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.]

*****

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.