GST Council Revises Rates For 29 Goods, 53 Services Categories

List Of Services Where GST Rate Will Be Reduced To 12% From 18%

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

List Of Services Where GST Rate Will Be Reduced To 5% From 18%

• Tailoring

List Of Services Where GST Rate Will Be Reduced To 18% From 28%

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

Works Contract Services Where GST Rate Will Be Reduced To 12% From 18%

• Works Contract 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
  

Other Services Changes

• To reduce GST rate on transportation of petroleum crude and petroleum products (MS, HSD, ATF) from 18% to 5% without ITC and 12% with ITC.
• To reduce job work services rate for manufacture of leather goods and footwear to 5%
• To reduce GST to 12% in respect of mining or exploration services of petroleum crude and natural gas and for drilling services
• To levy concessional GST at 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 (for instance, centralised cooking or distributing) mid-day meal scheme by an entity registered under Section 12AA of IT Act.

Services Exempted

• Providing information under RTI Act, 2005.
• Legal services provided to government, local authority, governmental authority and government entity.
• Transportation of goods from India to a place outside India by air (Sunset clause up to September 30, 2018).
• 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).
• 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.
• Dollar denominated services provided by financial intermediaries located in International Financial Service Centre SEZ.
• 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.
• To exempt services relating to admission to, or conduct of examination provided to all educational institutions, as defined in the notification.
• To exempt services by educational institution by way of conduct of entrance examination against consideration in the form of entrance fee.
• To exempt reinsurance services in respect of some exempted insurance schemes.
• Fumigation in a warehouse of agricultural produce.
• Subscription of online educational journals/periodicals by educational institutions.
• 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.
• 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.
• To exempt government’s share of profit petroleum and to clarify that cost petroleum is not taxable per se.
• 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.

Other Changes

• To extend 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.
• To levy 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.
• To allow ITC of input services in the same line of business at the GST rate of 5% in case of tour operator service.
• To enhance the exemption limit of Rs 5,000 per month per member to Rs 7,500 in respect of services provided by Resident Welfare Association to its members against their individual contribution.
• To amend entry 3 of notification No. 12/2017-CT(R) so as to exempt pure services provided to government entity.
• 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.
• To enhance the limit to Rs 2 lakh against Sl. No. 36 of exemption notification 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.

Also Read: GST Council Revises Rates, Mulls Simpler Return Filings

List Of Goods Where GST Rate Will Be 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 input tax credit of central excise duty/VAT/GST availed

List Of Goods Where GST Rate Will Be 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 availed

List Of Goods Where GST Rate Will Be Reduced To 12% From 18%

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

List Of Goods Where GST Rate Will Be 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

List Of Goods Where GST Rate Will Be Reduced To 5% From 12%

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

List Of Goods Where GST Rate Will Be Reduced To 5% From 12% (With No Refund Of Unutilised Input Tax Credit)

• Velvet fabric

List Of Goods Where GST Rate Will Be Reduced To 0.25% From 3%

• Diamonds and precious stones

List Of Goods Where GST Rate Will Be Increased To 12% From 5%

• Cigarette filter rods

List Of Goods Where GST Rate Will Be Increased To 5% From Nil

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

Rs 35,000 crore of Integrated GST will be provisionally divided between the Centre and states, Jaitley said. The division of IGST credit will boost the indirect tax position of both the central and state governments, he added.

The fitment committee will fix the rates for about 40 handicraft items; a few more items may be added to the list. The committee’s recommendations on 29 goods and 53 categories of services have been accepted by the GST Council, Jaitley said.

New rates for 29 goods and 53 services categories will come into force from Jan. 25, he added.

The e-way bill system began on a trial basis on Jan. 15, Jaitley said.

Implementation of the inter-state e-way bill has been made mandatory from Feb 1. Fifteen states have informed the Council that they will start intra-state the e-way bill from the same month, he added.

Nandan Nilekani made a detailed presentation on simplification of GST returns filing, Arun Jaitley told reporters at the press conference.

Based on that presentation, the GST Council decide that the filing of GSTR-3B should continue for the time being, with a 3B return and a suppliers’ invoice, he said. The matter was discussed but has not been not approved yet, the finance minister added.

GST rates on used cars has been reduced to 12 percent, Kerala Finance Minister Thomas Issac said.

The GST rate on 29 items has been cut to zero percent, said Uttarakhand Finance Minister Prakash Pant said. He added that the rates of 49 other items were reduced.

The Council will hold a video conference in 10 days to discuss simplification of the returns filing process, Pant told reporters.

There was no decision on real estate yet, although a presentation was made to the GST Council, he added.

Indian states are concerned about the drop in compensation that they receive from the Centre after the implementation of GST, said Yanamala Ramkrishnudu, finance minister of Andhra Pradesh, according to Bloomberg.

Ramakrishnudu said that states face a revenue shortfall of Rs 1.35 lakh crore due to GST, which is also leading to lower tax compensation, Bloomberg reported.

Pratik Jain, indirect tax partner with PricewaterhouseCoopers told BloombergQuint in an interview 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. Besides, 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, he said.

Most of the rate revisions will likely to be for services such as job works, housekeeping and carpentry services provided through an online platform, which are currently taxed at 18 percent. Only a few products such as biodiesel and electric vehicles may get a tax relief in today’s meeting, Jain said.

Watch the full interview here.

In its last meeting today ahead of the Union Budget 2018-19, the Goods and Services Tax Council is expected to discuss a slew of changes in the GST Law along with some tweaks in the tax rates.

The 25th meeting of the Council is currently underway at New Delhi chaired by Finance Minister Arun Jaitley.

The apex decision making body of the new indirect tax regime may also take up changes to simplify the composition scheme further and finalise filing of a single return under the new indirect tax regime from next financial year, two government officials told BloombergQuint yesterday.

Here’s the list of the key expectations from the Council today.