GST Rate on Services as Recommended by The GST Council in Its 37th Meeting

The 37thGST Council met in Goa today under the Chairmanship of Union Finance & Corporate Affairs Minister Smt Nirmala Sitharaman  . The meeting was also attended by Union Minister of State for Finance & Corporate Affairs Shri Anurag Thakur besides Chief Minister of Goa Shri PramodSawant,  Finance Ministers of States & UTs and seniors officers of the Ministry of Finance .

GST Council took following decisions relating to changes in GST rates, ITC eligibility criteria, exemptions and clarifications on connected issues.

(A)         EXEMPTIONS / CHANGES IN GST RATES / ITC ELIGIBILITY CRITERIA:

Rate reduction sector wise:

Hospitality and tourism:

  1. To reduce the rate of GST on hotel accommodation service as below: –

Transaction Value per Unit (Rs) per day GST
Rs 1000 and less Nil
Rs 1001 to Rs 7500 12%
Rs 7501 and more 18%
  1. To reduce rate of GST on outdoor catering services other than in premises having daily tariff of unit of accommodation of Rs 7501 from present 18% with ITC to 5% without ITC.  The rate shall be mandatory for all kinds of catering. Catering in premises with daily tariff of unit of accommodation is Rs 7501 and above shall remain at 18% with ITC.

Job work service:

  1. To reduce rate of GST from 5% to 1.5% on supply of job work services in relation to diamonds.
  2. To reduce rate of GST from 18%to 12% on supply of machine job work such as in engineering industry, except supply of job work in relation to bus body building which would remain at 18%.

Exemption sector wise:

Warehousing:

  1. To exempt prospectivelyservices by way of storage or warehousing of cereals, pulses, fruits, nuts and vegetables, spices, copra, sugarcane, jaggery, raw vegetable fibres such as cotton, flax, jute etc., indigo, unmanufactured tobacco, betel leaves, tendu leaves, rice, coffee and tea.

Transportation:

  1. To increase the validity of conditional exemption of GST on export freight by air or sea by another year, i.e. till 30.09.2020.

Insurance:

  1. To exempt “BANGLA SHASYA BIMA” (BSB) crop insurance scheme of West Bengal Government.
  2. To exempt services of life insurance business provided or agreed to be provided by the Central Armed Paramilitary Forces (under Ministry of Home Affairs) Group Insurance Funds to their members under the respective Group Insurance Schemes of these Central Armed Paramilitary forces.

Export promotion:

  1. To exempt services provided by an intermediary to a supplier of goods or recipient of goods when both the supplier and recipient are located outside the taxable territory.
  2. To issue a notification under Section 13(13) of IGST Act notifying the place of supply of specified R&D services (such as Integrated discovery and development, Evaluation of the efficacy of new chemical/ biological entities in animal models of disease,Evaluation of biological activity of novel chemical/ biological entities in in-vitro assays,Drug metabolism and pharmacokinetics of new chemical entities,Safety Assessment/ Toxicology,Stability Studies,Bio Equivalence and Bio Availability Studies, Clinical trials,Bio analytical studies) provided by Indian pharma companies to foreign service recipients, as the place of effective use and enjoyment of a service i.e. location of the service recipient.
  3. To clarify that the place of supply of chip design software R&D services provided by Indian companies to foreign clients by using sample test kits in India is the location of the service recipient and section 13(3)(a) of IGST Act, 2017 is not applicable for determining the place of supply in such cases.

Miscellaneous

  1. To allow the registered authors an option to pay GST on royalty charged from publishers under forward charge and observe regular GST compliance.
  2. To notify grant of liquor licence by State Governments against payment of license fee as a “no supply” to remove implementational ambiguity on the subject.
  3. To exempt services related to FIFA Under-17 Women’s World Cup 2020 similar to existing exemption given to FIFA U17 World Cup 2017.

(B) RATIONALIZATION/ TRADE FACILITATION MEASURES:

  1. To allow payment of GSTon securities lending service under reverse charge mechanism (RCM) at the merit rate of 18% and to clarify that GST on securities lending service for period prior to RCM period shall be paid on forward charge basis. IGST shall be payable on supply of these services and in cases where CGST/SGST/UTGST have been paid, such taxpayers will not be required to pay tax again.
  2. To allow RCM to suppliers paying GST @ 5% on renting of vehicles, from registered person other than body corporate (LLP, proprietorship) when services provided to body corporate entities.

(C) CLARIFICATIONS:

  1.             To clarify the scope of the entry ‘services of exploration, mining or drilling of petroleum crude or natural gas or both”.
  2. To clarify taxability of Passenger Service Fee (PSF) and User Development Fee (UDF) levied by airport operators.

Note: It is proposed to issue notifications giving effect to these recommendations of the Council on 1st October, 2019.

[This note presents the decision of the GST Council in simple language for easy understanding which would be given effect to through Gazette notifications/ circulars which shall have force of law.]

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RM/KMN



(Release ID: 1585718)

FAQ – 17

What are the various reasons where the GST Liability as per financial statements and GST Returns could be different?

There could a difference due to the following reasons commonly

a) Revenue Recognition

b) Stock Transfer outside the states

c) Advance Receipt from customers

d) GST on paid on job work if not returned in stipulated time

e) Reverse charge on certain goods on outward supplies

f) Reverse charge on inward supplies paid

GST TIP – 452

Time period for the recipient to communicate his acceptance or rejection of the consignment would be the validity period of the concerned e-way bill or 72 hours, whichever is earlier. In case of movement of goods on account of job-work, the registered job worker can also generate e-way bill .

GST Tip – 409

As per Rule 138 of the CGST Rules, the taxpayer who is sending the goods for job work, to a job worker outside the state, has to issue an E-waybill even if the goods being sent is of value less than Rs 50,000.

GST Tip – 406

As per Notification No 63/2017 – Central Tax, the last date for filing of Form GST ITC – 04, the taxable person who has dispatched or received goods for job work have to file the return by 31st Dec 2017 for the period July 2017 to Sep 2017, replacing the earlier date of 30th Nov 2017 as notified through Notification No – 53/2017 – Central Tax.

GST Tip – 335

As per Sub-section 68 of Section 2 of CGST Act 2017, ” means any treatment or process undertaken by a person on goods belonging to another registered person and the expression “job worker” shall be construed accordingly” meaning that it would amount to supply if the job worker adds any materials during the process or treatment. This is a major change in the job work process compared to erstwhile Central Excise Act.

GST Tip – 310

As per section 119 of the CGST Rules 2017, if the taxpayer has any materials sent on job work or for repairs or on sale or approval basis have to file GST TRAN – 1 within 90 days from the appointed date.

GST Tip – 283

As per Notification No. 11/2017-Central Tax (Rate) services falling under HSN/SAC 9988 are related to job work in specific cases and they are Manufacturing services on physical inputs (goods) owned by others. It clearly means that the job worker is not supposed to add any material on his side if he adds then it will be a supply. These services attract central tax rate of 2.5% and other services at 9%. Details are given in https://indiagstdotin.wordpress.com/2017/07/27/services-by-way-of-job-work-falling-under-hsn-sac-9988/

Services by way of job work falling under HSN / SAC 9988

(i) Services by way of job work in relation to-
(a) Printing of newspapers;
(b) Textile yarns (other than of man-made fibres) and textile fabrics;
(c) Cut and polished diamonds; precious and semi-precious stones; or plain and studded jewellery of gold and other precious metals, falling under Chapter 71 in the First Schedule to the Customs Tariff Act, 1975 (51of 1975);
(d) Printing of books (including Braille books), journals and periodicals;

(e) Processing of hides, skins and leather falling under Chapter 41 in the First Schedule to the Customs Tariff Act, 1975 (51of 1975).
Explanation.- “man made fibres” means staple fibres and filaments of organic polymers produced by manufacturing processes either,-
(a) by polymerisation of organic monomers to produce polymers such as polyamides, polyesters, polyolefins or polyurethanes, or by chemical modification of polymers produced by this process [for example, poly(vinyl alcohol) prepared by the hydrolysis of poly(vinyl acetate)]; or
(b) by dissolution or chemical treatment of natural organic polymers (for example, cellulose) to produce polymers such as cuprammonium rayon (cupro) or viscose rayon, or by chemical modification of natural organic polymers (for example, cellulose, casein and other proteins, or alginic acid), to produce polymers such as cellulose acetate or alginates.

(ii) Manufacturing services on physical inputs (goods) owned by others, other than (i) above.

Heading no. 9988 Manufacturing services on physical inputs (goods) owned by others
Group 99881 Food, beverage and tobacco manufacturing services
998811 Meat processing services
998812 Fish processing services
998813 Fruit and vegetables processing services
998814 Vegetable and animal oil and fat manufacturing services
998815 Dairy product manufacturing services
998816 Other food product manufacturing services
998817 Prepared animal feeds manufacturing services
998818 Beverage manufacturing services
998819 Tobacco manufacturing services n.e.c.
Group 99882 Textile, wearing apparel and leather manufacturing services
998821 Textile manufacturing services
998822 Wearing apparel manufacturing services
998823 Leather and leather product manufacturing services
Group 99883 Wood and paper manufacturing services
998831 Wood and wood product manufacturing services
998832 Paper and paper product manufacturing services
Group 99884 Petroleum, chemical and pharmaceutical product manufacturing services
998841 Coke and refined petroleum product manufacturing services
998842 Chemical product manufacturing services
998843 Pharmaceutical product manufacturing services
Group 99885 Rubber, plastic and other non-metallic mineral product manufacturing service
998851 Rubber and plastic product manufacturing services
998852 Plastic product manufacturing services
998853 Other non-metallic mineral product manufacturing services
Group 99886 Basic metal manufacturing services
998860 Basic metal manufacturing services
Group 99887 Fabricated metal product, machinery and equipment manufacturing services
998871 Structural metal product, tank, reservoir and steam generator manufacturing services
998872 Weapon and ammunition manufacturing services
998873 Other fabricated metal product manufacturing and metal treatment services
998874 Computer, electronic and optical product manufacturing services
998875 Electrical equipment manufacturing services
998876 General-purpose machinery manufacturing services n.e.c.
998877 Special-purpose machinery manufacturing services
Group 99888 Transport equipment manufacturing services
998881 Motor vehicle and trailer manufacturing services
998882 Other transport equipment manufacturing services
Group 99889 Other manufacturing services
998891 Furniture manufacturing services
998892 Jewellery manufacturing services
998893 Imitation jewellery manufacturing services
998894 Musical instrument manufacturing services
998895 Sports goods manufacturing services
998896 Game and toy manufacturing services
998897 Medical and dental instrument and supply manufacturing services
998898 Other manufacturing services n.e.c.
Heading no. 9989 SAC / HSN Number Other manufacturing services; publishing, printing and reproduction services; materials recovery services
Group 99891 Publishing, printing and reproduction services
998911 Publishing, on a fee or contract basis
998912 Printing and reproduction services of recorded media, on a fee or contract basis
Group 99892 Moulding, pressing, stamping, extruding and similar plastic manufacturing services
998920 Moulding, pressing, stamping, extruding and similar plastic manufacturing services
Group 99893 Casting, forging, stamping and similar metal manufacturing services
998931 Iron and steel casting services
998932 Non-ferrous metal casting services
998933 Metal forging, pressing, stamping, roll forming and powder metallurgy services
Group 99894 Materials recovery (recycling) services, on a fee or contract basis
998941 Metal waste and scrap recovery (recycling) services, on a fee or contract basis
998942 Non-metal waste and scrap recovery (recycling) services, on a fee or contract basis

GST Tip – 192

Every registered tax payer has to issue an electronic waybill aka e-waybill if the consignment value is more than Rs 50,000 (fifty thousand)  for the following cases, a) in relation to a supply, b) for reasons other than supply (job work, moving out machinery for repairs) and c) on purchases from unregistered persons.