The 28th meeting of the GST Council was concluded on 21st July 2018. In terms of the press releases issued, the broad outcomes are as follows:
Simplified GST Returns:-
The council has decided to implement one single simplified return which captures both outward and inward supplies (based on invoices uploaded by the supplier). It is also been stated that supplier can continuously upload the invoices during the month and the customer can view and lock the same to avail input credit. In other words, large part of return would be filled automatically.
The new return design would also provide the facility to amend invoices and other details by filing amendment return. Payment of differential tax liability also allowed to save interest.
Traders having turnover up to 5 crores have option to file a simplified quarterly GST return with monthly tax payment. The facility is available to traders who are engaged in making either B2C supplies or B2B and B2C supplies.
NIL GST returns would allowed to be filed by sending SMS
Composition Scheme
Upper limit of turnover to be raised from INR 1 crore to INR 1.5 crore
Composition dealers are allowed to supply services (other than restaurant services), for upto a value not exceeding 10% of turnover in the preceding financial year, or INR 5 lakhs, whichever is higher
Reverse Charge Mechanism
Levy of GST under reverse charge on procurement from unregistered persons to be applicable only to specified goods in case of certain notified classes of registered persons (to be notified)
Registration processes
Presently, GST Law allows a legal entity to obtain vertical wise registrations in a State or Union territory. It is proposed that the legal entity may opt for multiple registration in a state or union territory for its each place of business.
Transactions to be included under Schedule III (no supply)
1.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. Accordingly, where an Indian person buys goods from outside India and directly sells the same to a customer located outside India without the goods entering into India shall be out of the tax net.
2.Supply of warehoused goods to any person before clearance for home consumption
3.Supply of goods in case of high sea sales
Earlier such transactions were treated as exempted supplies and reversal of input tax credit was required. After the amendment, such transaction shall not be treated as supply and hence no input tax credit reversal is required
Input Tax Credit � scope is being widended and ITC would be available on following transactions:
1.Most of the activities/ transactions covered in schedule III
2.Motor vehicles for transportation of passengers having seating capacity more than 13 persons, vessels and aircrafts. Further, it is proposed that ITC on general insurance, servicing, repair and maintenance on such vehicles are also allowed.
3.Goods or services provided by employer to employee which are obligatory under any law.
Job-work provisions:
1.Commissioner to be empowered to extend the time limit for return of inputs/capital goods sent on job work, up to a period of one year/two years respectively
2.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.
Miscellaneous
1.It is proposed that if the recipient fails to pay the due amount to the supplier within 180 days from the date of issue of invoice, the ITC availed by the recipient will be reversed without any interest liability.
2.Consolidated credit/debit notes can be issued in respect of multiple invoices issued in a Financial Year
3.Recovery of arrears can be made by the Government from a distinct person as well (i.e. arrears of one registration of a legal entity can be recovered from another registration of the same legal entity)
4.If permitted by RBI, supply of services will qualify as exports, even if payment is received in INR
Changes in GST rate on Services:
It is proposed to issue notifications giving effect to the recommendations of Council and will be effective from 27 July 2018:
GST exemptions
1.Artificial insemination services (other than horses)
2.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, provided the place of supply is outside India. Accordingly the transaction between Liaison offices/ Branch offices and their HO are exempted if the POS is outside India.
Miscellaneous
1.GST shall be levied on accommodation service based on transaction value instead of declared tariff � Major relief to hotel industry
2.Composite supply of food and drinks in restaurant, mess, canteen, eating joints and such supplies to institutions (educational, office, factory, hospital) on contractual basis would be taxed at 5%. It is clarified that outdoor catering are restricted to supplies which are event based and occasional in nature.
3.Exemption on outward transportation of all goods by air/sea has been extended by another one year i.e. up to 30th September, 2019 for granting the relief to the exporters of goods
4.Rate on e-books has been reduced from 18% to 5%.
Changes in GST rate on Goods:
Major items under reduction from 28% to 18%
1.Paints, varnishes, Glaziers’ putty, grafting putty, resin cements
2.White Goods – Refrigerators, freezers, water cooler, milk coolers, refrigerating equipment for leather industry, ice cream freezer, etc.
3.Lithium-ion batteries
4.Special purpose motor vehicles. e.g., crane Lorries, fire fighting vehicle, concrete mixer Lorries, spraying Lorries.
5.Works trucks [self-propelled, not fitted with lifting or handling equipment] used in factories, warehouses, dock areas or airport for short transportation. Trailers and semi-trailers.
In addition to above, GST rates have been reduced on various other goods.
Miscellaneous
1.Currently, refund on account of inverted duty structure is not allowed to fabrics sector. The refund shall now be allowed only with the prospective effect on the purchases made after the notification is issued
2.Footwear having a retail sale price up to INR 1000 shall be taxed at 5% and others at 18%
3.GST rates have been recommended to be brought down for specified handicraft items (for detailed list, refer attached press release)
4.It has been clarified that Milk enriched with vitamins or minerals salt (fortified milk) is classifiable under HS code 0401 as milk and is exempt from GST
5.It has also been clarified that Beet and cane sugar, including refined beet and cane sugar (heading 1701), attracts 5% GST
Opening of migration window for tax payers till 31 August, 2018:
1.A proposal has been approved to open the migration window for taxpayers, who received provisional IDs but could not complete the migration process.
2.The taxpayers who filed Part A of FORM GST REG-26, but not Part B of the said FORM are requested to approach the jurisdictional Central Tax/State Tax nodal officers.
3.It has also been decided to waive the late fee payable for delayed filing of return in such cases (waiver effected by way of credit in cash ledger)
Source: Taxmann