The 31st GST Council meeting took place on December 22, 2018. It was held under the chairmanship of finance minister Mr. Arun Jaitley at Vigyan Bhavan, New Delhi.
The GST Council in its 31st GST meeting took decisions with regards to GST rate changes and exemptions on various goods and services. Further, it also gave in principle approval to various amendments in the GST Acts and referred certain issues to respective committees and Group of Ministers (GOMs).
Here are some key highlights of the 31st GST Council Meeting.
I. GST Rate Reduction in Goods
|Type of Goods||Changes in GST Rates|
|Goods falling under HS Code 8483 such as pulleys, transmission shafts and cranks, gear boxes etc.||Reduced from 28% to 18%|
|Monitors and TVs with a screen size up to 32 inches||Reduced from 28% to 18%|
|Retreaded or used pneumatic rubber tyres||Reduced from 28% to 18%|
|Power banks of Lithium ion batteries||Reduced from 28% to 18%|
|Digital cameras and video camera recorders||Reduced from 28% to 18%|
|Goods falling under HS code 9504 such as video game consoles, other games and sports requisites||Reduced from 28% to 18%|
|Parts, accessories for carriages meant for disabled persons||Reduced from 28% to 5%|
|Cork roughly squared or debagged||Reduced from 18% to 12%|
|Articles of natural cork||Reduced from 18% to 12%|
|Agglomerated cork||Reduced from 18% to 12%|
|Marble rubble||Reduced from 18% to 5%|
|Natural cork||Reduced from 12% to 5%|
|Walking Stick||Reduced from 12% to 5%|
|Fly ash blocks||Reduced from 12% to 5%|
|Music Books||Reduced from 12% to Nil|
|Footwear||5%/18% based on transaction value|
|Flexible Intermediate Bulk Container (FIBC)||Changed from 5%/12% based on transaction value to a uniform rate of 12%|
|Vegetables (uncooked or cooked by steaming/boiling water), frozen, branded and put in a unit container||Reduced from 5% to Nil|
|Vegetables that are provisionally preserved but are not suitable in that state for immediate consumption||Reduced from 5% to Nil|
|Renewable energy devices like solar power based devices/bio gas plant etc and parts used for their manufacture. These fall under chapters 84, 85 or 94 of the Tariff.||GST rate of 5%*|
*Note: There were certain issues in cases where these goods that attract a GST rate of 5% are supplied along with construction services etc and other goods for solar power plants.
In order to settle these issues, GST Council made a recommendation. It suggested that in all such circumstances, 70% of the gross value shall be taken as value of supply of such goods that call for 5% GST rate. The leftover portion of 30% of the aggregate value of the Engineering, Procurement and Construction(EPC) contract shall be treated as the value of supply of service that attracts the standard GST rate.
II. GST Rate Reduction in Services
|Type of Service||Changes in GST Rates|
|Cinema tickets above Rs. 100||GST reduced from 28% to 18%|
|Cinema tickets up to Rs. 100||GST reduced from 18% to 12%|
|Third party insurance premium of goods carrying vehicles||GST reduced from 18% to 12%|
|Air travel of pilgrims by non scheduled/charter operations for religious pilgrimage provided by the government of India under bilateral agreements||5% with ITC of input services|
III. GST Exemptions on Goods and Services
Services Suggested to be Exempted from GST
GST Council recommended a list of services to be exempted from GST. These include the services given by:
- banks to Basic Saving Bank Deposit (BSBD) account holders under Pradhan Mantri Jan Dhan Yojana
- rehabilitation professionals who are recognized under Rehabilitation Council of India Act, 1992 at medical establishments, educational institutions, rehabilitation centers established by Central or State governments, Union Territories or entities that are registered under section 12AA of the Income Tax Act
- a Goods Transports Agency (GTA) to such government departments or local authorities that have taken registration solely for deducting tax under section 51
- Central, State or UT governments to PSUs in the form of guaranteeing loans availed by these PSUs from financial institutions
Goods Suggested to be Exempted from GST
The GST Council also suggested a host of goods to be exempted from GST. These include GST exemption on:
- supply of gold by Nominated Agencies to exporters of articles of gold jewelry
- amount received by government via auction of gifts received by President, Prime Minister, Governor or CM of a state and public servants. The amount received from such an auction is used for public or charitable cause.
- vehicles imported for temporary purposes under the Customs Convention on the Temporary importation of Private Road Vehicles
IV. Clarifications with Regards to Certain Goods and Services
- As per notification dated 28/6/2018, sprinkler system having nozzles, lateral and other components would be charged GST @12%
- Movement of rigs, tools and spares and all goods on wheels on own account shall not be counted as supply and thus would not attract GST. This is so only when such movement is undertaken providing service and not for further supply of such goods
Goods coming under chapter 44 having description ‘Bagasse Board’ shall be charged GST @12%
- LPG provided in bulk to an Oil Marketing Company (OMC) by refiners for the purpose of bottling for further supply to domestic household consumers shall be charged GST at the concessional rate of 5%.
- The exemption of animal/cattle/aquatic/poultry feed would not be applicable to the inputs of such a feed. These include fish meal, meat bone meal, bran, sharps etc.
Manner of determination of classification of vitamins, pro vitamins etc as animal feed supplements
- Sattu or Chattua fall under HSN code 1106 and is charged the applicable GST rate
Polypropylene bags (Woven and Non – Woven), PP bags (Woven and Non – Woven) laminated with BOPP fall under HS code 3923 and charged GST @ 18%.
- Wood logs including the wood in rough/log used for pulping would attract GST @ 18%
- Turbo charger comes under the heading 8414 and would attract GST @18% and not 5%
- Fabric whether having embroidery, lace, tikki etc or sold as a three piece suit set would still be taken as a fabric and attract GST @ 5%.
- Scope of concessional GST rate of 5% for specified equipment for waste to energy plant
The council gave clarity:
- that degrees/diploma given by IIMs under IIM Act, 2017 shall be exempt from GST. This will come into effect From January 31, 2018.
- services rendered by the International Finance Corporation (IFC) and Asian Development Bank (ADB) are exempt from GST. This is with regards to the provisions of IFC Act, 1958 and ADB Act, 1966.
- to West Bengal that services provided to students by Council or board of primary, secondary or higher secondary education for conducting examination are not subject to GST.
- that ‘Printing of Pictures’ is covered under the service code ‘998386: Photographic and Video graphic Processing Services’. Thus, it attracts a GST at the rate of 18%. It does not come under service code ‘998912: Printing and Reproduction of Services of Recorded Media on a Fee or Contract Basis’. Hence would not be charged GST at the rate of 12%.
- Oil Marketing Companies(OMCs) leasing pumps and reservoirs to petrol pump dealers is deemed as a mixed supply. Therefore, the Licence Fee Recovery (LFR) charged for the same shall attract a GST at the rate of 28%. This is the rate that is charged for pumps. Whereas leasing of land and building together with equipment shall come under the heading 9972 (Real Estate Services). These would be charged GST at the rate of 18%.
- with regards to the fact that Incentives given to Banks under ‘Currency Distribution and Exchange Scheme’ (CDES) by the Reserve Bank of India are taxable
regarding the scope of the entry for multi modal transport in terms of GST applicability. The council clarified that the scope of the entry for multi modal transport having GST rate of 12% included only the domestic multi modal transport. In other words, it only covered the transportation of goods from one location in India to another location in India.
- that the nature of any business establishment supplying food, drinks and other articles for human consumption shall not decide whether such supply is a supply of goods or services. The components of each individual supply shall determine the nature of supply and whether such a supply meets the conditions of a ‘composite supply’ or ‘mixed’ supply under GST.
- any food or drinks provided by an educational institution to its students, staff etc shall not be subject to GST. However, if any such supply is made by a third person who is in a contractual agreement with the institution, such a supply would attract a GST at the rate of 5%.
- with regards to the liability of the banking company to pay GST. Accordingly, it is liable to pay GST on the entire value of service charge or fee charged from customers. This is irrespective of the fact that such a fee is received through a business facilitator or business correspondent.
- to the Food Corporation of India (FCI) with regards to the godown owner providing leasing with services. Accordingly, a godown owner who undertakes storage and preservation of stored food grains together with leasing of the warehouse is deemed to provide the service of storage and warehousing of agricultural produce. Therefore, a godown owner providing such services is exempt from GST.
V. In Principle to Amendments in GST Acts
The GST Council in its 31st GST Council Meeting gave approval to the following amendments in the GST Acts:
Creation of a Centralized Appellate Authority for Advance Ruling
The council suggested to create a centralized Appellate Authority for Advance Ruling (AAAR). This is undertaken to resolve the cases where two or more State Appellate Advance Ruling Authorities give conflicting decisions on the same issue.
GST to be Paid on the Net Tax Liability of the Taxpayer
It was suggested to amend section 50 of the CGST Act. According to the amendment, interest should be charged only on the net tax liability of the taxpayer after taking into consideration the permissible input tax credit. In other words, interest would be paid only on the amount paid via the electronic cash ledger.
VI. Creation of a 7 Member GoM
The Council suggested to create a seven member Group of Ministers. This 7 member GoM would be responsible to study the revenue course and reasons behind the structural pattern that influence the revenue collections in some of the states.
This study would relate to understanding the reasons responsible for the shift in the revenue collection targets from the original targets set during the design of the GST system.
Further, the GoM would be facilitated by a committee of experts from Central Government, State governments and National Institute of Public Finance and Planning (NIPFP). The members of GoM and the expert committee would be disclosed over a period of time.
VII. Issues Referred by the GST Council to Various Committees
Here is a list of issues that have been referred by the GST Council to the committees mentioned against them:
- Tax rate on lotteries – Referred to the Committee of States
- Taxation of residential property in real estate sector – Referred to the Law Committee and Fitment Committee
- Threshold limit of exemption under GST regime – Referred to the Group of Ministers under MSMEs
- Extending the Composition Scheme to small service providers – Referred to the Law Committee and Fitment Committee
VIII. Policy Recommendations By the GST Council
Following are the policy recommendations made by the GST Council in its 31st GST meeting:
Single Cash Ledger for Each Tax Head
The council suggested that there will be a single cash ledger for each tax head. The mode of implementing this would be established after consulting the GSTN and accounting authorities.
Single Authority for GST Refund
A scheme with regards to single authority for disbursal of GST refund sanctioned by either the Centre or State tax authorities shall be implemented in a pilot basis. The modalities with regards to the same shall be established in some time.
New Return Filing System
The Council recommended to introduce new return filing system on a trial basis from April 1, 2019. The same shall be implemented mandatorily from July 1, 2019.
Due Date For Annual Return Filing For FY 2017 – 2018
Clarifications with Regards to Formats/Instructions for Filing Annual Returns or Reconciliation Statement
There are some changes in respect of the headings of the forms. These changes would state that the return in Form GSTR 9 and Form-9A shall be in respect of supplies ‘made during the year’ and not as ‘declared in returns filed during the year’.
Filing of GSTR 1 and Form GSTR 3B
All the taxpayers are required to file returns in form GSTR 1 and GSTR 3B before filing the forms GSTR 9 and GSTR 9C
File GSTR 4 Before Filing Form GSTR 9A
The taxpayers are required to file all returns in GSTR 4 before filing of Form GSTR 9A.
Mentioning HSN Code
The taxpayers are required to specify the HSN code of only those inward supplies whose value alone makes for 10% or more of the total value of inward supplies.
Additional Payments Through Form GST DRC – 03
Any additional payments required to be made by the taxpayer can be done only in cash via Form GST DRC – 03.
Input tax credit cannot be claimed via Form GSTR 9 and Form GSTR 9C.
Auto Population of Invoices in Form GSTR 9
All invoices related to previous financial year shall be auto populated in Table 8A of Form GSTR – 9. This is regardless of the month in which the invoice has been accounted in Form GSTR 1.
Value of Non – GST Supply
The value of ‘Non – GST Supply’ shall also include the value of no supply. Further this value may be recorded in table 5D, 5E and 5F of Form GSTR 9.
Taxpayer’s Verification in Form GSTR 9C
The verification of the taxpayer uploading the reconciliation statement shall be included in Form GSTR 9C.
IX. Due Date for Form GSTR – 8 Extended
The last date for filing Form GSTR 8 by e commerce operators for the months of October, November and December, 2018 would be extended till January 31, 2019.
X. Due Date for Form GST ITC – 04 Extended
The last date for furnishing Form GST ITC – 04 for the period July 2017 to December 2018 would be extended till March 31, 2019.
XI. Availing ITC for Invoices Issued in FY 2017 – 2018
The taxpayers can claim ITC in respect of invoices issued by the supplier in financial year 2017 – 2018 till the due date for filing Form GSTR 3B for the month of March, 2019. This is, however, subject to certain conditions.
XII. GSTN to Allow Uploading of Documents on Portal for Claiming Refund
GSTN shall allow the taxpayer to upload the underlying documents or invoices in respect of claiming refund via form GST RFD – 01A electronically on the common portal.
The taxpayers would be required to submit the documents online at the time of furnishing refund application. This is done to remove the need for the taxpayer to physically visit the tax office for submitting the refund application. This would be facilitated by GSTN over a period of time.
XIII. Types of Refunds Available via Form GST RFD – 01A
The Council provided that following types of refunds can be availed by the taxpayers via form GST RFD – 01A:
- refund with regards to Assessment or Provisional Assessment or Appeal or any other order
- tax paid on an intra state supply which is later held as inter -state supply and vice versa
- excess payment of tax
- any other refund
There can be cases where applications for refund in form GST RFD – 01A are generated on the common portal before the above mentioned facility is provided by GSTN. However, these applications have not been submitted in the jurisdictional tax office within 60 days of the generation of Application Reference Number.
In such cases, the claimants are sent an email on their registered email ids containing details on where to submit these refund applications. If the refund applications are still not submitted within 15 days of receiving such an email, the said refund application shall be out-rightly rejected.
Further, the amount debited (if any) shall be credited back to the electronic credit ledger of the claimant.
XIV. Another Window for Completion of Migration Process Allowed
- The Council has recommended to allow one more window for undertaking the completion of the migration process.
- Further, the Council has suggested to extend the last date for the taxpayers who did not furnish the complete form GST REG – 26 but only received a Provisional ID (PID) till December 31, 2017. Thus, such taxpayers can file the necessary details to the jurisdictional Nodal Officer until January 31, 2019.
- Also, the late date for filing Form GSTR – 3B and Form GSTR – 1 for the period July 2017 – February 2019/quarters by such taxpayers would be extended until March 31, 2019.
XV. Late Fee Dispensed with on Forms GSTR 1, 3B and 4
The council suggested to fully do away with the late fees on Forms GSTR 1, Form GSTR 3B and Form GSTR 4 for the months or quarters from July 2017 to September 2018. Provided these forms are furnished after December 22, 2018 but on or before March 31, 2019.
XVI. Restriction on Generating E-way Bills
The taxpayers who are unable to furnish tax returns for two consecutive tax periods shall not be allowed to generate E-way Bills. This facility shall be provided once the GSTN/NIC makes the requisite functionality available.
XVII. Clarifications in Respect of Certain Matters
The Council suggested to give clarity with regards to:
- refund related matters such as refund of ITC accumulated as a result of inverted duty structure
- giving refunds within the time defined
- time permitted for availing ITC on invoices
- refund of accumulated ITC of compensation cess