The Council, under the chairmanship of Ms. Nirmala Sitharaman, made some important decisions in the 35th meeting held at Vigyan Bhawan. The decisions taken are as follows:
The due date for furnishing FORM GSTR – 9/ 9A/ 9C for FY 2017-18 to be extended till 31 August 2019.
The due date for furnishing FORM GST ITC – 04, relating to job work, for the period July, 2017 – June, 2019 to be extended till 31 August 2019.
GST laws to be amended to incorporate certain changes brought earlier by notifications.
The date of invocation of Rule 138E of the CGSTR, 2017, pertaining to blocking of e-way bills filing facility for taxpayers who do not file returns for two consecutive tax periods, has been postponed from 21 June 2019 to 21 August 2019.
The last date to avail for tax payment scheme under Notfn. No.: 02/2019 – CT(R) to be extended from 30 April 2019 to 31 July 2019.
Location of the State and Area Benches for the GSTAT for various States and UTs with legislature were decided. It has been decided to have a common State Bench for Sikkim, Nagaland, Manipur and Arunachal Pradesh.
The tenure of National Anti-Profiteering Authority has been extended by 2 years.
e-invoicing system for B2B transactions to be introduced in phase-wise manner from January 2020.
“Seamless flow of credit” is one of the key features of GST. Barring a few exceptions, a registered person is allowed to avail the credit for GST paid on all inputs, input services and capital goods. However, in certain situations the provisions of law obliges such registered persons (recipients of supplies) to reverse the credit availed. Let’s discuss the provisions of law that deal with the same –
ITC attributable to discount given after the supply has been effected [Section 15(3)] – The recipient of the supply on which discount is given after the said supply has been effected, shall reverse the ITC attributable to the discount on the basis of the credit note (or any other document) issued by the supplier. This is in line with the provision that such discount shall not be included in the value of the said supply, thereby allowing the supplier to reduce his output tax liability. However, there is one other condition that such discount shall be established as per an agreement entered into at or before the time of such supply and specifically linked to relevant invoices. If this other condition is not satisfied, then despite the fact that the recipient reverses the ITC availed by him as mentioned above, the supplier will not be able to exclude the discount from his value of supply and reduce his output tax liability.
Non-payment of consideration along with tax amount within 180 days [Second Proviso to Section 16(2)] – If a recipient fails to pay the amount towards the value of supply, along with tax payable thereon, to the supplier within 180 days from the invoice date, the ITC availed by him on such supply shall be reversed and added to his output tax liability, along with interest calculated @ 18% for the period starting from the date of availing the ITC (i.e. the date when the relevant return was furnished, thereby crediting the amount of ITC to the e-CrL) till the date when the amount added to the output tax liability is paid. This reversed amount can be reclaimed when the due payment of the consideration is made.
Common inputs/ input services/ capital goods used partly for business purpose for effecting taxable supplies and partly for exempt supplies or non-business purposes [Sections 17(1) and (2)] – A registered person who is involved in making both taxable supplies (including zero-rated supplies, whether taxable or exempt) and exempt supplies (other than zero-rated supplies) shall reverse the amount of common inputs/ input services/ capital goods that he uses for effecting both the kind of supplies, calculated as per Rules 42 and 43 and Section 17(3). The same provision applies to a registered person who uses such inputs/ input services/ capital goods commonly for his business as well as non-business purposes (legally speaking, it even includes the ITC on telephone expenses that is used for making both official as well as personal phone calls). NOTE: The calculations as per Rules 42 and 43 have to be done both monthly as well as annually.
Receipt of Credit Note [Section 34] – If a recipient of goods/ services receives a Credit Note from his supplier for any reason, including overbilling or purchase returns, he shall reverse the amount of ITC claimed on the basis of the original invoice to the extent covered by such credit note, thereby allowing the supplier to reduce his output tax liability. The same provision shall apply to the apportionment of reduction of ITC by an ISD on account of receipt of credit note from the supplier. However, the ISD shall adjust the amount of reduction from the ITC required to be distributed in the month of receipt of the said credit note, and in case the amount goes negative, shall add to the output tax liability of such recipient(s).
Discrepancies in claim of ITC [Section 42] – The provisions of this section is not effective as of now, but might soon be. Where a mismatch between the claim of ITC by the recipient and the corresponding details of output tax liability of the supplier is found and communicated to both the parties and yet no rectification is made by either of them timely, the said mismatched amount of ITC shall be added to the output tax liability of the recipient in his return (FORM GSTR – 3) for the month succeeding the month in which the discrepancy is made available.
The Council made the following important decisions in its 32nd meeting –
Regarding Composition scheme, w.e.f. 01 April, 2019 –
The turnover capping limit for eligibility to register under Composition scheme shall be raised to ₹ 1.5 crores for general states (as provided in the CGST Amendment Act, 2017). The special category states shall decide their turnover limit within a week.
The persons registered under composition scheme shall now be required to file only one return annually. However, the tax shall still be payable on quarterly basis.
Composition scheme shall be made available to service suppliers (pure or mixed) having aggregate turnover in the previous FY up to ₹ 50 lakhs, with a tax rate of 6%.
W.e.f. 01 April, 2019, the threshold limits for exemption from registration and payment of GST shall be –
For Goods – ₹ 40 lakhs or ₹ 20 lakhs as per the discretion of the state.
For Services – ₹ 20 lakhs or ₹ 10 lakhs as applicable currently.
Kerala has been allowed to levy a cess for natural calamities @ not exceeding 1% for max 2 years on all intra-state supply of goods and services.
Along with approving a one-time amnesty scheme by completely waiving the late feefor all taxpayers in case FORM GSTR-1, FORM GSTR-3B & FORM GSTR-4 for the months/ quarters July 2017 to September 2018, are furnished after 22.12.2018 but on or before 31.03.2019, the GST Council in its 31st meeting today, made the following key recommendations:
Interest shall be made applicable to the net amount of GST to be paid in cash only, i.e. after considering the admissible ITC.
GST rates on goods like pulleys, transmission shifts, gearboxes, monitors and television screens up to 32″, retreaded tires, power banks have been slashed from 28%. (For the detailed list, including services, please refer the annexure at the bottom of this post).
A centralized Appellate Authority for Advance Ruling shall be formed for considering cases where 2 or more State Appellate Authorities of Advance Ruling give conflicting decisions.
The categorization of e-cash ledger into Tax, Interest, Penalty etc. for each of CGST, SGST/ UTGST, IGST, Compensation Cess shall be removed and it should be subsumed under a single pool for each tax head.
The refund amount sanctioned by either Centre or State authorities shall be disbursed by a single authority. This scheme shall first be implemented on a pilot basis.
The new simplified return filing system shall run on a trial basis from 01 April 2019 and made mandatory from 01 July 2019.
The due date for furnishing FORM GSTR-9/9A/9C for FY 2017-18 has further been extended till 30.06.2019. The following key clarificatory changes shall be made in the formats/ instructions for filing these forms –
Amendment of headings in the forms to specify that the return in FORM GSTR-9 & 9A would be in respect of supplies etc. ‘made during the year’ and not ‘as declared in returns filed during the year’;
All returns in FORM GSTR-1 & FORM GSTR-3B have to be filed before filing of FORM GSTR-9 & FORM GSTR-9C;
All returns in FORM GSTR-4 have to be filed before filing of FORM GSTR-9A;
HSN code may be declared only for those inward supplies whose value independently accounts for 10% or more of the total value of inward supplies;
Additional payments, if any, required to be paid can be done through FORM GST DRC-03 only in cash;
ITC cannot be availed through FORM GSTR-9 & FORM GSTR-9C;
All invoices pertaining to previous FY (irrespective of the month in which such invoice is reported in FORM GSTR-1) would be auto-populated in Table 8A of FORM GSTR-9;
Value of “non-GST supply” shall also include the value of “no supply” and may be reported in Table 5D, 5E, and 5F of FORM GSTR-9;
Verification by a taxpayer who is uploading the reconciliation statement would be included in FORM GSTR-9C.
The due date for furnishing FORM GSTR-8 for October, November and December, 2018 has been extended till 31.01.2019.
The due date for furnishing FORM GST ITC-04 for July 2017 – December 2018 has been extended till 31.01.2019
ITC in relation to invoices issued by the supplier during FY 2017-18 may be availed by the recipient till the due date for furnishing of FORM GSTR-3B for the month of March 2019, subject to specified conditions.
All the supporting documents to be submitted with FORM GST RFD-01A shall be submitted electronically.
One more window for completion of the migration process is being allowed. The due date for the taxpayers who did not file the complete FORM GST REG-26 but received only a Provisional ID (PID) till 31.12.2017 for furnishing the requisite details to the jurisdictional nodal officer shall be extended till 31.01.2019. Also, the due date for furnishing FORM GSTR-3B and FORM GSTR-1 for the period July 2017 to February, 2019/quarters July 2017 to December 2018 by such taxpayers shall be extended till 31.03.2019.
Taxpayers who have not filed the returns for two consecutive tax periods shall be restricted from generating e-way bills.
The different amendment acts shall be made applicable from 01.02.2019
From 28% to 18%
Pulleys, transmission shafts and cranks, gearboxes etc.
Monitors and TVs of up to screen size of 32″
Re-treaded or used pneumatic tires of rubber
Power banks of lithium-ion batteries
Digital cameras and video camcorders
Video game consoles and other games and sports requisites
Cinema tickets above ₹ 100
From 28% to 5%
Parts and accessories for the carriages of differently-abled persons.
From 18% to 12%
Cork roughly squared or debagged
Articles of natural cork
Cinema tickets up to ₹ 100
Third party insurance premium of goods carrying vehicles
From 18% to 5%
From 12% to 5%
Fly ash blocks
From 12% to Nil
From 5% to Nil
Vegetables (uncooked or cooked by steaming or boiling in water), frozen, branded and put in a unit container
Vegetable provisionally preserved but unsuitable in that state for immediate consumption
Exemption from GST on the supply of gold by Nominated Agencies to exporters of an article of gold jewelry.
Exemption from GST on proceeds received by Government from the auction of gifts received by President, Prime Minister, Governor or Chief Minister of a State and public servants, the proceeds of which are used for the public or charitable cause.
Exemption from IGST/Compensation cess on vehicles imported for temporary purposes under the Customs Convention on the Temporary Importation of Private Road Vehicles (carnet de passages-en-douane).
Rate of 5%/18% to be applied based on the transaction value of footwear
Uniform GST rate of 12% on Flexible Intermediate Bulk Container (FIBC) from existing 5%/12% (depending on the value)
Services supplied by banks to Basic Saving Bank Deposit (BSBD) account holders under Pradhan Mantri Jan Dhan Yojana (PMJDY) shall be exempted.
Air travel of pilgrims by non-scheduled/charter operations, for religious pilgrimage facilitated by the Government of India under bilateral arrangements, shall attract the same rate of GST as applicable to similar flights in Economy class (i.e. 5% with ITC of input services)
Services supplied by rehabilitation professionals recognised under Rehabilitation Council of India Act, 1992at medical establishments, educational institutions, rehabilitation centers established by Central Government / State Government or Union Territories or entity registered under section 12AA of the Income-tax Act shall be exempted.
Services provided by GTA to Government departments/local authorities which have taken registration only for the purpose of deducting tax under Section 51 shall be excluded from payment of tax under RCM and the same shall be exempted.
Exemption on services provided by Central or State Government or Union Territory Government to their undertakings or PSUs by way of guaranteeing loans taken by them from financial institutions is being extended to guaranteeing of such loans taken from banks.
Parliament and State legislatures shall be extended the same tax treatment with regard to payment of tax under RCM (reverse charge mechanism)as available to Central and State Governments.
Security services (supply of security personnel) provided to a registered person, except Government Departments which have taken registration for TDS and entities registered under composition scheme, shall be put under RCM.
Services provided by unregistered Business Facilitator (BF) to a bank and agent of Business correspondent (BC) to a BC shall be put under RCM.
GST on solar power generating plant and other renewable energy plants
GST rate of 5% rate has been prescribed on renewable energy devices & parts for their manufacture (biogas plant/solar power based devices, solar power generating system (SGPS) etc) [falling under chapter 84, 85 or 94 of the Tariff]. Other goods or services used in these plants attract applicable GST.
Certain disputes have arisen regarding GST rates where specified goods attracting 5% GST are supplied along with services of construction etc and other goods for a solar power plant.
To resolve the dispute the Council has recommended that in all such cases, the 70% of the gross value shall be deemed as the value of supply of said goods attracting 5% rate and the remaining portion (30%) of the aggregate value of such EPC contract shall be deemed as the value of supply of taxable service attracting standard GST rate.
Sprinkler system consisting of nozzles, lateral and other components would attract 12% GST rate under S.No. 195B of notification No. 1/2017-Central Tax (Rate) dated 28.6.2018
Movement of Rigs, Tools & Spares and all goods on wheels on own account where such movement is not intended for the further supply of such goods but for the provision of service does not involve a supply (e.g., movement of testing equipment etc.) and is not be liable to GST.
The goods with description Bagasse Board [whether plain or laminated] falling under Chapter 44 attract GST at the rate of 12%.
Concessional GST rate of 5% applies to the LPG supplied in bulk to an OMC by refiners/ fractioners for bottling for further supply to household domestic consumers.
While animal/ cattle/ aquatic/ poultry feed are exempt vide S. No. 102 of notification No. 2/2017-Central Tax (Rate), this exemption would not apply to their inputs such as fish meal, meat bone meal, bran, sharps, oil cakes of various oil seeds etc.
Manner of determination of the classification of vitamins, provitamins etc. as animal feed supplements
Sattu or Chattua falling under HS code 1106 and attracts the applicable GST rate.
Polypropylene Woven and Non-Woven Bags and PP Woven and Non-Woven Bags laminated with BOPP falls under HS code 3923 and attract 18% GST rate.
18% GST is applicable on wood logs including the wood in rough/log used for pulping.
Turbocharger is classified under heading 8414 and attracts 18% GST and not 5% GST.
Fabric even if embroidered or has stitching of lace and tikki etc., and even if sold in three-piece fabric as ladies suit set, will be classifiable as fabric and would attract 5% GST.
Scope of concessional rate of 5% GST rate for specified equipment for waste to energy plant.
With effect from 31st January, 2018 degrees/ diploma awarded by IIMs under IIM Act, 2017 will be exempt from GST.
The services provided by IFC and ADB are exempt from GST in terms of provisions of IFC Act, 1958 and ADB Act, 1966.
Services provided by Council/ Board of Primary/ Secondary/ Higher Secondary Education for conduct of examination to its students are exempt.
“Printing of pictures” falls under service code “998386: Photographic and videographic processing services” of the scheme of classification of services and attract GST @18% and not under “998912: Printing and reproduction services of recorded media, on a fee or contract basis” which attracts GST @12%.
Leasing of pumps and reservoirs by the OMCs to petrol pump dealers is a mixed supply and the Licence Fee Recovery (LFR) charged for the same shall be leviable to GST @ 28%, the rate applicable to pumps. Leasing of land and buildings along with equipment shall fall under heading 9972 (real estate services) and attract GST rate of 18%.
The incentives paid by RBI to Banks under “Currency Distribution and Exchange Scheme” (CDES)are taxable.
Scope of entry for multi-modal transport with GST rate of 12% inserted w.e.f. date 26.07.2018, covers only transport of goods from a place in India to another place in India, that is, only domestic multi-modal transport.
The nature of business establishment making supply of food, drinks and other articles for human consumption will not determine whether the supply by such establishments is a supply of goods or services. It will rather depend on the constituents of each individual supply and whether same satisfies the conditions/ingredients of a ‘composite supply’ or ‘mixed supply’.
GST is exempt on supply of food and drinks by an educational institution when provided by the institution itself to its students, faculty and staff and is leviable to GST of 5% when provided by any other person based on a contractual arrangement with such institutions.
The banking company is liable to pay GST on the entire value of service charge or fee charged to customers whether or not received via business facilitator or the business correspondent.
To issue a clarification to Food Corporation of India (FCI) that the service provided by godown owner in case of lease with services, where the godown owner, besides leasing the warehouse, undertakes to carry out activities of storage and preservation of stored food grains, is the service of storage and warehousing of agricultural produce and the same is exempt.
The Central Government vide Circular No.: 72/ 46/ 2018 – GST has clarified the procedure to be followed under the GST laws in case supplied goods have to be returned for any reason.
There are 2 procedures which can be followed by the person returning the goods:
Procedure – I: Treat the return as a fresh supply
Where the person returning the goods is registered under GST laws (other than composition supplier)
The person shall issue a tax invoice with the value of the return supply being the value of the goods as shown in the invoice on the basis of which the said goods were supplied earlier. The recipient of such return supply shall be eligible to avail the ITC on the tax paid on such goods, subject to fulfillment of other applicable conditions.
Where the person returning the goods is a composition supplier
The person shall issue a bill of supply and pay the tax at the rate applicable to a composition supplier. The recipient of such return supply shall not avail any ITC.
Where the person returning the goods is not registered under GST laws
The person shall return the goods by issuing any commercial document without charging any tax on the same.
Procedure – II: Return by issuing a credit note
The person returning the goods shall return the same by issuing a delivery challan. In return, the first supplier shall issue a credit note. It may be noted that there is no time limit for the issuance of a credit note in the law except with regard to the adjustment of the tax liability in case of the credit notes issued prior to the month of September following the end of the financial year and those issued after it.
If the Credit Note is issued by September following the end of the financial year in which the first supply was made, or the date of furnishing the relevant annual return, whichever is earlier
The tax liability may be adjusted by the first supplier, subject to the condition that the person returning the goods has either not availed the ITC or if availed has reversed the ITC so availed against the goods being returned.
If the Credit Note is NOT issued by the aforementioned time limit
The tax liability cannot be adjusted by the first supplier. He is not required to declare such credit note on the common portal as tax liability cannot be adjusted in this case.
The Government through a press release dated 08 December 2018 has clarified that there is no GST on the sale of a complex/ building and ready-to-move-in flats where the sale takes place after the issue of completion certificate by the competent authority.
GST is applicable on sale of under-construction property or ready-to-move-in flats where completion certificate has not been issued at the time of sale.
The effective rate of tax and credit available to the builders for payment of tax are summarized below for pre-GST and GST regime –
Service Tax: 4.5%, VAT: 1% to 5%
Affordable housing segment: 8%, Other segments: 12% after 1/3rd abatement of the value of land. [NOTE: ITC is available for all major construction materials and capital goods]
Housing projects in the affordable segment such as JNNURM, RAY, PMAY or any other housing scheme of SG etc., attract GST of 8%. For such projects, after offsetting ITC, the builder/ developer in most cases will not be required to pay GST in cash as the builder would have enough ITC in his books of account to pay the output GST.
For projects other than the affordable segment, it is expected that the cost of the complex/ buildings/ flats would not have gone up due to the implementation of GST. Builders are also required to pass on the benefits of the lower tax burden to the buyers of property by way of reduced prices/ installments, where effective tax rate has been down.
TCS mechanism under GST is applicable from 01 Oct 2018.
Section 52 of the CGST Act, 2017 deals with the provisions of TCS mechanism under GST. It states that
every e-commerce operator, other than an agent,
shall collect an amount of tax @ notified by the Government, not exceeding 1%,
of the net value of taxable supplies made through it by other suppliers
where the consideration w.r.t. such supplies
is to be collected by the operator.
Now, the term “net value of taxable supplies” =
The aggregate value of taxable supplies, except the ones mentioned in Sec. 9(5), made during any month by all registered persons through the operator
(-) the aggregate value of taxable supplies returned to the suppliers during that month.
Moreover, vide Notfn. No.: 52/2018 – CT and 02/2018 – IT, the Govt. has notified that the tax shall be collected at source @
0.5% in the case of intra-state supplies (+ 0.5% for State Government) or
1% in the case of inter-state supplies.
Mohan sold his products on amazon.com for ₹ 1,000 (+ 18% GST) in an intrastate transaction. Amazon.com deducted ₹ 450 as commission. The net payout by Amazon.com to Mohan would be –
Value of the goods collected from customer = ₹ 1,000
+ GST collected from the customer for goods = ₹ 180
(-) Commission charged = (₹ 450)
(-) Tax collected at source [(0.5%+0.5%) of ₹ 1,000] = (₹ 10)
Net payout to Mohan = ₹ 720
The tax collected by the e-commerce operator shall be paid to the Government by the 10th day of the next month. The supplier of goods/ services, who supplied through the e-commerce operator, shall claim the credit of this TCS in his e-Cash Ledger.
Moreover, the operator shall also furnish a statement in FORM GSTR – 8 containing the details of
net supplies effected through it and
the amount of tax collected
during a month, by the 10th day of the next month, and an annual statement in FORM GSTR-9B by 31 December of the next financial year.
If an operator discovers any omission or incorrect particulars
after furnishing the monthly statement
other than as a result of scrutiny, audit, inspection or enforcement action by the tax authorities,
he shall rectify the same in the month during which
such omission/ incorrect particulars are noticed
subject to payment of interest @ 18%.
However, no such rectification shall be allowed
the due date for furnishing FORM GSTR-8 of September of the next FY
the actual date of furnishing FORM GSTR-9B of the relevant year
Vide Circular No. 66/40/2018-GST, dated 26 September 2018, the Govt. has clarified the issue regarding the applicability of GST on residential religion/ spirituality/ yoga programmes or camps for which the fee charged includes the cost of boarding and lodging.
The services of advancement of religion/ spirituality/ yoga provided by a religious/ charitable trust registered u/s 12AA of the IT Act, 1961 are exempt. Hence, the fee/ any other consideration charged from the participants for participating in programmes/ camps meant for such services shall be exempt.
Even residential programmes/ camps where the fee charged includes the cost of lodging and boarding shall also be exempt as long as the primary objective of such programme/ camp is the advancement of religion/ spirituality/ yoga.
However, if charitable/ religious trusts primarily provide accommodation or serve food and drinks against consideration in any form (including donations), then such activities will be taxable. Similarly, activities like holding fitness camps or classes of aerobics, dance, music etc. will be taxable.
According to Section 17(5) of the CGST Act, 2017, as amended by the CGST Amendment Act, 2018 (yet to be notified), ITC shall not be available in respect of the following –
motor vehicles for transportation of persons
having approved seating capacity of ≤ 13 persons (including the driver),
except when they are used for making the following taxable supplies —
a further supply of such motor vehicles; or
transportation of passengers; or
imparting training on driving such motor vehicles;
vessels and aircraft
except when they are used –
for making the following taxable supplies –
a further supply of such vessels/aircraft, or
transportation of passengers, or
imparting training on navigating such vessels, or
imparting training on flying such aircraft
for the transportation of goods;
General insurance, servicing, repair and maintenance
relating to motor vehicles/ vessels/ aircraft referred to in 1 or 2 above.
However, ITC for such services shall be available –
if the motor vehicles/ vessels/ aircraft referred to in 1 or 2 are used for purposes specified therein.
if received by a taxable person engaged –
in the manufacture of such motor vehicles/ vessels/ aircraft, or
in the supply of general insurance services for such motor vehicles/ vessels/ aircraft insured by him;
the following supply of goods/services —
food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, leasing/ renting/ hiring of motor vehicles/ vessels/ aircraft referred to in 1 or 2 except when used for the purposes specified therein, life insurance and health insurance
However, the ITC for such goods/ services shall be available where an inward supply of such goods/ services, is used by a registered person for making an outward taxable supply of the same category of goods/ services or as an element of a taxable composite or mixed supply;
membership of a club, health and fitness center; and
travel benefits extended to employees on vacation such as leave or home travel concession.
However, ITC for such goods/services shall be available if it is obligatory for an employer to provide the same to its employees under any law;
works contract services when supplied for construction of an immovable property (other than plant and machinery) except where it is an input service for the further supply of works contract service; NOTE: Construction includes re-construction, renovation, additions or alterations or repairs, to the extent of capitalization, to the said immovable property.
goods/services received by a taxable person for construction of an immovable property (other than plant or machinery) on his own account including when such goods/services are used in the course or furtherance of the business;
goods/services on which tax has been paid under section 10;
goods/services received by an NRTP except on goods imported by him;
goods/services used for personal consumption;
goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples; and
any tax paid in accordance with the provisions of sections 74, 129 and 130.