Gist of GST Notifications giving effect to recommendations of 28th GST Council meeting

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Several changes on GST rates on goods and services were announced by ‘MSME-focused’ 28th GST Council meeting concluded on July 21, 2018. Several prolonged decisions such as simplification of returns filing and exempting tax on sanitary napkins were finally taken in the meeting along with slashing of GST rates on several general-use items such as while goods consisting of TV (upto 27 inch), washing machine, refrigerators etc., paints, wall putty, scents, cosmetics, marble, stones etc.

The Central Government has now given effect to the recommendations of GST Council vide various notifications dated July 26, 2018 and all such notifications, unless specifically mentioned, shall be effective from July 27, 2018. Important pointers of all such notifications has been summarised for you easy digest:

Notification No. Gist of Amendments
Notification No. 13/2018 -Central Tax (Rate)

The Central Government has amended Notification No. 11/2017- Central Tax (Rate) dated June 28, 2017 in the following manner:

  • The description contained in item (i) under s.no. 7 has been rationalised and two explanations has been inserted to clarify the places where such services can be supplied and it specifically excludes supplies covered in S. No. 5.
  • Option has been provided by way of insertion of item (ia) to tax “supply of goods, being food or any other article for human consumption or any drink, by the Indian Railways or Indian Railways Catering and Tourism Corporation Ltd. or their licensees, whether in trains or at platforms” at 5% without claiming input tax credit.
  • In items (ii), (vi) and (viii) under S. No. 7 of GST Services Rate Notification dealing with accommodation services, word “declared tariff” has now been substituted with “value of supply” and explanation in respective item no. dealing with meaning of declared tariff has been omitted.

Thus, Hotel industry has been given major relief by providing that the rate of tax on accommodation service shall be based on transaction value instead of declared tariff.

  • The description contained in item (v) in S. No. 7 dealing with outdoor catering services has been rationalised to include only those supplies  by way of or as part of any service, of goods, being food or any other article for human consumption or any drink, at Exhibition Halls, Events, Conferences, Marriage Halls and other outdoor or indoor functions that are event based and occasional in nature.
  • Specified rate of 12% has been prescribed where contract of transportation of goods is multi-modal.
  • As a green initiative, GST on supply of e-books has been reduced from 18 to 5%.
Notification No. 14/2018 -Central Tax (Rate)

The Central Government has amended Notification No. 12/2017- Central Tax (Rate) dated June 28, 2017 to exempt certain services like:

  1. Services by an old age home run by Central Government, State Government or by an entity registered under Section 12AA of the Income-tax Act, 1961 to its residents (aged 60 years or more) against consideration upto twenty-five thousand rupees per month per member.
  2. Services by Coal Mines Provident Fund Organisation to persons governed by the Coal Mines Provident Fund and Miscellaneous Provisions Act, 1948
  3. Services by National Pension System (NPS) Trust to its members against consideration in the form of administrative fee.
  4. Services supplied by Central Government, State Government, Union territory to their undertakings or PSUs by way of guaranteeing the loans taken by such undertakings or PSUs from the financial institutions.
  5. Services provided by an unincorporated body or a non-profit entity registered under any law for the time being in force, engaged in –
  • activities relating to the welfare of industrial or agricultural labour or farmers; or
  • promotion of trade, commerce, industry, agriculture, art, science, literature, culture, sports, education, social welfare, charitable activities and protection of environment,

to its own members against consideration in the form of membership fee upto an amount of one thousand rupees (Rs 1000/-) per member per year.

Certain clarification and rationalisation have also been made and few important of them are as under:

  • The word ‘declared tariff’ has been replaced with ‘value of supply’ in serial no. 14 to exempt services by a hotel, guest house etc. for residential or lodging purposes, where value of supply is less than Rs. 1000 per day or equivalent
  • In S. No. 19A and 19B the sunset clause has been extended to September 30, 2019 for service by way of transportation of goods by an aircraft/ Vessel from customs station of clearance in India to a place outside India.
  • An explanation has been inserted to clarify that supply of services provided by State and Central educational boards to students for conduct of examination will be exempt.
Notification No. 15/2018 -Central Tax (Rate) The Central Government has amended Reverse Charge Notification No. 13/2017-Central Tax (Rate) dated June 28, 2017 as under:

  • Services supplied by individual Direct Selling Agents (DSAs) other than body corporate, partnership or LLP to banks/ non-banking financial company (NBFCs) shall be taxed under reverse charge mechanism.
  • The definition of “renting of immovable property” has been inserted to mean “allowing, permitting or granting access, entry, occupation, use or any such facility, wholly or partly, in an immovable property, with or without the transfer of possession or control of the said immovable property and includes letting, leasing, licensing or other similar arrangements in respect of immovable property.”
Notification No. 16/2018 -Central Tax (Rate)

In terms of Notification No. 14/2017- Central Tax (Rate)dated June 28, 2017, services by way of any activity in relation to a function entrusted to a Panchayat under Article 243G of the Constitution, undertaken by CG, SG or any local authority was neither treated as a supply of goods nor services.

Now, this notification has been amended to include services by way of any activity in relation to a function entrusted to a Municipality under Article 243W of the Constitution. Thus, the same shall also be treated neither as a supply of goods nor services.

 

Further, now these services undertaken by union territories shall also be given same treatment.

Notification No. 17/2018 -Central Tax (Rate) Clause (a) under Item no. (vi) of S. No. 3 in Notification No. 11/2017 – Central Tax (Rate) dated June 28, 2017 prescribed GST rate of 12% for specified works contract services provided to CG, SG, UT, governmental authority, local authority or government entity meant for purposes other than business or profession.

 

Now, an explanation has been inserted to clarify the meaning of ‘business’ to state that the term ‘business’ shall not include any activity or transaction undertaken by the CG, SG or any local authority in which they are engaged as public authorities.

Notification No. 18/2018 -Central Tax (Rate) The Central Government has amended Notification No. 01/2017-Central Tax (Rate) dated June 28, 2017 dealing with list of applicable tax rates on various goods, to provide revised list of rate classification as per recommendations of the 28th GST Council meeting.
Notification No. 19/2018 -Central Tax (Rate) The Central Government has amended Notification No. 02/2017-Central Tax (Rate) dated June 28, 2017 dealing with list of exempted goods, to provide revised list of exempted goods as per recommendations of the 28th GST Council meeting.
Notification No. 20/2018 -Central Tax (Rate) The Central Government has amended Notification No. 5/2017-Central Tax (Rate), dated June 28, 2017, whereunder list of goods were mentioned in respect of which no refund of unutilised input tax credit was allowed where the credit has accumulated on account of inverted duty structure.

 

In the said notification, list of items contained in serial numbers 1, 2, 3, 4, 5, 6, 6A, 6B, 6C and 7 (pertaining to fabric sector) has been amended so as to allow refund of accumulated ITC arising on account of inverted duty structure on supplies received on or after August 01, 2018. In respect of any supplies received before such date, the accumulated ITC shall lapse.

Notification No. 21/2018 -Central Tax (Rate)

The Central Government has amended notification No. 01/2017-Central Tax (Rate), dated June 28, 2017 to provide for concession in rate of GST on handicraft goods.

 

DISCLAIMER: The views expressed are strictly of the author and A2Z Taxcorp LLP. The contents of this article are solely for informational purpose. It does not constitute professional advice or recommendation of firm. Neither the author nor firm and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any information in this article nor for any actions taken in reliance thereon.

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