Changes made in 25th GST Council Meeting

Changes made in 25th GST Council Meeting

The 25th GST Council Meeting was held at New Delhi on the 18th of January 2018. Though there is no GST return filing due date changes, various other measures were announced to improve ease of doing business. In addition to relaxation of GST rules and regulations, GST rates have also be reduced for various goods and services.

Penalty for Late Filing GST Return Reduced to Rs.50 – Rs.20 for NIL Return

The penalty for late filing of GST returns has been further reduced by the 25th GST Council Meeting. Now, any business that failed to file GSTR1 return, GSTR5 return or GSTR5A return will only have to pay a penalty of Rs.50 per day for default made.

In case of failure to file NIL GST return, the penalty has been reduced to just Rs.20 per day.

Cancellation of GST Registration

Persons who obtained GST registration voluntarily were previously barred from surrendering their GST registration before end of one year from date of registration. The rules have now been modified to allow cancellation of voluntary GST registration before 1 year.

Also, those who obtained GST registration mandatorily due to migration from VAT or Service Tax or Central Excise can cancel their GST registration before 31st March 2018.

E-Way Bill Introduced

The Government has begun rolling out the e-way bill mechanism on a trial basis through ewaybill.nic.in. Stakeholders can login to ewaybill.nic.in and generate, cancel or modify GST eway bill on a trial basis. Once the system is ready, the GST eway bill system will be made available on ewaybillgst.gov.in.

The Government rollout a nationwide GST eway bill system for interstate movement of goods from 1st Feb. 2018. The Government rollout eway bill system for intrastate movement of goods on later than 1st June 2018. However, no date has been announced by the Government mandating eway bill for intrastate movement of goods.

GST Rate Changes for Goods

The following are the GST rate changes for goods announced in the 25th GST Council Meeting:

GST Rate Reduced from 28% to 18%

• Old and used motor vehicles [medium and large cars and SUVs] on the margin of the supplier, subject to the condition that no input tax credit of central excise duty/value added tax or GST paid on such vehicles has been availed by him.
• Buses for use in public transport which exclusively run on bio-fuels. 

GST Rate Reduced from 28% to 12%

• All types of old and used motors vehicles [other than medium and large cars and SUVs] on the margin of the supplier of subject to the conditions that no input tax credit of central excise duty /value added tax or GST paid on such vehicles has been availed by him. 

GST Rate Reduced from 18% to 12%

• Sugar boiled confectionary
• Drinking water packed in 20 litters bottles
• Fertilizer grade Phosphoric acid
• Bio-diesel
• Bio-pesticides
• Bamboo wood building joinery
• Drip irrigation system including laterals, sprinklers
• Mechanical Sprayer 

GST Rate Reduced from 18% to 5%

• Kernel Powder
• Mehendi paste in cones
• LPG supplied for supply to household domestic consumers by private LPG distributors
• Scientific and technical instruments, apparatus, equipment, accessories, parts, components, spares, tools, mock ups and modules,
• Raw material and consumables required for launch vehicles and satellites and payloads.

GST Rate Reduced from 12% to 5%

• Articles of straw, of esparto or of other plaiting materials,
• Basketware and wickerwork
• Velvet fabric with no refund of unutilised input tax credit. 

GST Rate Reduced from 3% to 0.25%

• Diamonds and precious stones

GST Rate Change to NIL

• Vibhut
• Parts and accessories for manufacture of hearing aids.
• De-oiled rice bran
• GST Rate Increased from 12% to 18%
• Cigarette filter rods

GST Rate Increased from Nil to 5%

• Rice bran (other than de-oiled rice bran)

GST Rate Changes for Services

The following are the GST rate changes or exemptions for services announced in the 25th GST Council Meeting:

• 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.

• To exempt supply of services by way of providing information under RTI Act, 2005 from GST.

• To exempt legal services provided to Government, Local Authority, Governmental Authority and Government Entity.

• To reduce GST rate on construction of metro and monorail projects (construction, erection, commissioning or installation of original works) from 18% to 12%.

• 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.

• To reduce GST rate on tailoring service from 18% to 5%.

• 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%.

To grant following exemptions:

1.  To exempt service by way of  transportation of goods from India to a place outside India by air;
2. 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.

NOTE-The above exemptions may be granted upto 30th September, 2018.

• 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 the Central Government retrospectively w.e.f. 1.7.2017.
• To exempt 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 declared under 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.
• To allow ITC of input services in the same line of business at the GST rate of 5% in case of tour operator service.
• To reduce 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, their sub-contractor would also be liable @ 5%.
• To enhance 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.
• 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
• To exempt dollar denominated services provided by financial intermediaries located in IFSC SEZ, which have been deemed to be outside India under the various regulations by RBI, IRDAI, SEBI or any financial regulatory authority, to a person outside India.
• To  exempt  (a) services by government or local authority to governmental authority or government entity, by way of lease of land, and (b) 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 of construction of flats etc. and   to carry out suitable amendment in the provision relating to valuation of construction service involving transfer of land or undivided share of land, so as to ensure that buyers pay the  same effective  rate of GST on property built on leasehold and freehold land.
• To amend entry 3 of notification No. 12/2017-CT(R) so as to exempt pure services provided to Govt. entity.
• To expand 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.
• To reduce job work services rate for manufacture of leather goods (Chapter 42) and footwear (Chapter 64) to 5%.
• To exempt services relating to admission to, or conduct of examination provided to all educational institutions, as defined in the notification.
• To exempt services by educational institution by way of conduct of entrance examination against consideration in the form of entrance fee.
• To enhance 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.
• To exempt reinsurance services in respect of insurance schemes exempted under S.Nos. 35 and 36 of notification No. 12/2017-CT (Rate).[It is expected that the premium amount charged from the government/insured in respect of future insurance services is reduced.]
• To increase 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.
• To reduce GST on Common Effluent Treatment Plants services of treatment of effluents, from 18% to 12%.
• To exempt services by way of fumigation in a warehouse of agricultural produce.
• 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.
•  To exempt subscription of online educational journals/periodicals by educational institutions who provide degree recognized by any law from GST.
• To exempt 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 educational institution providing education upto higher secondary or equivalent.
• To extend 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) and low-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 of Housing & Urban Affairs, under the same concessional rate.
• To tax 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.
• 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.
• To exempt services provided by and to FédérationInternationale de Football Association (FIFA) and its subsidiaries directly or indirectly related to any of the events under FIFA U-20 World Cup in case the said event is hosted by India.
• To exempt government’s share of profit petroleum from GST and to clarify that cost petroleum is not taxable.

Major Clarifications

In addition the above GST rate changes, the GST Council has also clarified the following matters:

Health Care Services

The GST Council has clarified that services provided by senior doctors / consultants / technicians hired by the hospitals, whether employees or not is exempt from GST.

Also, the entire amount charged by hospitals for healthcare services from the patients including the retention money and the fee/payments made to the doctors is exempt from GST. And food supplied to the in-patients as advised by the doctor/nutritionists is a part of composite supply of healthcare and is not separately taxable under GST. However, other supplies of food by a hospital to patients (not admitted) or their attendants or visitors is taxable under GST.