Recommendations made on 25th Meeting of the GST Council in New Delhi dated 18th Jan 2018

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Recommendations made on 25th Meeting of the GST Council in New Delhi dated 18th Jan 2018

The Union Finance Minister Shri Arun Jaitley Chaired the 25th Meeting of the GST Council in New Delhi dated 18th Jan 2018. The Council has recommended many relief measures regarding GST rates on goods and services covering many sectors and  commodities.  The Council has also recommended issuance of certain clarifications on issues relating to GST rates and taxability ofgstdt certain goods and services.

Major recommendations of the Council are summarised below.

A]   Recommendations relating to Supply of Services

 

The following decisions relating to exemptions / changes in GST rates / ITC eligibility criteria, rationalization of rates / exemptions and clarification on levy of GST onservices were taken by the Council in the meeting held at New Delhi on 18.01.2018. The information is being uploaded immediately after the GST Council’s decision and it will besubject to further vetting during which the list may undergo some changes. The decisions of the GST Council are being communicated for general information and will be giveneffect to through Gazette notifications / circulars which shall have force of law. It is proposed to issue notifications giving effect to following recommendations of the Councilon 25tJanuary, 2018.

 

(A)  Exemptions / Changes in GST Rates / ITC Eligibility Criteria :

 

  1. 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.
  2. To exempt supply of services by way of providing information under RTI Act, 2005 from GST.
  3. To   exempt   legal   services   provided   to   Government,   Local   Authority, Governmental Authority and Government Entity.
  4. To   reduce   GST   rate   on   construction   of   metro   and   monorail   projects (construction, erection, commissioning or installation of original works) from 18% to 12%.
  5. To  levy  GST  on  the  small  housekeeping  service  providers,  notified  under section 9 (5) of GST Act, who provide housekeeping service through ECO, @ 5% without ITC.
  6. To reduce GST rate on tailoring service from 18% to 5%.
  7. To reduce GST rate on services by way of admission to theme parks, water parks, joy rides, merry-go-rounds, go-carting and ballet, from 28% to 18%.
  8. To grant following exemptions:

(i)           To exempt service by way of  transportation of goods from India to a place outside India by air;

(ii)         To exempt service by way of transportation of goods from India to a place outside India by sea and provide that value of such service may be excluded from the value of exempted services for the purpose of reversal of ITC.

The  above  exemptions  may  be  granted  with  a  sunset  clause  upto  30th September, 2018.

  1. To exempt services provided by  the Naval Insurance Group Fund by way of Life Insurance to personnel of Coast Guard under the  Group Insurance Scheme of theCentral Government retrospectively w.e.f. 1.7.2017.
  2. Toexempt 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 declaredunder 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.
  3. Toallow ITC of input services in the same line of business at the GST rate of 5% in case of tour operator service.
  4. Toreduce GST rate (from 18% to 12%) on the Works Contract Services (WCS) 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%. Likewise, WCS attracting 5% GST, theirsub-contractor would also be liable @ 5%.
  5. Toenhance the exemption limit of Rs 5000/- per month per member to Rs. 7500/- in respect of services provided by Resident Welfare Association (unincorporated or nonprofit entity) to its members against their individual contribution.
  6. 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.
  7. Toexempt dollar denominated services provided by financial intermediaries located in IFSC SEZ, which have been deemed to be outside India under the variousregulations by RBI, IRDAI, SEBI or any financial regulatory authority, to a person outside India.
  8. Toexempt
  9.        services by government or local authority to governmental authority or government entity, by way of lease of land, and
  10.        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 ofconstruction of flats etc. and   to carry out suitable amendment in the provision relating to valuation of construction service involving transfer of land orundivided share of land, so as to ensure that buyers pay the  same effective  rate of GST on property built on leasehold and freehold land.
  11. Toamend entry 3 of notification No. 12/2017-CT(R) so as to exempt pure services provided to Govt. entity.
  12. Toexpand 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. upto 25% of supply of goods.
  13. Toreduce job work services rate for manufacture of leather goods (Chapter 42) and footwear (Chapter 64) to 5%.
  14. To exempt  services  relating  to  admission  to,  or  conduct  of  examination provided to all educational institutions, as defined in the notification.  To exemptservices by educational institution by way of conduct of entrance examination against consideration in the form of entrance fee.
  15. Toenhance 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.
  16. Toexempt reinsurance services in respect of insurance schemes exempted under Sr.Nos. 35 and 36 of notification No. 12/2017-CT (Rate). [It is expected that the premiumamount charged from the government/insured in   respect of future insurance services is reduced.]
  17. Toincrease threshold limit for exemption under entry No. 80 of Notification No. 12/2017-C.T. (Rate) for all the theatrical performances like Music, Dance, Drama,Orchestra, Folk or Classical Arts and all other such activities in any Indian language in theatre GST from Rs.250 to 500 per person and to also extend  the  threshold exemption  to  services  by  way  of  admission  to  a planetarium.
  18. Toreduce GST on Common Effluent Treatment Plants services of treatment of effluents, from 18% to 12%.
  19. To exempt  services  by  way  of  fumigation  in  a  warehouse  of  agricultural produce.
  20. To reduce  GST  to  12%  in  respect  of  mining  or  exploration  services  of petroleum crude and natural gas and for drilling services in respect of the said goods.
  21. To  exempt   subscription   of   online   educational   journals/periodicals   by educational institutions who provide degree recognized by any law from GST.
  22. Toexempt the service provided by way of renting of transport vehicles provided to a person providing services of transportation of students, faculty and staff to an educationalinstitution providing education upto higher secondary or equivalent.
  23. Toextend the concessional rate of GST on houses constructed/ acquired under the Credit Linked Subsidy Scheme for Economically Weaker Section (EWS) / Lower Income  Group  (LIG)  /  Middle  Income  Group-1  (MlG-1/Middle Income Group-2 (MlG-2) under the Housing for All (Urban) Mission/Pradhan Mantri Awas Yojana (Urban) andlow-cost houses up to a carpet area of 60 square  metres   per  house  in   a   housing   project   which has   been   given infrastructure status, as proposed by Ministry ofHousing & Urban Affairs, under the same concessional rate.
  24. Totax time charter services at GST rate of 5%, that is at the same rate as applicable to voyage charter or bare boat charter, with the same conditions.
  25. To levy  concessional  GST  @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, centralized cooking or distributing) mid-day meal scheme by an entity registered under section 12AA of IT Act.
  26. Toexempt services provided by and to Fédération Internationale de Football Association (FIFA) and its subsidiaries directly or indirectly related to any of the eventsunder FIFA U-20 World Cup in case the said event is hosted by India.

 

  1. Toexempt government’s share of profit petroleum from GST and to clarify that cost petroleum is not taxable per se.

 

(B) Rationalization of certain exemption entries :

 

  1. To provide inCGST rules that value of exempt supply under sub-section (2) of section 17, shall not include the value of deposits, loans or advances on which interest ordiscount is earned (This will not apply to a banking company and a financial institution including a non-banking financial company engaged in providing services by way ofextending deposits, loans or advances).
  2. To defer the liability to pay GST in case of TDR against consideration in the form of construction service and on construction service against consideration in the form ofTDR to the time when the possession or right in the property is transferred to the land owner by entering into a conveyance deed or similar instrument (eg. allotment letter). Nodeferment in point of taxation in respect of cash component.
  3. To tax renting of immovable property   by government or local authority to a registered person under reverse Charge while renting of immovable property by government orlocal authority to un-registered person shall continue under forward charge
  4. To define insurance agent in the reverse charge notification to have the same meaning as assigned to it in clause (10) of section 2 of the Insurance Act, 1938, so that corporate agents get excluded from reverse charge.
  5. To insert a provision in GST Rules under section 15 of GST Act that the value of lottery shall be 100/112 or 100/128 of the price of lottery ticket notified in the Gazette (thesame is currently notified in the rate notification).
  6. To add, in the GST rate schedule for goods at 28%, actionable claim in the form of chance to win in betting and gambling including horse racing.
  7. To insert in GST rules under section 15 of GST Act,-

Notwithstanding anything contained in this chapter, value of supply of Betting & Gambling shall be 100 % of the face value of the bet or the amount paid into the totalizator.

 

(C) Clarifications :

 

  1. To clarify that exemption of Rs 1000/- per day or equivalent (declared tariff) is available in respect of accommodation service in hostels.
  2. To clarify that fee paid by litigants in the Consumer Disputes Commissions and any penalty imposed by these Commissions, will not attract GST.
  3. To clarify that elephant/ camel joy rides are not classified as transportation services and attract GST @ 18% with threshold exemption to small services providers.
  4. To clarify that leasing or rental service, with or without operator, of goods, attracts same GST as supply of like goods involving transfer of title in the said goods.Therefore, the GST rate for the rental services of self-Propelled Access Equipment (Boom. Scissors/Telehandlers) is 28%.
  5. To clarify that,-
  6.          Services provided by senior doctors/consultants/technicians hired by the hospitals, whether employees or not, are healthcare services which is exempt.
  7.          Hospitals also provide healthcare services. The entire amount charged by them from the patients including the retention money and thefee/payments made to the doctors etc., is towards the healthcare services provided by the hospitals to the patients and is exempt.

III.        Food supplied to the in-patients as advised by the doctor/nutritionists is a part  of  composite supply of healthcare and  not  separatelytaxable. Other supplies of food by a hospital to patients (not admitted) or their attendants or visitors is taxable.

  1. To clarify that  services by way of,-
  2. admission  to  entertainment  events  or  access  to  amusement  facilities including casinos, race-course
  3. ancillary services provided by casinos and race-course in relation to such admission.

III.          services given by race-course by way of total is at or (if given through some other person or charged separately as fees for using totalisator for purpose of betting, are taxable at 28%. Services given by race-course by way of license to bookmaker which is not a service by way of betting andgambling, is taxable at  18%.

B]   Changes recommended in Return Filing Dates:

  1. The following recommendations have been made by the GST Council in its 25th meeting held today at New Delhi:
  2. The late fee payable by any registered person for failure to furnish FORM GSTR-1 (supply details), FORM GSTR-5 (Non-resident taxable person) or FORM GSTR-5A(OIDAR) is being reduced to fifty rupees per day and shall be twenty rupees per day for NIL filers. The late fee payable for failure to furnish FORM GSTR-6 (Input Service Distributor) shall be fifty rupees per day.
  3. Taxable persons who have obtained voluntary registration will now be permitted to  apply for cancellation of registration even before the expiry of one year from the effective date of registration.
  4. For migrated taxpayers, the last date for filing FORM GST REG-29 for cancellation of registration is being extended by further three months till 31st March, 2018.
  5. The facility for generation, modification and cancellation of e-way bills is being provided on trial basis on the portal ewaybill.nic.in. Once fully operational, the eway bill system will start functioning on the portal   ewaybillgst.gov.in
  6. Certain modifications are being made to the e-way bill rules which are to be notified nationwide for inter-State movement with effect from 01.02.2018 and for intra-State movement with effect from a date to be announced separately by each State but not later than 01.06.2018.
  7. The report and recommendations submitted by the Committee on Handicrafts were also accepted by the GST Council.

C]   Recommendations For Changes In GST/IGST Rate And Clarifications In Respect Of GST Rate On Certain Goods

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