India: Important Decisions On The Filing Procedure, RCM And GST Rates Taken In GST Council's 25th Meeting

Last Updated: 22 January 2018
Article by SKP  

Important decisions on the filing procedure, RCM and GST rates taken in GST Council's 25th meeting

The 25th GST Council meeting was held in New Delhi on the 18 January 2018. The decisions taken by GST Council shall come into force as mentioned in the official notification to be issued. Some important discussions which were held are:

Discussion on simplification in return filing procedure

  • The simplification of return filing procedure was discussed, and a detailed presentation made by Mr Nandan Nilekani was considered. The following key points have emerged:
    • Filing of GSTR 3B and GSTR-1 will continue.
    • Claims of Input Tax Credit (ITC) can be verified with the GSTR-1 of the suppliers, and any difference can be considered at the time of assessments.
    • Matching of returns may be considered at the supplier-recipient level instead of invoice level.
    • A final decision is expected to be taken in the next Council meet.

Reverse charge mechanism on supply from unregistered persons

Partial implementation of reverse charge mechanism for composition dealers was discussed, but the final decision on the same will be taken in next meeting.

e-Way Bill rules

  • e-Way Bill rules are being considered as a major anti-evasion measure by the government.
  • Facility for generation, modification and cancellation on a trial basis has been started.
  • 15 states have agreed to introduce e-Way Bill for intra-state movement of goods.
  • Certain modifications are being made to the e-Way Bill rules which are to be notified nationwide for inter-state movement with effect from 1 February 2018.

Other Points to be considered at the next meeting

The Council did not reach any conclusion on bringing petroleum products and real estate under the ambit of GST, and the same will be considered in the next GST Council meeting.

Changes in rate of GST (services) effective from 25 January 2018

Particulars

Present rate

Recommended rate

Construction of metro and monorail projects (construction, erection, commissioning or installation of original works).

18%

12%

Tailoring service

18%

5%

Services by way of admission to theme parks, water parks, joy rides, merry-go-rounds, go-carting and ballet

28%

18%

Works Contract Services (WCS) provided by sub-contractor to the main contractor providing WCS to Government

18%

12%

Common effluent treatment plants services for the treatment of effluents

18%

12%

Exemption in rate of GST (services) effective from 25 January 2018

  • GST exemption on Viability Gap Funding (VGF) for a period of three years from the date of commencement of Regional Connectivity Scheme airports from the present period of one year.
  • Transportation of goods from India to a place outside India by air and sea up to 30 September 2018 (reversal of ITC not required in respect of transportation by sea).
  • Temporary transfer or permitting the use or enjoyment of any intellectual property right on which customs duty is applicable under Rule 10 (c) of the Customs Valuation.
  • Expansion in the definition of pure service provided to the government entity to make it exempt.
  • Increase in the threshold limit for exemption from INR 250 to INR 500 per person under the entry for theatrical performances like music, dance, drama, orchestra, folk or classical arts and all other such activities in any Indian language in theatre.
  • Exemption on legal services provided to the government, local authority, governmental authority and government entity.
  • Enhancement in the exemption limit of INR 5,000 per month per member to INR 7,500 in respect of services provided by resident welfare association (unincorporated or non-profit entity) to its members against their individual contribution.

Rationalisation of certain provisions

  • Renting of immovable property by the government or local authority to a registered person to be brought under reverse charge.
  • Services provided by senior doctors/consultants/technicians hired by the hospitals, whether employees or not, are healthcare services, which is exempt.
  • The entire amount charged by hospitals from the patients including the retention money, the fee/payments made to the doctors, etc. is exempt.
  • Food supplied to the in-patients as advised by the doctor/nutritionists is a part of the composite supply of healthcare and not separately taxable. Other supplies of food by a hospital to patients (not admitted) or their attendants or visitors is taxable.
  • Taxable persons who have obtained voluntary registration will now be permitted to apply for cancellation of registration even before the expiry of one year from the effective date of registration.

Changes in rate of GST (Goods) effective from 25 January 2018



Particulars

Present rate

Recommended rate

Old and used motor vehicles (medium and large cars, and Sport Utility Vehicles (SUVs)) on the margin of the supplier, subject to the condition that no ITC of central excise duty/Value Added Tax (VAT) or GST paid on such vehicles have been availed by him.

28%

18% compensation cess reduced to nil)

Buses, for use in public transport, which exclusively run on biofuels.

28%

18%

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 ITC of central excise duty/VAT or GST paid on such vehicles have been availed by him.

28%

12% (compensation cess reduced to nil)

Diamonds and precious stones

3%

0.25%

Sugar boiled confectionary

18%

12%

Drinking water packed in 20 litres bottles

18%

12%

Bio-diesel

18%

12%

Drip irrigation system including laterals, sprinklers, etc.

18%

12%

Liquid Petroleum Gas (LPG) supplied to domestic household consumers by private LPG distributors.

18%

5%

SKP's Comments

The Council has tinkered with the GST rates in a continuous rationalisation process and much relief has been provided to entertainment, transportation, infrastructure and healthcare sectors taking into account their representation.

The magnitude of changes proposed in the GST Council meeting and the expected changes in the next meeting is akin to the changes usually made in the Union Budget. Many important changes such as returns simplification, bringing petroleum and real estate under GST and amendments in the GST Law are on the anvil in the next meeting which will be eagerly anticipated.

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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