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The 37th GST Council meeting was held on 20 September 2019 in
Goa. The Council deliberated on a host of issues and devised
various steps to provide relief to businesses. The key decisions of
the Council have been captured in this alert.
Law and procedural changes
- Annual return in GSTR-9 has been made
optional for businesses with an aggregate turnover of up to INR 20
- A committee has been appointed to
examine the possibility of simplification of annual return and
audit/reconciliation statement forms i.e. GSTR-9 and GSTR-9C
- The Council has decided to impose
restrictions on availing input tax credit (ITC) by recipients in
cases where the supplier has not filed his GSTR-1. However, further
clarification is awaited on the modalities of this
- The new return filing system earlier
proposed to be implemented in a phased manner from October 2019 has
been postponed to April 2020.
- In a big relief, the GST Council has
rescinded two contentious circulars issued in the recent past:
- Supply of Information Technology
enabled Services (ITeS)
- The Circular had sought to clarify
what qualifies as intermediary services in the ITeS sector. A new
Circular in supersession of the said Circular will be issued
- Taxability of post-sales
- The Circular, inter alia, had
clarified that discounts provided by the original supplier of goods
to his dealers, so that the dealers can offer a special reduced
price to the customers, should be chargeable to GST in the hands of
the dealer. The said Circular has been rescinded ab initio.
- A single authority integrated refund
system for quick disbursal of refund claims will be introduced from
24 September 2019.
Rationalization of GST rates
|Marine fuel 0.5% (FO)
|Cut and polished semi-precious stones
|Specified goods for petroleum operations under Hydrocarbon
Exploration Licensing Policy
||28% + 12% Compensation cess
|Import of specified defense goods not being manufactured
|Exclusive parts and accessories for use with a medical device
(specific Chapter headings)
|Hotel accommodation - Daily tariff above INR 7500
|Hotel accommodation - Daily tariff of more than INR 1000 but up
to INR 7500
||18%/12% (based on tariff)
|Outdoor catering other than in premises having a daily tariff
of a unit of accommodation of more than INR 7500
||5% without ITC
|Machine job work in the engineering industry (other than bus
|Intermediary services when both supplier and recipient of goods
are located outside the taxable territory
Other GST rate related changes
- It has been clarified that fishmeal
is exempt from GST for the period 1 July 2017 to 30 September 2019.
However, any tax collected for this period should be deposited with
- Compensation cess on passenger
vehicles having certain specifications and designed to carry more
than 10 but up to 13 persons to be reduced from 15% to 1% for
petrol and 3% for diesel vehicles respectively.
- The option provided to pay GST at the
rate of 18% on transactional value at the time of disposal of
specified goods for petroleum operations (on which concession GST
rate of 5% is paid on purchase) provided that the goods are
certified by Director General Hydrocarbon as
- Warehousing services for cereals,
pulses, fruits, nuts, vegetables, etc. exempted from GST.
- The validity of conditional exemption
on export freight extended till 30 September 2020.
- In order to extend export benefits to
certain research & development (R&D) services provided to
foreign clients, the place of supply in case of the following
services has to be treated as location of the foreign service
- Specified R&D services provided
by Indian pharma companies;
- R&D services in relation to chip
design software by using sample test kits.
The dipping GDP growth rate had given enough indications that
the government would attempt to provide a stimulus to the economy
through GST rate reductions in key sectors in order to boost
consumption. However, the announcements have been more in the form
of ease of compliance requirements rather than big-ticket rate
changes. Despite several demands, there has been no significant
rate reduction in the automobile sector which is undergoing a huge
This shall certainly give confidence to the trade and industry
that the government would be ready to step in whenever any
arbitrary provisions are detrimental to businesses. Many such
announcements, however, shall come to light on 1 October when the
notifications making these effective shall be issued.
Note:The changes in relation to GST rates should be
effective from 1 October 2019.
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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