The 28th GST Council Meeting took place on July 21, 2018. Here are the key takeaways from the meeting.
1) Return Simplification- Single Return
In the 28th GST council meeting, the government announced certain measures which will simplify the tax filing related compliances for the taxpayers.
- Return formats and associated changes in law approved by council with a change that small tax payers will have the option of filing returns with monthly tax payment.
- Every Taxpayer will file one monthly return with two parts, one for reporting outward supplies and another for availing ITC based on invoices uploaded by supplier on regular interval which can be locked by buyer. The process will be “UPLOAD- LOCK-PAY” for most tax payers.
- NIL returns can be filed by sending SMS.
- Quarterly filing of Return is optional for Taxpayers having turnover below Rs. 5 Crore. This return will be called as SAHAJ and SUGAM and details will be lesser than in regular return.
- Amendment in invoices shall be carried out by an Amendment Return and payment will also be allowed and ultimately will save the interest liability for taxpayers.
2) GST migration reopened
The government has noticed that there are some taxpayers which have not yet completely migrated to the GST regime from older indirect tax regimes like VAT, Service Tax, etc. The migration window will be reopened for the taxpayers who received provisional IDs but could not complete the migration process. The taxpayers who filed Part A of Form GST REG-26, but not Part B will be able to approach the jurisdictional Central / State tax nodal officers with the required documents and data by 31st August 2018.
3) GST rate changes for various products and services
The Government has reduced the GST rates for various goods and services across the board as follows:
Rate Reduction from 28% to 18%
- Paints and varnishes (including enamels and lacquers)
- Glaziers’ putty, grafting putty, resin cement
- Refrigerators, freezers and other refrigerating or freezing equipment including a water cooler, milk coolers, refrigerating equipment for leather industry, ice cream freezer etc.
- Washing machines
- Lithium-ion batteries
- Vacuum cleaners
- Domestic electrical appliances such as food grinders and mixers & food or vegetable juice extractor, shaver, hair clippers etc.
- Storage water heaters and immersion heaters, hair dryers, hand dryers, electric smoothing irons etc.
- Televisions up to the size of 68 cm
- Special purpose motor vehicles. e.g., crane lorries, fire fighting vehicle, concrete mixer lorries, spraying lorries
- Works trucks [self-propelled, not fitted with lifting or handling equipment] of the type used in factories, warehouses, dock areas or airports for short transport of goods.
- Trailers and semi-trailers.
- Miscellaneous articles such as scent sprays and similar toilet sprays, powder-puffs and pads for the application of cosmetics or toilet preparations.
Rate Reduction from 28% to 12%
Rate has been reduced for Fuel Cell Vehicle. Further, Compensation Cess shall also be exempted on fuel cell vehicle.
5% GST rate will now be applicable for footwear having a retail sale price up to Rs 1,000 per pair. 18% GST rate will be applicable for footwear having a retail sale price exceeding Rs 1,000 per pair.
4) GST Rate Change Recommendations
The GST Council has also recommended for the following rate changes in the 28th GST Council Meeting:
a) Rate Reduction from 18% or 12% or 5% to 0%
- Stone/Marble/Wood Deities
- Rakhi [other than that of the precious or semi-precious material of chapter 71]
- Sanitary Napkins
- Coir pith compost
- Sal Leaves siali leaves and their products and Sabai Rope
- Phool Bhari Jhadoo [Raw material for Jhadoo]
- Khali dona
- Circulation and commemorative coins, sold by Security Printing and Minting Corporation of India Ltd [SPMCIL] to the Ministry of Finance.
b) Rate Reduction from 12% to 5%
- Chenille fabrics and other fabrics under heading 5801
- Handloom dari
- Phosphoric acid (fertilizer grade only).
- Knitted cap/topi having retail sale value not exceeding Rs 1000
c) Rate Reduction from 18% to 12%
- Bamboo flooring
- Brass Kerosene Pressure Stove.
- Hand Operated Rubber Roller
- Zip and Slide Fasteners
- Handbags including pouches and purses; jewellery box
- Wooden frames for painting, photographs, mirrors, etc.
- Art ware of cork [including articles of sholapith]
- Stone art ware, stone inlay work
- Ornamental framed mirrors
- Glass statues [other than those of crystal]
- Glass art ware [ incl. pots, jars, votive, cask, cake cover, tulip bottle, vase ]
- Art ware of iron
- Art ware of brass, copper/ copper alloys, electroplated with nickel/silver
- Aluminium art ware
- Handcrafted lamps (including panchloga lamp)
- Worked vegetable or mineral carving, articles thereof, articles of wax, of stearin, of natural gums or natural resins or of modelling pastes etc. (including articles of lac, shellac)
- Ganjifa card
d) Rate Reduction from 18% to 5%
- Ethanol for sale to Oil Marketing Companies for blending with fuel
- Solid biofuel pellets
e) Rate Reduction from 12% to 5%
- Handmade carpets and other handmade textile floor coverings (including namda / gabba)
- Handmade lace
- Hand-woven tapestries
- Hand-made braids and ornamental trimming in the piece
5) Recommendations by GSTN Council
There are certain recommendations made by the council which will give effect to amendments to GST acts after they are approved by way of notifications.
a) Quarterly return for small taxpayers
So far, the taxpayers with the annual turnover of up to Rs 1.5 crore were exempt from filing returns every month. They had to file the return once every quarter. The government has extended this benefit to 93% taxpayers by raising the exemption limit from Rs 1.5 crore to Rs 5 crores.
b) Refund of accumulated ITC
In respect of fabrics, GST is applicable at the rate of 5% subject to the condition that refund of accumulated input tax credit on account of inversion will not be allowed. However, considering the difficulty faced by the fabric manufacturing industry on account of this condition, the GST Council has recommended for allowing the refund to fabrics on account of inverted duty structure. The refund of accumulated ITC would be allowed only with the prospective effect.
c) The threshold for composition scheme revised
Any taxpayer operating under the composition scheme is now allowed to supply services of up to a value not more than 10% of the turnover in the preceding financial year or Rs 5 lakhs, whichever is higher.
d) GST on RCM
In the meeting, it was decided that GST on reverse charge basis will be applicable on receipt of supplies of specified goods by certain notified classes of registered persons from unregistered suppliers.
e) GST registration threshold revised
The registration exemption limit under GST has been increased from Rs 10 lakhs to Rs 20 lakhs in the states of Assam, Arunachal Pradesh, Himachal Pradesh, Meghalaya, Sikkim and Uttarakhand.
f) Multiple registrations within the state
The taxpayers are mandatorily required to register in every state they operate. But now they have the option to have multiple registrations within a state or union territory in respect of multiple places of business located within the same state or union territory. Multiple registrations within a state are mandatory for e-commerce operators who are required to collect TCS.
g) Temporary suspension of registration during the cancellation process
If a taxpayer has applied for getting his registration cancelled, his registration will stay temporarily suspended as long as the cancellation is under process. This step has been taken to relieve the taxpayer from continued compliance burden.
h) Certain transactions to be treated as no supply
The following transactions to be treated as no supply (no tax payable) under Schedule III:
- Supply of goods from a place in the non-taxable territory to another place in the non-taxable territory without such goods entering into India;
- Supply of warehoused goods to any person before clearance for home consumption; and
- Supply of goods in case of high sea sales.
i) Issuing credit/debit notes
Registered persons may issue consolidated credit/debit notes in respect of multiple invoices issued in a financial year.
j) The cap on the amount payable for filing the appeal
The government has capped the amount of pre-deposit payable for the filing of appeal before the Appellate Authority and the Appellate Tribunal. The limit has been set to Rs 25 crores and Rs 50 crores, respectively.
k) Revision of powers of the commissioner
The Commissioner will be empowered to extend the time limit for return of inputs and capital sent on job work, up to a period of one year and two years, respectively.
l) Treatment of exports
Supply of services to qualify as exports, even if payment is received in Indian Rupees, where permitted by the RBI.
m) Determination of place of supply
Place of supply in case of job work of any treatment or process done on goods temporarily imported into India and then exported without putting them to any other use in India, to be outside India.
n) Recovery provisions
Recovery can be made from distinct persons, even if present in different State/Union territories.
o) Input tax credit
The order of cross-utilisation of input tax credit is being rationalised. Several other provisions related to ITC have been revised.
p) ITC available for additional transactions
The scope of input tax credit is being widened, and it would now be made available in respect of the following:
- Most of the activities or transactions specified in Schedule III;
- Motor vehicles for transportation of persons having a seating capacity of more than thirteen (including driver), vessels and aircraft;
- Motor vehicles for transportation of money for or by a banking company or financial institution;
- Services of general insurance, repair and maintenance in respect of motor vehicles, vessels and aircraft on which credit is available; and
- Goods or services which are obligatory for an employer to provide to its employees, under any law for the time being in force.
q) Reversal of ITC
In case the recipient fails to pay the due amount to the supplier within 180 days from the date of issue of invoice, the input tax credit availed by the recipient will be reversed, but the liability to pay interest is being done away with.
These recommendations will now be placed before the Parliament and the legislature of State and Union territories for approval and amending relevant GST Acts.