22 January 2018

25th meeting of GST Council – Certain highlights

GST Council met for the 25th time on 18-1-2018 in New Delhi. Number of decisions, including reduction in GST rates for around 29 goods and 53 services were taken while also recommending reduction of late fees payable on delayed filing of certain returns. Some procedural relaxations in respect of cancellation of registration have also been proposed. Some of the important changes which will come into effect from 25th of January, according to the Press Releases issued in this regard by the Ministry of Finance are,


Revision of GST rates on around 29 goods

GST rates on number of goods have been reduced, including on old and used motor vehicles. According to the latest proposals, while rate of tax on old and used medium and large cars and SUVs will be 18%, 12% GST would be payable on other old and used motor vehicles. Buses, for use in public transport, which run exclusively on bio-fuels would also be liable to tax at 18%. Further, GST Council has also recommended exemption to old and used vehicles and on ambulances from Compensation Cess.

Similarly, tax rate is proposed to be reduced on sugar boiled confectionary, drinking water packed in 20 litre bottles, bio-diesel, drip irrigation system including laterals, sprinklers, and mechanical sprayer.

There is also a proposal to reduce the tax rate on Tamarind kernel powder and mehendi paste in cones, Velvet fabric and Diamonds and precious stones. GST is proposed to be exempted on parts and accessories for manufacture of hearing aids, and on de-oiled rice bran.

There is however a slight increase in the GST rates on cigarette filter rods and rice barn (other than de-oiled).


Revision in tax rate for 53 services

GST Council has decided to reduce tax rate on construction of metro and monorail projects. Exemption from GST is also proposed, till 30-9-2018, on service of transportation of goods from India to a place outside India, by air or sea.

Exemption is proposed on legal services provided to Government, Local Authority, Governmental Authority and Government Entity, and on supply of services by way of providing information under the RTI Act.

Further, while GST rate on services by way of admission to theme parks, water parks, joy rides, merry-go-rounds, go-carting and ballet, is proposed to be reduced from 28% to 18%, the GST Council has proposed to clarify that elephant/ camel joy rides are not to be classified as transportation services and would hence attract GST @ 18% with threshold exemption to small services providers.

IGST is also proposed to be exempted on service of temporary transfer or permitting use or enjoyment of any intellectual property right, on part of consideration towards royalty and license fee includible in transaction value of imported goods.

It is also proposed to be clarified that leasing or rental service, with or without operator, of goods, would attract same GST as supply of like goods involving transfer of title.


Late fees for filing of certain GST returns to be reduced

Late fee payable by any registered person for failure to furnish FORM GSTR-1 (details of outward supply), FORM GSTR-5 (applicable in case of non-resident taxable person) or FORM GSTR5A (applicable in case of OIDAR) is proposed to be reduced to Rs. 50 per day. This late fees will however be Rs. 20/day for NIL return filers. Similarly, late fee payable in case of FORM GSTR-6 (applicable for Input Service Distributor) will also be Rs.50/day.


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