After the GST Council’s decisions in its 23rd meeting, our Hon’ble Prime Minister Narendra Modi tweeted that “jan bhagidari” was “at the core” of the government’s functioning and all its decisions were “people-inspired, people-friendly and people-centric”. Indeed, the GST Council in its 23rd meeting has made sweeping changes to the present framework of GST, allowing taxpayers and small businesses to breathe easy. Importantly, the highest GST tax slab was slashed to retain only 50 items at 28% tax bracket. Effective from November 15, 2017, as many as around 233 items from chocolates, detergents to granite and marble will become cheaper – 177 items moving from 28% to 18%, 2 items from 28% to 12% and around other 54 items also moving to lower tax brackets. As per government algorithm, these measures are expected to cost the exchequer around Rs. 20,000 crore.
Additionally, the GST Council has come out with a string of deadline relaxations and lowering of penalty/ late fees for delayed filing of return along with an increase in the annual turnover threshold for the composition scheme to Rs 1.5 crore (overall limit to be increased to Rs. 2 Cr) from the recently revised Rs 1 crore. Taxpayers would file summary return in Form GSTR-3B along with payment of tax by 20th of the succeeding month till March, 2018. Further filing of GSTR 2 & 3 is done away with till March, 2018 and requires filing of details in FORM GSTR-1 only till March 2018, with taxpayers divided into two categories – Taxpayers with annual aggregate turnover upto Rs. 1.5 crore filing quarterly GSTR-1 and those with annual aggregate turnover more than Rs. 1.5 crore filing GSTR-1 on monthly basis, as per revised frequency provided. Eating out will also be easier as all standalone restaurants are now going to be taxed at 5% without ITC, as against attracting different rates based on whether or not they were air-conditioned.
Despite of these wholesale changes in GST rates and other procedures, we are still in the state of flux as to when the apparent flaws in the basic structure of GSTN portal will be sorted out. It is being stated that a committee under GSTN chairman Ajay Bhushan Pandey has been set up to look into the matter of making filing of GSTR-2 and GSTR-3 business friendly, but complete removal of all forms of technical glitches is still-to-watch scenario. Even after so much of rates re-shuffling, goods like washing machine, AC, etc., which are actually the need of aam aadmi, is still categorised as luxury item falling in 28% tax bracket. Further, marbles and certain sanitary fittings will now be taxed at lower rate than cement, which creates an awkward position as cement is the first basic material for construction. May be we will see some more reductions in future to align these gaps.
The changes recommended in the 23rd GST Council meeting can be summarized as under for your easy digest:
- Return Filing: GSTR-3B and GSTR-1
- The return filing process is to be further simplified in the following manner:
(i). All taxpayers would file monthly return in Form GSTR-3B along with payment of taxes by 20th of the succeeding month till March, 2018.
(ii). 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 up to Rs. 1.5 Crore need to file GSTR-1 on quarterly basis as per following frequency:
|Jul – Sep||31st Dec, 2017|
|Oct – Dec||15th Feb, 2018|
|Jan – Mar||30th April, 2018|
(b) Taxpayers with annual aggregate turnover more than Rs. 1.5 Crore need to file GSTR-1 on monthly basis as per following frequency:
|Jul – Oct||31st Dec, 2017|
|Nov||10th Jan, 2018|
|Dec||10th Feb, 2018|
|Jan||10th Mar, 2018|
|Feb||10th Apr, 2018|
|Mar||10th May, 2018|
(iii). No need to file GSTR-2 & GSTR-3 for the previous month/ period till March, 2018 and 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.
- 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 fees was waived in all such cases. It has been decided that where such late fees 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 fees 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) and for all other taxpayers, Rs. 50/- per day (Rs. 25/- per day each under CGST & SGST Acts) instead of Rs. 200/- per day (Rs. 100/- per day each under CGST & SGST Acts) .
- Extension of dates for furnishing Forms
Taking cognizance of the late availability or unavailability of some forms on the GSTN portal, it has been decided that the due dates for furnishing the following forms shall be extended as under:
|S. No.||Form and Details||Original due dates||Revised due dates|
|1.||GST ITC-04, containing details of Inputs & CG sent to Job Workers, for the quarter July-September, 2017||25.10.2017||31.12.2017|
|2.||GSTR-4 for the quarter July-September, 2017 by Composition Dealer||18.10.2017||24.12.2017|
|3.||GSTR-5 for July, 2017 by Non-Resident Taxable Person||20.08.2017 or 7 days from the last date of registration whichever is earlier||11.12.2017|
|4.||GSTR-5A for July, 2017 by OIDAR Service Providers||20.08.2017||15.12.2017|
|5.||GSTR-6 for July, 2017 by ISD||13.08.2017||31.12.2017|
|6.||TRAN-1||30.09.2017||31.12.2017 (One-time option of revision also to be given till this date)|
Revised due dates for subsequent tax periods will be announced in due course.
- Manual Filing of Application for Advance Ruling
A facility for manual filing of application for advance ruling is being introduced for the time being.
- Further benefits for 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 Rs. 20 lakhs. As a result, all service providers, whether supplying intra-State, inter-State or through e-commerce 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).
- 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.
Relevant notifications for all of the above decisions will be issued shortly, so as to be effective from 15.11.2017.
- Changes recommended in Composition Scheme
- Uniform rate of tax @ 1% under composition scheme for manufacturers and traders(Tax to be paid on Taxable turnover excluding exempt supply of goods). No change for composition scheme for restaurant.
- Composition Dealers will be allowed to make Supply of services upto Rs. 5 Lakhs per annum within overall limit of composition dealer.
- Annual turnover eligibility for composition scheme will be increased to Rs. 2 Crore from the present limit of Rs. 1 Crore under the law. Thereafter, eligibility for composition will be increased to Rs. 1.5 Crore per annum. This change recommended by the GST Council will be implemented only after the necessary amendment of the CGST Act and SGST Acts.
- Changes relating to GST rates on Restaurant Service
- All stand-alone restaurants, whether air conditioned or not, will attract GST @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.
- 8.Changes relating to GST rates on Other Services
- 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 ITC.
- 9.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 if IGST 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 ATA carnet system. These goods are to be re-exported after the specified use is over.
- Other changes for simplification and harmonisation or clarification of issues
- 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.
- 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.
- Rationalization of certain exemption entries–
- The existing exemption entries w.r.t. 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-Central Tax (Rate) 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”].
- 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-
(a) permanent transfer of Intellectual Property other than Information Technology software attracts GST at the rate of 12%; and
(b) permanent transfer of Intellectual Property in respect of Information Technology software attracts GST at the rate of 18%.
- Other Clarifications:
- It is being clarified that credit of GST paid on aircraft engines, parts & accessories will be available for discharging GST liability 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- Central Tax (Rate) and Notification No. 12/2017- Central Tax (Rate) (“Exemption Notification”) 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 Sl. No. 40 of Exemption Notification;
(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 Exemption Notification which exempts Services by Central Government, State Government, Union territory or local authority to individuals.