other articles for human consumption will not determine whether the supply by such establishments is a supply of goods or services. It will rather depend on the constituents of each individual supply and whether the same satisfies the conditions/ingredients of a ‘composite supply’ or ‘mixed supply.
- This has been clarified that GST is exempt on the supply of food and drinks by an educational institution when provided by the institution itself to its students, faculty, and staff and is leviable to GST of 5% when provided by any other person based on a contractual arrangement with such institutions.
Note: The notifications with respect to the above recommendations are expected to be released shortly.