GST which we all knows stands for Goods And Services Tax which comes into force from July 2017 and has affected almost all of us as it has impacted some manufacturers and customers in negative way whereas benefited the professionals like CA…
GST Rate Cut…..
Shares of paint, consumer durables and footwear companies rallied by up to 10 percent on the BSE on Monday, after the GST Council reduced tax rates from 28 per cent to 18 per cent on a range of daily use products and appliances.
Among items on which GST was reduced on Saturday include footwear, small televisions, water heater, electric ironing machines, refrigerators, lithium-ion batteries, hair dryers, vacuum cleaners, food appliances and ethanol.
The development triggered a 5 per cent to 9 per cent rally in Bata India, Relaxo Footwears, Mirza International, Khadim India, Superhouse and Liberty Shoes from the footwear sector; Asian Paints and Shalimar Paints from the paint segment; and Havells India, IFB Industries and Butterfly Gandhimathi Appliances from the consumer durables space.
Asian Paints, Berger Paints, Havells India, Bata India and Relaxo Footwears hit their respective 52-week highs on the BSE. Meanwhile, ITC (up 3 per cent at Rs 282) and VST Industries (up 20 per cent at Rs 2,993) from the cigarette sector rallied up to 20 per cent over the past few months as the GST Council kept the tax rates unchanged…
The decision to reduce the compliance burden of small companies and traders, comes just two days after Prime Minister Narendra Modi address regarding concerns over implementation of GST.
GST Rate Changes for Services:
GST newly applicable on following:
GST Rate at 5% on small housekeeping service providers, notified under section 9 (5) of GST Act, who provide housekeeping service through ECO, without availing ITC
GST Rate at 28% on actionable claim in the form of chance to win in betting and gambling including horse racing
Rate reduced from 28% to 18%
Services by way of admission to theme parks, water parks, joy rides, merry-go-rounds, go-karting and ballet
Rate reduced from 18% to 12%
1. Transportation of petroleum crude and petroleum products with ITC Credit.
2. Metro and monorail projects (construction, erection, commissioning or installation of original works)
3. Works Contract Services by Sub-contractor to the Main contractor under the following scenario:
Where the main contractor provides WCS to Central Government, State Government, Union territory, a local authority, a Governmental Authority or a Government Entity at the rate of 12%
Note: Similarly, GST Rate for Sub-contract services to the main contractor shall attract 5% where the Main contractor is providing services to Central Government, State Government, Union territory, a local authority, a Governmental Authority or a Government Entity at the rate of 5%
4. Common Effluent Treatment Plants services for treatment of effluents
5. Mining or exploration services of petroleum crude and natural gas and for drilling services in respect of the said goods
Rate reduced from 18% to 5%
Transportation of petroleum crude and petroleum products without ITC Credit.
Job-work services for manufacture of leather goods(Chapter 42) and footwear (Chapter 64)
Following Services are exempted :
Providing information under RTI Act, 2005 from GST.
Legal services provided to Government, Local Authority, Governmental Authority and Government Entity.
Transportation of goods from India to a place outside India by air or sea until 30th September 2018:
Life Insurance to personnel of Coast Guard (under the Group Insurance Scheme of the Central Government) by the Naval Insurance Group Fund, retrospectively w.e.f. 1.7.2017
Dollar-denominated services provided by financial intermediaries located in IFSC SEZ, which have been deemed to be outside India under the various regulations by RBI, IRDAI, SEBI or any financial regulatory authority, to a person outside India
Pure services provided to Government entity by a Panchayat/ Municipality. Composite supply involving predominantly supply of services (i.e. up to 25% of the supply of goods) is also exempted.
Lease of land:
By government or local authority to governmental authority or government entity
Supply as a part of specified composite supply of construction of flats, etc
Admission to, or conduct of examination provided to all educational institutions including any service of conducting entrance examinations on collection of entrance fees
Reinsurance services in respect of following insurance schemes :
General insurance business provided under schemes such as Pradhan Mantri Suraksha Bima Yojna and others listed in Notification 12/2017-CGST Rate
Life insurance business provided under schemes such as Pradhan Mantri Jan Dhan Yojana and others listed in Notification 12/2017-CGST Rate
Services by way of fumigation in a warehouse of agricultural produce
Services of admission to planetarium where consideration charged is below Rs.500
Subscription of online educational journals/periodicals by educational institutions who provide degree recognized by any law
Renting of transport vehicles to a person providing services of transportation to an educational institution (students, faculty, and staff) providing education upto higher secondary or equivalent.
Services provided by and to Fédération Internationale de Football Association (FIFA) and its subsidiaries directly or indirectly related to any of the events under FIFA U-20 World Cup in case the said event is hosted by India.
Changes in Exemption limits in the following cases:
The exemption limit of Rs 5,000 per month per member in respect of services provided by Resident Welfare Association (unincorporated or nonprofit entity) to its members against their individual contribution is enhanced to Rs 7500/-.
The exemption limit of the amount of cover of Rs. 50,000 enhanced to Rs. 2 lakhs in respect of services of life insurance business provided under life microinsurance product approved by IRDAI
The exemption limit of Rs.250 for services with respect to all the theatrical performances like Music, Dance, Drama, Orchestra, Folk or Classical Arts and all other such activities in any Indian language in theatre increased 500 per person
Others Recommendations to Note:
To allow ITC of input services in the same line of business at the GST rate of 5% in case of tour operator service
To extend the period of Viability Gap Funding (VGF) with respect to the construction of RCS Airports from 1 to 3 years from the date of commencement of RCS Udan Airport.
Proposal to not to include the Value of deposits, loans or advances on which interest or discount is earned in the Value of exempt supply under sub-section (2) of section 17 (Not applicable to Banking company, Financial Institutions, NBFC extending deposits, loans or advances)
To defer the liability to pay GST in case of TDR against consideration in the form of construction service and on construction service against consideration in the form of TDR to the time when the possession or right in the property is transferred to the landowner by entering into a conveyance deed or similar instrument (eg. allotment letter). No deferment in point of taxation in respect of cash component.
Changes in Valuation of Lottery, Betting and gambling Services:
To insert a provision that the value of lottery shall be 100/112 or 100/128 of the price of lottery ticket earlier notified.
To insert a provision that the Value of supply of Betting & Gambling shall be 100 % of the face value of the bet or the amount paid into the totalizator.
Recommendations made regarding Reverse Charge Mechanism
To include Renting of Immovable property by government or local authority to a registered person under reverse Charge while renting of immovable property by government or local authority to unregistered person shall continue under forward charge
To define insurance agent in the reverse charge notification to have the same meaning as assigned to it in clause (10) of section 2 of the Insurance Act, 1938, so that corporate agents get excluded from reverse charge
GST Rate Clarifications are given for the following goods:
1. GST at 18% to be charged only on the net quantity of “Poly Butylene Feed Stock & Liquefied Petroleum Gas” retained for the manufacture of “Poly Isobutylene or Propylene or di-butyl para cresol” subject to specified conditions.
2. With Respect to Rail coach industry:
GST at 5% on Chapter 86 Goods (with condition that no Refund of unutilized ITC)
GST to attract at applicable rates for the rest of the Goods supplies to Indian Railways
3. With Respect to Coal Rejects falling under HSN Code 2701:
GST at 5%
Compensation Cess at Rs 400 Per Metric Ton
24th GST Council Meet held on 16th December 2017:
1. E way bill rules will be rolled out on a trial basis from 16th Jan 2018
2. The e-way bill for inter-state transport will be implemented in India from 1st February 2018
3. The states can opt to follow the e-way bill system for intra-state transport anytime between 1st Feb to 1st June 2018
4. From 1st June 2018 e-way bill rules for intra-state transport will uniformly apply to all states.
All of the above are recent updates in GST rates… Lets see in the coming future how these affects the economy….