GST Update: Changes made by 22nd GST Council Meet

Recently the 22^nd GST Council meet in New Delhi on 6^th Oct 2017 has made several changes in existing GST Act, 2017 which is summarised as below on point basis. There is cut down in rates of around 27 items and 12 services. The key takeaways from GST Council meet based on press release are listed below:-

List of changes made to the existing system:

Composition Scheme- GST Council announced following changes in the scheme

1. The annual turnover threshold on the composition scheme unde GST has been raised from Rs. 75 lakh to Rs. 1 crore for all states except the North Eastern States. For North Eastern States threshold limit for availing Composition, Scheme has increased from Rs. 50 Lakhs to Rs. 75 Lakhs. Jammu and Kashmir (J & K) and Uttarakhand is under threshold limit of Rs. 1 crore.
2. The facility for opting composition scheme is extended from 16^th Aug 2017 to 31^st March 2018.
3. The due date for filing of returns by a composite dealer (quarterly) has extended from 18^th October 2017 to 15th November 2017.
4. Assesses who are engaged in the supply of exempted service are also eligible for availing composition scheme.
5. Whereas, no option for availing composition scheme exists for the assesses engaged in the supply of service except restaurant service.
6. “Assesses engaged in the supply of restaurant service as well as exempted service, for the purpose of calculation of turnover for availing composition scheme, turnover pertains to exempted service is not to be included.”
7. New entrants to the scheme shall file GST Return in Form GSTR -4 only for the portion of the quarter from when scheme becomes applicable and shall file returns as regular dealers for the preceding tax period.
8. Composition scheme shall be effective from the succeeding the month in which application for opting of the composition is made.
9. Facility to avail composition scheme, under the increased threshold, shall be available up to March 31, 2018, to both migrated as well as new taxpayers.
10. Persons who are otherwise eligible for composition scheme but are providing any exempt service (such as extending deposits to banks for which interest is being received) where being considered ineligible for the said scheme. It has been decided that such persons who are otherwise eligible for availing the composition scheme and are providing any exempt service, shall be eligible for the composition scheme.
11. A Group of Ministers (GoM) shall be constituted to examine measures to make the composition scheme more attractive.

Exporters & Exports

1. GST council has has decided that Refund is to be paid for exporters

Month	Due Date
July	10th October
August	18th October

2. An E-Wallet for all the exporters for every exporter through which notional amount of Refund will be credited soon.
3. The held-up refund of IGST paid on goods exported outside India in July 2017 would be to be paid by October 10, 2017. The August backlog would get cleared on October 18, 2017, and refunds for subsequent months would be handled expeditiously.
4. Other refunds of IGST paid on supplies to SEZs and of inputs taxes on exports under Bond/LUT, shall be processed from October 18, 2017, onwards.
5. Relief is being given by extending the Advance Authorization (AA) / Export Promotion Capital Goods (EPCG) /100% EOU schemes to sourcing inputs etc. from abroad as well as domestic suppliers. Holders of AA/ EPCG and EOUs would not have to pay IGST, Cess etc. on imports.
6. Domestic suppliers to holders of AA / EPCG and EOUs would be treated as deemed exports under section 147 of CGST/SGST Act and refund of tax paid on such supplies given to the supplier.
7. Merchant exporters will now have to pay nominal GST of 0.1% for procuring goods from domestic suppliers for export.
8. Introduction of “e-Wallet” with a notional amount as an advance refund would be made operational w.e.f. 1^st April 2018 and can be used to pay taxes.
9. GST rate on sale & purchase of duty scrip under HSN 4907 is being reduced from 5% to 0%.

 Small and Medium Enterprises

1. Exemption to service providers whose annual aggregate turnover is less than INR 20 Lakhs (INR 10 Lakhs in special category States except for the State Jammu & Kashmir) from obtaining  GST Registration even if they are making inter-state supplies of services.
2. Small and medium business having annual aggregate turnover up to INR 150 lakhs shall be required to file GST returns in Form GSTR-1, 2 & 3 and pay due taxes, on a quarterly basis starting from the quarter October to December 2017.
3. The due dates for quarterly returns shall be announced in due course.
4. Registered buyers from such small business would be eligible to avail input tax credit on the monthly basis.
5. Meanwhile, all taxpayers will be required to file FORM GSTR-3B on a monthly basis until December 2017.
6. All taxpayers are also required to file FORM GSTR—1, 2 & 3 for the months of July, August and September 2017.
7. No change in due dates for filing the returns for the month of July 2017 which is notified vide Notification no.30/2017 dated 11/09/17.
8. The due dates for the months of August and September 2017 will be announced in due course.
9. Reverse charge mechanism as provided under Section 9(4) of the CGST Act, 2017 and Section 5(4) of the IGST Act, 2017 shall be deferred till March 31, 2018, and shall be reviewed by the Committee of Experts.
10. Services provided by the Goods Transport Agency (GTA) to an unregistered person shall be exempt from GST.

Reverse charge mechanism:

1. As per provision of sub-section (4) of section 9 of the CGST Act, 2017 and under sub-section (4) of section 5 of the IGST Act, 2017, GST has to be paid by the recipient where either Goods or Services are procured from an Unregistered Dealer.
2. Recommendations made by the Council in its 22^nd GST Council meeting held on 06/10/2017 at National Capital was that the above said provisions would be suspended till 31/03/2018.

GST on Advances

1. There was a provision under Input Tax Credit scheme that GST to be paid in advance received and credit cannot be availed till the final settlement of the bill.
2. Taxpayers having the annual aggregate turnover of INR 150 lakhs, shall not be required to pay tax on receipt of advances on account of supply of goods. GST on such supplies shall be payable only when the supply of goods is made. 

TDS and TCS Provisions

1. Operationalization of TDS and TCS provisions so proposed in GST Act is postponed till 31/03/2018.

 

Below is the list of items on with GST Rates has been revised in the 22nd GST Council meet:

S. No.	Chapter/ Heading/ Sub-heading/ Tariff item	Description	Present GST Rate	GST Rate Recommended by the GST Council
1.	0804	Mangoes sliced dried	12%	5%
2.	1905 or 2106	Khakra and plain chapatti/roti	12%	5%
3.	19 or 21	Food preparations put up in unit containers and intended for free distribution to economically weaker sections of the society under any programme duly approved by any Govt. i.e. either Central Govt. or State Govt.	18%	5 %
4.	21	Nankeens other than those which are put in unit containers and- (a)  bearing a registered brand name;   or (b) Bearing a brand name on which an actionable claim or enforceable right in a court of law is available.	12%	5%
5.	2710	Imposing  the GST only on the net quantity of superior kerosene oil retained for the manufacture of Linear Alkyl Benzene	18%	18%
6.	30	Ayurvedic, Unani, Siddha, Homeopathy medicines, other than those bearing a brand name	12%	5%
7.	3213	Poster Colour	28%	18%
8.	3407	Modelling paste for children amusement	28%	18%
9.	3915	Plastic waste, parings or scrap	18%	5%
10.	4004 00 00	Rubber  waste, parings or scrap	18%	5%
11.	4017 00 20	Hard Rubber waste or scrap	28%	5%
12.	4707	Paper waste or scrap	12%	5%
13.	4907	Duty credit scrip	5%	Nil
14.	5401	Sewing thread of man-made filaments, whether or not put up for retail sale	18%	12%
15.	5402, 5404, 5406	All synthetic filament yarn like nylon, polyester, acrylic, etc.	18%	12%
16.	5403, 5405, 5406	All artificial filament yarn, such as viscose rayon, Cuprammonium,	18%	12%
17.	5508	Sewing thread of man-made staple fibers	18%	12%
18.	5509, 5510, 5511	Yarn of man-made staple fibres	18%	12%
19.	5605	Real Zari	12%	5%
20.	6802	All goods falling under heading 6802 [other than those of marble and granite or those which attract 12% GST]	28%	18%
21.	7001	Cullet, other waste, and scrap of Glass	18%	5%
22.	8305	Fittings for loose-leaf binders or files, letter clips, letter corners, paper clips, indexing tags and similar office articles, of base metal; staples in strips  of base metal	28%	18%
23.	8483	Plain Shaft under chapter 8483	28%	18%
24.	84	Parts suitable for use solely or principally with fixed Speed Diesel Engines of power not exceeding 15HP	28%	18%
25.	84 or 85	Parts suitable for use solely or principally with power driven pumps primarily designed for handling water, deep tube well turbine pumps, submersible pumps, axial flow and mixed flow vertical pumps.	28%	18%
26.	84 or 85	E-Waste	28%/ 18%	5%
27.	Any Chapter	Biomass briquettes	18%	5%

Below is the list of goods getting IGST exemption from now:

S.No.	Description	Present applicable IGST rate	Recommended IGST rate
1	IGST exemption on imports of rigs imported for oil/gas exploration and production projects under lease, subject to some stipulated conditions that: (i)   Integrated tax leviable under section 5(1) of the IGST Act, 2017 on supply of service covered by item 1(b) or 5(f) of Schedule II of the Central Goods and Services Tax Act, 2017; (ii)     The rig is not sold without the prior permission of the Commissioner of Customs of the port on which goods are imported; (iii)   To re-export the goods within 3   months from the expiry of the period for which they were supplied out of India;	5%	Nil
2	Exemption of IGST on imports of medicines supplied free by the international agencies like UNICEF, WHO, Red Cross etc.	12%/ 5%	Nil
3	A.    Exemption from IGST on imports of bona fide gifts up to CIF value limit of Rs. 5000 imported through post or air.	28%	Nil