Key Decisions of 28th GST Council Meeting held on 21st July 2018 By CS Preeti Khandelwal

Dear Professional Colleagues,

The 28th GST Council meeting held on 21st July 2018  ended with the bundle of gifts for the common man by slashing the GST rates of various items. Rates of various consumer goods such as refrigerator, washing machine, vacuum cleaner, hair dryers have been slashed down. A gift to women of the Nation given by making Sanitary napkins 100% exempt from tax.  Simplified return for small taxpayers and also the increase of limit of Rs. 1.5 crore to Rs.5 crore for quarterly return is a major relief for small taxpayers.

Threshold  Exemption limit for States of Assam, Arunachal Pradesh, Himachal Pradesh, Meghalaya, Sikkim and Uttarakhand to be increased to Rs. 20 Lakhs from Rs. 10 Lakhs. Some of the major outcomes of the meeting has been summarized for readers:
Quarterly Return limit raised from 1.5 Crore to Rs.5 Crore and Simplified Returns:

  • The limit of Rs.1.5Crore for quarterly return has been increased to Rs.5 Crore.
  • Quarterly return filing will be available only to small traders making only B2C supply or making the B2B +B2C supply. Thus, it's not available for traders making the only B2B supply. For such taxpayers, simplified returns have been designed called  Sahaj and Sugam. Monthly returns will be simplified.
  • The new GST return would be simple with two main tables. In one table, the taxpayer would have to report sales and in another report purchases for availing input tax credit. Invoices can now be uploaded continuously by the seller and continuously viewed and locked by the buyer for availing input tax credit. This process would ensure that for the most part, the return is automatically filled based on the invoices uploaded by the buyer and the seller. Simply put, the process would be “UPLOAD – LOCK – PAY” for most taxpayers.
  • NIL return filers (no purchase and no sale) shall be given facility to file a return by sending SMS.
  • Migration Window for taxpayers re-opened. The taxpayers who received provisional id but could not complete the migration process will now be able to complete the process. The taxpayers who filed Part –A of form REG-26 but not part –B  can now complete the migration process by approaching to the respective jurisdictional officer with the prescribed document before 31.08.2018.
  • Exemption limit for states of Assam, Assam, Arunachal Pradesh, Himachal Pradesh, Meghalaya, Sikkim and Uttarakhand increased from Rs.10 lakh to Rs. 20 lakh.
  • Reverse charge mechanism further deferred till 30.09.2019.
  • The 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.
  • As a green initiative, GST on the supply of e-books has been reduced from 18 % to 5% for which print version exists.
  • Lower GST Rate on footwear up to Rs.1000 per pair.5% GST is being extended to footwear having a retail sale price up to Rs. 1000 per pair. Footwear having a retail sale price exceeding Rs. 1000 per pair will continue to attract 18%.
Reduction of GST Rates on various goods:

  • Reduced 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 the 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.     
28% to 12%

Fuel Cell Vehicle. Further, Compensation cess shall also be exempted on fuel cell vehicle.

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
18% to 12%

Bamboo flooring
Brass Kerosene Pressure Stove.
Hand Operated Rubber Roller
Zip and Slide Fasteners

18% to 5%

Ethanol for sale to Oil Marketing Companies for blending with fuel
Solid biofuel pellets 

List of items proposed to be Nil rated:

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
PhoolBhariJhadoo [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. 

Reduction of rates of various Handicraft items:

Rates of various Handicraft items including handbags, pouches, purses, jewellery box, wooden frames, handcrafted lamps have been reduced from 18% to 12 %. Items such as handmade carpets, handmade textile floor coverings, handmade woven tapestries, toran, etc will attract a reduced rate of 5 %.
The proposed rates will be effective from 27th July 2018.

Changes in GST rates on Services
Multiple Relief has been provided by GST Council to following  services which will be  effective  from 27th July 2018:

  1. Services by way of artificial insemination of livestock (other than horses)- exempted
  2. Warehousing of minor forest produce in line with exemptions provided to the agricultural produce - exempted
  3. Works of installation and commissioning undertaken by DISCOMS/ electricity distribution companies for extending electricity distribution network upto the tube well of the farmer/ agriculturalist for agricultural use - exempted
  4. Services provided by FSSAI to food business operators- exempted
  5. Services provided by Coal Mines Provident Fund organisation to the PF subscribers from the applicability of GST on the lines of EPFO. - exempted
  6. Services by an old age home run by State / Central Government or by a body registered under 12AA of Income Tax Act) to its residents (aged 60 years or more) against consideration upto Rs.25,000  per month per member provided consideration is inclusive of charges for boarding, lodging and maintenance - exempted
  7. The administrative fee collected by National Pension System Trust - exempted
  8. 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 farmer; or for the promotion of trade, commerce, industry, agriculture, art, science, literature, culture, sports, education, social welfare, charitable activities and protection of environment, to own members against consideration in the form of  membership fee up to an amount of Rs.1000 per member per year. - exempted
  9. Reinsurance Services provided to specified Insurance Schemes such as Pradhan Mantri Rashtriya Swasthya Suraksha  Mission (PMRSSM) (Ayushman Bharat), funded by Government. - exempted
  10. Services by Government to ERCC by way of assigning the right to collect the royalty, DMFT etc. from the mining leaseholders. - exempted
  11. Guarantees are given by Central/State Government/UT administration to their undertakings/PSUs. - exempted
  12. GST on the import of services by Foreign Diplomatic Missions/ UN & other International Organizations based on reciprocity. - exempted
  13. Services supplied by an establishment of a person in India to any establishment of that person outside India, which are treated as establishments of distinct persons in accordance with Explanation I in section 8 of the IGST Act provided the place of supply is outside the taxable territory of India in accordance with section 13 of IGST Act. - exempted
  14. Prescribe GST rate of 12% with full ITC under forwarding charge for composite supply of multimodal transportation.
  15. Rationalize the notification entry prescribing reduced GST rate on the composite supply of works contract received by the Government or a local authority in the course of their sovereign functions.
  16. Rationalize entry relating to composite supply of food and drinks in restaurant, mess, canteen, eating joints and such supplies to institutions (educational, office, factory, hospital) on contractual basis at GST rate of 5%; and making it clear that the scope of outdoor catering under 7(v) is restricted to supplies in case of outdoor/indoor functions that are event-based and occasional in nature.

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