The 28th GST Council meeting witnessed a slew of rate changes that are further implemented via notifications. The Council meeting has attempted to cut down the rates of several essentials as well as exempted many goods and services for the common benefit of taxpayers. This article aims to highlight the changes in essential rates brought about by the Notifications following the GST Council recommendations.
Rate Changes in goods and services
The rates for handicraft goods such as Articles made of paper made, Handmade carpets, Hand-woven tapestries have been cut down to 5% from the initial 12% falling under Chapter head 46, 48, 56, 57, etc. Also some of the handloom articles like handbags, carved wood products have been brought to tax bracket of 12% such as goods falling under chapter head 42, 44, 45, etc. The rate for ethanol has also been cut down to 5% from 18% with clear intention of the government to reduce the cost of production where ethanol forms a major component like that of petrol . The rate for fuel cell vehicle has been reduced from 28% to 12%. Other essentials like rates of electrical, clothing and apparel has also been reduced to 18% from 28% tax slab.3
Sevices also witnessed change in rates. Supply of e-books will now be taxed at 5% than that of 18%. Mutimodal transportation will be taxed at 12%. Moreover, supply of food along with service has been bifurcated in three parts i.e. food provided in restaurant, Indian railways and at events/ conferences.4 The tax shall be levied at 5% on all such services.
Goods and Services exempt from GST
Certain goods like sanitary napkins, rakhi, deities of stone and marble have been kept out of the GST ambit.5
Certain services are kept out of GST ambit. Some of the exempted services are as follows:
- Services provided by coal mines provident fund organization to the PF subscribers
- Services provided by Old age home run by state government/ central government to the citizens aged more than 60 years upto Rs. 25000
- Administrative fees collected by National Pension System Trust
- Services provided by an unincorporated body or nonprofit entity registered under any law to own members upto Rs. 1000 per year of membership fees.
- Services supplied by an establishment of a person in India to its own establishment outside India, which are treated as establishments of distinct persons provided the place of supply is outside India.
Restriction on refund under inverted duty structure in case of supply of fabrics withdrawn6
Government has restricted the refund of accumulated credit to be claimed by the textile and wagon industry under the inverted duty structure. On various representations being made by the industry in relation to hardship being faced by such restriction, Government has done away with restriction and thus allowing the benefit of refund to the textile industry only with effect from 1st August, 2018. However, the unutilized accumulated input tax credit balance as on 31stJuly, 2018 shall lapse. Thus, the restriction still applies to the wagon manufacturing industry.
Other Key Amendments
- Compensation Cess exempted on fuel cell motor vehicles and coal rejects (coal on which cess has been paid and ITC has not been claimed)7
- Services provided by individual Direct Selling Agents to a banking or non-banking financial company liable to reverse charge.8
- Services by way of an activity in relation to a function entrusted to a municipality or Panchayat shall not be treated as supply of goods or services9
- Construction services on a civil structure to Central, State government and local authority or any government authority shall be taxed at 12% and shall include any activity or transaction undertaken by Central, State government or local authority which are behaving like public authorities.10
Opening of migration window for taxpayers
The migration window shall be opened again for the taxpayers who received provisional IDs but could not complete the migration process because of non-filing of Part B of FORM GST REG-26. Such taxpayers are required to submit the necessary details to the jurisdictional Central Tax/State Tax nodal officers by 31st August, 2018 who shall forward the same to GSTN for enabling the migration.11
1Notification No. 22/2018- Integrated Tax (Rate) dated 26.07.2018
Notification No. 21/2018- Central Tax (Rate) dated 26.07.2018
Notification No. 21/2018- Union Territory Tax (Rate) dated 26.07.2018
2Notification No. 18/2018- Central Tax (Rate) dated 26.07.2018
3Notification No. 18/2018- Central Tax (Rate) dated 26.07.2018
4Notification No. 13/2018- Central Tax (Rate) dated 26.07.2018
5Notification No. 19/2018- Central Tax (Rate) dated 26.07.2018
6 Notification No.20/2018-Central Tax (Rate) dated 26th July, 2018
Notification No. 21/2018- Integrated Tax (Rate) dated 26th July, 2018
7Notification No. 02/2018- Compensation Cess (Rate) dated 26.07.2018
8Notification No. 15/2018- Central Tax (Rate) dated 26.07.2018
10 Notification No. 17/2018- Central Tax (Rates) dated 26.07.2018
11Trade Circular No. 10/2018 dated 03.08.2018
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