25th GST Council Meeting: Changes made in the Rates

With the completion of the 25^th GST meeting, held in Vigyan Bhawan of New Delhi on 18^th January, 2018, GST changes has been implemented. The whole meeting resulted in a far more better economic structure for the country. Some major key points of the events were late fee reduction, rate reduction for goods and services, providing clarifications and so on. Once the notifications are issued, the proposals for exemptions, rate changes and so on shall be put to effect.

The Main Decisions of the 25^th GST Council Meeting

• One of the most prominent rules GST changes in this even is the late fee reduction. The late fee for GSTR-1, GSTR-5, GSTR-5A and GSTR-6 the late fees is reduced to Rs 50 for each day. Meanwhile, the late fee is reduced to Rs 20 per day in case of nil return filed for GSTR-1, GSTR-5, and GSTR-5A.
• The voluntary registrants can apply to cancel their registration within the time limit of 1 year starting from their registration.
• Migrated taxpayers can apply to cancel their registration (REG-29) and the date has been extended to 31^st of March, 2018.
• The E-way bill portal has been shifted to ewaybillgst.gov.in after the successful application of e-way bills.
• Notifications regarding any modification done to e-way bill rules will have been provided.
• The GST council has accepted the recommendations given by the Handicraft committee. The rates were left to be worked out later.
• According to the new GST rules, the GST rates for 53 services and 29 products has already reduced. The implementation of this decision has already started from 25^th January, 2018.

GST changes made for Products

Three criteria of products fall under the nil-rated goods under the new GST rules. These are vibhuti, Parts and components for the manufacture of hearing aids and de-oiled rice bran. The products whose rates are reduced to 18% from 28% are old and used automobiles, including large and medium sized cars and SUVS, as well as, other motor vehicles. But the condition is that no ITC should have been availed. Public transport buses which run on biofuel has rates reduced from 28% to 18% as well.

The GST rates for old and used motor vehicles, other than the cars and SUVs, has been reduced to 12% from 28% with the precondition that no ITC has been used. Moreover, the products for which the rates diminished from 28% to 12% include – sugar boiled confectionary, mineral drinking water packaged in 20 litres bottles, sprinklers, biodiesel, drip irrigation systems, bio-pesticides, phosphoric acid of fertilizer grade, mechanical sprayer and finally, bamboo wood made joinery.

The products for which the GST rates are reduced to 5% from 18% include – LP gas sent to Household Domestic Consumers; the raw materials require for launch vehicles, payloads (both CGST and IGST rates) and satellites; tamarind kernel powder and finally mehendi paste packaged in cones. The following products has a reduced rate from 12% to 5% – goods made from straw, esparto and other braiding materials and velvet fabric with a precondition that refund is not claimed on ITC. Finally, the following products has their GST rates reduced from 3% to 0.25% – diamonds and other precious stones.

Some goods unfortunately also has increased GST changes in terms of percentage. The following product has an increment in rate from 12% to 18% – cigarette filter rods. The rate for rice bran, apart from de-oiled rice brain, has increased to 5% from 0%. Furthermore, the compensation cess for the following motor vehicles is reduced to 0% – used and old motor vehicles provided that they did not use the ITC offer; the vehicles posing as ambulances, that is, they have all the necessary components of a real ambulance and 10-13 seater buses and real ambulances after being subjected to specific rules.

GST changes made for Services

The following services are newly added into the GST system with a rate of 5% imposed on them – service providers offering small housekeeping through ECO, notified under section 9(5) of GST Act, provided that they do no avail ITC. Claims to win a betting or gambling including horse-racing can expect to get a rate of 28% imposed on the service. Moreover, the following services has a reduced rate from 28% to 18% – entry into themes parks, water parks, availing merry-go-round, go-karting, ballet and joy rides.

The services for which the GST rates are reduced from 18% to 12% are as follows:

• ITC credited transportation regarding petroleum crude and petroleum products
• Construction, installation and commission related to metro and monorail services
• If the main contractor dispenses WCS to the Central Government, State Government, Union Territory, respective local authority; then the rate is 12% for the contactor services between the main contractor and the sub-contractor. It is to be noted that sub-contractor services attract a rate 5% with the aforementioned conditions.
• Services related to effluent treatment via Common Effluent Treatment Plants
• Services related to mining and exploration in search of natural gas and petroleum crude as well as for drilling in search of the mentioned goods

The upcoming products has a reduced rate from 18% to 5% – tailoring and seamstress services; moving petroleum crude and products without the ITC credit; services related to the manufacture of leather products and footwear (view Chapter 64).

Exemptions are made for the services given below:

• Services related to give information under RTI Act, 2005 from GST
• Government, Local Authority, Governmental Authority and Governmental Entity providing legal services.
• International transportation of products from India to any place via the air or sea routes until the 30^th September, 2018
• Personnel of the Coast Guard (following the Group Insurance Scheme of the Central Government) accessing life insurance service via the Naval Insurance Group Fund from W.E.F 1.7.2017
• The dollar-denominated services seemingly outside of India following different regulations like RBI, IRDAI, SEBI or any financial regulatory authority, offered by the financial intermediaries situated in IFSC SEZ, to a person residing out of India.
• Services provided to the Government from a rural Panchayat or Municipality. Composite supply up to around 25% of supply of goods is also exempted.
• Services related to lease of land – from a government entity to another government authority or supply as a portion of specific composite supply. For example, construction of flats.
• Services related to the admission to any educational institutions, conduction of regular examinations along with entrance exams and collection of entrance fees.
• General insurance businesses offered under the schemes like Pradhan Mantri Suraksha Bima Yojna and others which are mentioned in the Notification 12/2017 – CGST Rate.
• Life insurance business offered under schemes such as Pradhan Mantri Jan Dhan Yojna and others mentioned in Notification 12/2017 – CGST Rate
• Services related to warehouse of agricultural products in the form of fumigation
• Services to admit into a planetarium whose consideration charge is below Rs 500
• Online educational journal subscription via educational institutions providing degree in any department.
• Services related to rent-a-car vehicles with the precondition of achieving minimum higher secondary level of education or equivalent.
• If the event of FIFA U-20 World Cup is held in India, service GST rates are exempted which are directly or indirectly linked to FIFA and its subsidiaries.

Exemption limits are given for the services below according to the new GST rules

• The exemption limit of Rs 5000 per member per month has been increased to Rs 7500 in terms of services offered by the Resident Welfare Association (unincorporated or nonprofit entity).
• The limit of exemption of services provided by the life insurance businesses under life micro-insurance product permitted by IRDAI has increased their cover of Rs 50,000 to Rs 2 lakhs.
• The exemption limit to services related to the creative and entertainment sector such as dance, drama, music, orchestra, folklore and classical art and all other similar activities in any Indian language received an increment from Rs 250 to Rs 500.

Further GST changes has the following recommendations to be noted

• In case of tour operator services, the ITC input service must be allowed in the same line of business with a GST rate of 5%
• Extending the time frame for Viability Gap Funding (VGF) with respect to the building of RCS Airports from 1 to 3 years beginning from the date of registration.
• Exclusion of the value of deposits, loans and advances on which the interest or discount is gained in the Value exempt of supply under the sub-section 17(2). It is to be noted that it is not applicable for banking companies, financial organizations and NBFC extending deposits, loans and so on)
• To postpone the accountability to pay GST in case of TDR in the form of construction service and on construction service against consideration in the shape of TDR to the time when the ownership of the property is given to the landlord by agreeing into a conveyance deed or something similar. Taxation is to be conducted in due time.
• To put a provision that the value of lottery can be 100/112 or 100/128 of the price of the lottery ticket which has been informed earlier.
• The value of supply of gambling and betting has to be 100% of the face value of the bet or the amount of money paid into the system
• Renting of a an immobile property owned by the government to a registered person under the reverse charge and renting of a an immobile property owned by the government to an unregistered person under the forward charge
• The definition of an insurance agent should align with its assigned meaning according to the clause (10) of section 2 of the Insurance Act, 1938, in order for the corporate agents to get removed from the reverse charge.

Certain clarification regarding GST changes are made for the following products and services

• The total quantity of “Poly Butylene Feed Stock & Liquefied Petroleum Gas” kept in stock for the manufacture of “Poly Isobutylene or Propylene or di-butyl para cresol” has 18% of GST rate imposed on it with specific conditions.
• Goods mentioned in Chapter 86 has a GST rate of 5% provided that there is no refund of unutilized ITC, in terms of Rail Coach Industry
• Provision to attract plausible rates for the other goods supplied to the Indian raileways, in terms of Rail Coach Industry.
• GST to be considered at 5% for the coal rejects that fall under HSN Code 2701
• Compensation Cess has to be at Rs 400 each metric ton for the coal rejects that fall under HSN Code 2701

Therefore, this is the detailed list of decisions that were taken in the 25^th GST Council meeting and the GST changes made during this event.