India: Highlights Of The Decisions Taken In The 23rd GST Council Meeting

Last Updated: 24 November 2017
Article by SKP  

The 23rd GST Council meeting held in Guwahati has made some sweeping changes in the current framework of Goods and Services Tax (GST) regime. Some of the key decisions of the meeting are:

Relaxation in return filing procedure

The return filing cycle has been simplified in the following manner:

GSTR-3B

  • Filing of Form GSTR 3B on a monthly basis would be continued until March 2018 (Notification No. 56/2017 - Central Tax).
  • The due date for the payment of taxes and filing GSTR 3B would continue to be the 20th day of the subsequent month.

GSTR-1

  • The facility to file GSTR-1 on a quarterly basis has been granted to taxpayers with annual aggregate turnover up to 15 million (Notification No. 57/2017 - Central Tax).
  • For a taxpayer with an aggregate annual turnover of more than 15 million, filing of GSTR-1 on a monthly basis would continue (Notification No. 58/2017 - Central Tax).
  • The due dates for filing GSTR-1 are:

    Companies with annual aggregate turnover more than 15 million Companies with annual aggregate turnover less than 15 million
    Month Due Date Period Due Date
    July 2017 31 December 2017 July to September 2017 31 December 2017
    August 2017 31 December 2017
    September 2017 31 December 2017
    October 2017 31 December 2017 October to December 2017

    15 February 2018

    November 2017 10 January 2018
    December 2017 10 February 2018
    January 2018 10 March 2018 January to March 2018 30 April 2018
    February 2018 10 April 2018
    March 2018 10 May 2018

GSTR-2 and GSTR-3

(Notification No. 57/2017 - Central Tax; Notification No. 58/2017 - Central Tax)

  • The facility of filing form GSTR-2 and GSTR-3 has been temporarily suspended for the period of July 2017 to March 2018. Presently, taxpayers are not required to file GSTR-2 and GSTR-3 for these periods.
  • The period for filing GSTR-2 and GSTR-3 for the period of July 2017 to March 2018 shall be announced by a committee of officers.
  • It is advisable for taxpayers to be ready with the data required for filing of GSTR-2 and GSTR-3 for the period above, as the due dates could be announced any time.

Extension in the due dates of few other GST returns and forms:

Form No. and period Purpose Revised due date Notification/ Order No.
GSTR-4
(July – September 2017)
For dealers opting for composition scheme 24 December 2017 59/2017 - Central Tax
GSTR-5
(July 2017)
For registered non-taxable person 11 December 2017 60/2017 - Central Tax
GSTR-5A
(July 2017)
Details of supply of online information and database access or retrieval services by a person located outside India made to a non-taxable person in India 15 December 2017 61/2017 - Central Tax
GSTR-6
(July 2017)
Input Service Distributor (ISD) 31 December 2017 62/2017 - Central Tax
GST ITC-04
(July – September 2017
Details of inputs or capital goods sent and received back from job workers 31 December 2017 63/2017 - Central Tax
TRAN-1 and revised TRAN-1 Declaration for claim of input tax credit 27 December 2017 Order No. 9/2017 - GST
Order No. 10/2017 - GST

Relaxation in late fee

  • The penalty for late filing of returns for the month of July, August and September has already been waived off and refunds are being credited to taxpayers online GST account. Furthermore, it has been decided that where any such late fees were paid, it will be re-credited to the electronic cash ledger under the 'tax head' instead of 'fee head' so as to enable the taxpayers to use that amount to discharge their future tax liabilities.
  • Per day penalty for delay in filing of returns has been reduced for filing of returns from October 2017 onwards (Notification No. 64/2017 - Central Tax), which are:

    Particulars Untill September 2017 From October 2017
    Nil returns INR 200 per day (waived off) INR 20 per day
    Others INR 200 per day (waived off) INR 50 per day

Composition scheme dealers

  • A uniform GST rate of 1% under composition scheme has been granted to manufacturers and traders (earlier, only manufacturers were falling under the 1% GST category).
  • The annual turnover limit for composition scheme has been increased to INR 20 million from the present limit of INR 10 million (no clarity has been provided regarding special category states in this matter).
  • The composition dealers would be allowed to make a supply of services up to INR 0.5 million per annum which would be treated as exempt supply.

Changes relating to GST rate on restaurant service (vide Notification No. 46/2017-Central Tax (Rate))

The following categories of restaurants have been imposed with a GST rate of 5% and no Input Tax Credit (ITC), effective from 15 November 2017:

  • All stand alone1 restaurants (whether air-conditioned or not).
  • Food parcels or takeaways.
  • Restaurants in hotels with room declared tariff2 of less than INR 7,500/day.

The following categories of restaurants would have to charge GST rate of 18% and can claim full ITC:

  • Restaurants in hotels with room declared tariff of more than INR 7,500/day.
  • Outdoor catering.

Other reduction in rates

The Central Board of Excise and Customs (CBEC) has changed the GST rates of various items vide notification no. 42/2017-Central Tax (Rate) dated 14 November 2017 and 41/2017-Central Tax (Rate) dated 14 November 2017. Corresponding notification to change integrated tax and Union territory tax has also been issued.

The following is a summary of rate changes recommended in the GST council meeting:

Rate change Items
28% to 18% 177 Items
28% to 12% 2 Items
18% to 12% 13 Items
18% to 5% 6 Items
12% to 5% 8 Items
5% to Nil 6 Items

Export of Services to Nepal and Bhutan

Export of services to Nepal and Bhutan was exempted vide notification no 42/2017-Integrated Tax (Rate) dated 27 October 2017, even if the payment is received in Indian currency. Since the services were exempted and not nil rated, no ITC was allowed on such supply.

The government has extended the benefit of claiming ITC in respect of goods and services used for making such exempt supply of services to Nepal and Bhutan and bringing such services at par with other exports.

Application of Advance Ruling

A facility for filing a manual application for advance ruling shall be introduced soon.

No tax on advances received

  • The CBEC vide Notification No. 40/2017 - Central Tax dated 13 October 2017 had extended the facility of no payment of tax on advances for outward supplies of goods for dealers having an annual turnover of INR 15 million and those who have not opted for composition scheme.
  • The CBEC vide Notification No. 66/2017 - Central Tax dated 15 November 2017 has extended the above facility of no payment of tax on advances for outward supplies of goods to all dealers who have not opted for composition scheme irrespective of their turnover limit.
SKP's comments

The biggest relief to the taxpayers who are reeling under the technical glitches of the current GST portal is the temporary suspension of filing of GSTR-2 and GSTR-3 until 31 March 2018. Continuation of GSTR-3B and GSTR-1 until such time will both safeguard revenue on the one hand and ease the compliance burden on the other. We can hope that the review of return forms by the committee of officers will lead to the redesign of the compliance mechanism which will provide long-term relief.

Lowering the rates from 28% to 18% of 178 items will undoubtedly come as a consumption boost giving a fillip to the economy. Allowing manual filing of advance ruling applications would help in the resolution of disputed questions. By extending the benefit of ITC to services provided to Nepal and Bhutan, the GST Council has brought such services at par with exports. A flat GST rate of 5% on restaurants without the benefit of ITC has been proposed. This is mainly due to the concern of the government that benefit of increased input tax credit was not being passed on to the consumers

Overall, 23rd GST council meeting has brought a huge cheer amongst taxpayers, consumers and tax professionals.

Footnotes

[1] Restaurants other than those located in the premises of hotels, inns, guest houses, clubs, campsites or other commercial places

[2] 'Declared tariff' includes charges for all amenities provided in the unit of accommodation (given on rent for stay) like furniture, air conditioner, refrigerators or any other amenities, but without excluding any discount offered on the published charges for such unit

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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