22nd GST Council meeting held on 6thOctober, 2017 had relaxed or deferred implementation of number of provisions to provide for time for the industry to get accustomed with the new provisions. Numerous Notifications have been issued to implement such decision of the GST Council meeting. In this part of our BT GST Alert we have analysed relevant Notifications and highlighted the key amendments made in GST law.
Amendments in reverse charge provisions
- Reverse charge mechanism on inter-state/intra state supply of goods or services received from an unregistered dealer has been suspended till 31st March’2018. As the notification is prospective in nature, it shall be effective from 13th October’20171.
- Services provided by members of overseeing committee to RBI have been brought under Reverse charge, where RBI has to discharge such liability.2
- Any Registered person shall be required to discharge GST under Reverse Charge on used vehicles, seized and confiscated goods, old and used goods, waste and scrap if, these goods are procured from Central Government, State Government, Union Territory or Local Authority.3
Amendments for Infrastructure services 4
- Hitherto works contract services in relation canal, dam, irrigation works or pipeline, conduit, or plant for i) water supply, ii) water treatment or iii) sewerage treatment or disposal, supplied to only Government or Governmental Authority was exempted. Vide this Notification the benefit has been extended when same are supplied to either of Central Government / State Government / Union Territory, local authority and Government entity.
- 5% GST on Works contract service involves predominantly earth works (It constitutes more than 75% of the value of works contract). The term earth work has not been defined, this would lead to unnecessary litigation, unless proper guidelines is being issues in this regard.
- Where works contract service includes oil and natural gas exploration in offshore area beyond 12 nautical miles, the rate would be 12%.
- Concessional rate of 5% / 12% GST shall apply only in cases where specified work to the Government entity has been entrusted to them by Central / State Government or Union territory.
Extension in time limits for specified Return filing
- Time limit for Form GSTR 6 in respect of input service distributors for the month of July, August and September has been extended till 15th November, 20175
- Time limit of Form GSTR 5A in respect of persons supplying OIDAR services from outside India to non taxable online recipient for the month of July, August and September is extended to 20th November, 2017.6M
- Time limit of Form ITC-01 by persons who opted for new registration/converted from composition scheme to normal scheme / converted from providing exempt to taxable supply during July-September, 2017 has been extended till 31st October, 2017.7
Compliance Relief to small taxpayers8
In order o mitigate the inconveniences faced by small taxpayers, it has been notified that the following person (other than persons registered under composition scheme) will not pay GST on receipt of advances; instead GST will be paid on issuance of invoice:
- Persons having an aggregate turnover of less than Rs. 1.5 crores in the preceding financial year
- Persons having an expected aggregate turnover of less than Rs. 1.5 crores in the current year (if registration has been obtained in the current financial year)
Rate slashes of certain Items
The GST rate on unbranded namkeen, unbranded ayurvedic medicine, sliced dried mango and khakra has been reduced to 5 per cent from 12 per cent, while the same on man-made yarn used in textile sector has been reduced to 12 per cent from 18 per cent. Tax rate on stationery items, stones used for flooring (other than marble and granite), diesel engine parts and pump parts has been cut to 18 per cent from 28 per cent, e-waste to 5 per cent from 28 per cent.9
To restore the lost incentive on sale of duty credit scrips, GST on sale or purchase of MEIS scrips has been reduced from 5% to 0%.10
Hitherto GST rate on vehicle hire charges was 5% where cost of fuel is included in the consideration and 12%, where consideration involves only hire charges, with restriction on input service credit for concessional rate. Vide this Notification 11concessional rate of GST shall be extended for back to back outsource services.
Exemptions of certain services from GST 12
- Any activity in relation to any function entrusted to a Panchayat under Article 243G of the Constitution was exempted if same was provided by a Governmental Authority. Amendment has been made to extend such exemption to Central/State Government / Union Territory and local authority.
- Service provided by a Government Entity in the form of grant to Central Government, State Government, Union territory, local authority or any person specified by such Government has been exempted. Moreover, Government Entity has been defined with the same meaning that of Governmental Authority
- Services provided by a goods transport agency to an unregistered person, including an unregistered casual taxable person has been exempted .Earlier GTA was required to pay tax under Forward cover if it supplies to unregistered person.
- Service by way of access to a road or a bridge on payment of annuity.Earlier service by way of access to a road or a bridge on payment of toll charges was exempt only. Now exemption to similar income received in form of annuity has also been provided. Toll charge is basically paid by the passengers while annuity is paid by NHAI for construction and maintenance of highways.
- Hitherto Upfront and/or one time amount (called as premium, salami, cost, price, development charges or by any other name) for long term lease (30 years and above) of industrial plots provided by the State Government Industrial Development Corporations or Undertakings was exempted. Vide this notification; such benefit has been extended to any entity having 50 per cent or more ownership of Central Government, State Government, and Union territory.
Leasing of Motor Vehicles13
A motor vehicle if purchased and leased prior to 01.07.2017 or if such motor vehicle is registered prior to 01.07.2017 and no credit is availed of any input tax credit under central excise law or VAT laws, then, concessional rate of GST, being 65% of the applicable rate shall apply. Such concessional provisions shall be applicable only upto 01.07.2020.
Major Changes in relation to Customs:
- Goods imported under a valid EPCG license- Exemption now available from payment of IGST and GST compensation cess upto 31.03.2018. However, deemed export as defined as per Foreign Trade Policy shall not be counted for fulfillment of export obligation in relation to an EPCG license if the such license holder has availed exemption from payment of IGST and GST Compensation Cess.14
- Goods imported under a valid Advance Authorisation/Annual Advance Authorisation- Exemption now available from payment of IGST and GST compensation cess upto 31.03.2018. Further, wherein exemption from IGST and GST compensation cess is availed the authorisation holder can fulfill the export obligation under the license only by making physical exports. It may also be noticed that the aforesaid exemption from payment of IGST and GST Compensation Cess shall be subject to pre-import condition.14
- Goods imported by Export Oriented Undertaking now exempted from payment of Integrated Tax and GST Compensation Cess. Further, the aforesaid exemption is valid up to 31.03.2018.15
- BCD and IGST rates prescribed on certain goods like16:
- Medicines/drugs/vaccines supplied by UNICEF/Red Cross/International Organisation
- Import of gold by specified banks or PSU
- Rigs & ancillary items imported for oil/ gas exploration and production taken on lease by the importer for use after import.
- Bonafide gifts imported by posts/air upto CIF value of Rs.5000.
- Fixed Tariff Value of Edible Oils, Brass Scrap, Poppy Seeds, Areca Nut, Gold and Silver has been notified.17
Other important Amendments
- SGST/UTGST officers have been cross empowered to sanction refund under both CGST and IGST law 18 However, refund of unutilized Input credit under Rule 96, shall not be covered under this provisions.
- A person making both taxable and exempt supply in the same invoice to an unregistered person needs to issue a single ‘’invoice cum bill of supply”.19
- Returns forms amended to insert separate details for Zero rated supplies made towards SEZ and also towards deemed exports supplies.
- Hitherto, exemption from registration to small units having turnover below Rupees 20 lakhs was applicable to intra state (local) supplies. Vide this Notification20 such exemption is extended to inter state supplies, provided that aggregate turnover for the whole year remain within threshold limit.
11Notification No 32/2017-IGST (Rates) and 38/2017-CGST (Rates), both dated. 13.10.2017
2Notification No 33/2017-IGST (Rates) dated 13.10.2017
3Notification No 36/2017 – Central Tax (Rates) and Notification no 37/2017 – IGST (Rate) both dated 13.10.2017
4Notification No 31/2017-Central Tax (Rate) and Notification No 39/2017 – IGST (Rates) both dated 13.10.2017
5Notification No 43/2017 – Central Tax dated 13.10.2017
6Notification No 42/2017 – Central Tax dated 13.10.2017
7Notification No 44/2017 – Central Tax dated 13.10.2017
88 Notification No 40/2017- Central Tax dated 13.10.2017
9Notification No 35/2017- Integrated Tax (Rates) dated 13.10.2017 and Notification No 34/2017- Central Tax
10(Rates) dated 13.10.2017 10Notification No 36/2017- Integrated Tax (Rates) dated 13.10.2017
11Notification No 31/2017- Central Tax (Rates) dated 13.10.2017
12Notification No 33/2017- Integrated Tax (Rates) dated 13.10.2017 and Notification No 32/2017- Central Tax (Rates) dated 13.10.2017
13Notification No 37/2017- Central Tax (Rates) dated 13.10.2017
14Notification No 79/2017- Customs dated 13.10.2017
15Notification No 78/2017- Customs dated 13.10.2017
16Notification No 77/2017- Customs dated 13.10.2017
1717 Notification No 95/2017- Customs (N.T.) dated 13.10.2017
18Notification No 39/2017- Central Tax dated 13.10.2017
19Notification No 45/2017- Central Tax dated 13.10.2017
20Notification No 10/2017- IGST dated 13.10.2017
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