37th GST council Meeting

The 37th GST council has been held in Panaji, Goa on September 20, 2019. The meeting was chaired by Finance Minister Nirmala Sitaraman and has revoked certain existing GST norms. The GST council addressed various matters like GST rate cuts for industries like FMCG, automobile and other industries that have been adversely affected by the economic crisis. The decisions taken in the GST council is concerned with creating a larger scope for ‘Make in India’ and attracting private investment from global regions. The government strongly believes that this will improve the standards of our private sector and open more employment.

The major announcements made in the corporate tax rates for domestic companies will be reflected in the system from October 1, 2019 and are as follows:

1. Corporate Tax Reduced to 22%  

   For companies who do not look for incentives or exemptions (previously was 30%)

   No minimum alternate tax

   Effective tax rate is 25.17% (previously was 34.95%)

2. Domestic company integrated after October 1, 2019 

   If the production begins before March 31, 2023, the tax rate will be 15% (previously was 25%)

   Effective tax rate is 17.01% which includes surcharge and cess (previously was 29.12%)

3. Minimum Alternative Tax (MAT) reduced to 15% :Companies that avail exemption shall not be obligatory to pay MAT
4. Center/State/PSU incubators and public funded universities can spend 1.2% CSR
5. No Tax, no But-Back for listed companies before July 5, 2019
6. New manufacturing companies will have corporate tax rate cut
7. Sales of securities have no enhanced surcharge : Enhanced surcharge put forth in the budget is not applicable on capital gain arising on sale of equity shares in a company liable for Securities Transactions Tax (STT)
8. No enhanced surcharge on capital gains :  There will be no enhanced surcharge on capital gains on the sale of security in the hands on Foreign Portfolio Investors (FPIs)
   There will be no enhanced super-rich tax on capital gains on the sale of a share in hands
9. Broadened the scope for CSR activities 
10. Income Tax Act, 1961 and Finance Act, 2019 to be amended through an ordinance
11. An amount of RS.1.45 lakh Cr estimated for revenue forgone for reduction in corporate tax and other relief

The main amendments after the GST council held on September 20, 2019 are listed below:

Changes in GSTR 9 Return Filing

• Waiver of Annual Return filed by Composition Taxpayers in GSTR 9A for FY 2017-18 and FY 2018-19
• Waiver of Annual Return filed by Regular Taxpayers who have aggregate turnover up to RS.2Cr for FY 2017-18 and FY 2018-19
• No exemption for taxpayers whose aggregate turnover exceeds RS.2Cr. They have to file their Annual Return in GSTR 9 and Reconciliation Statement in GSTR 9C 
• A committee of officials has been entitled to examine the Annual Return and Audit Report (Reconciliation)

GST Refunds

• Should notify refund claim against an order in appeal or other forum
• Should notify the eligibility to file refund application in GST RFD 01A for a period and category where NIL refund is applied
• From September 24, 2019 an integrated refund system has come in to effect for distribution of refund by single authority 
• Aadhar to be linked for Registration and Refund claims

GST Returns & Introduction of New Return Filing System

• ITC cannot be availed without filing GSTR 1. This will boost the compliance of filing return of Outward Supplies in GSTR 1
• A new return filing system will be introduced in from April 2020. Until then the present GSTR 1 and GSTR 3B shall be continued

GST Rates of Services

Hotel & Tourism

• There will be no GST charges for Tariff rates less than RS.1000/-
• GST will be 12% for Tariff Rates between RS.1001/- and RS.7500/-
• GST will be 18% for Tariff Rates above RS.7501/-

Catering Business

• For daily Tariff Rate of RS.7501/-,
• GST rates will be:18% with ITC and 5% without ITC within the premises
• 18% with ITC other than the premises

Job Work

• For diamond job wok, GST rate will be from 5% to 1.5%
• For works undertaken in engineering industries, GST rate will be from 18% to 12%
• For bus body building works, GST will be 18%

Other Important Highlights

• The Circular on Post Sales Discount has been withdrawn
• Clarification of Supply of ITeS has to be made on own account or as intermediary
• Restriction on passing of credit by risky (or new risky taxpayers) has been considered to reduce fake invoices and false refund claims

Revised GST Rates of Goods

Cess Charges on Motor Vehicles

• Petrol vehicles having 10-13 passenger capacity, 1200 cc engine cap and 4000 mm length has 1% of cess rate as against the previous rate of 15%
• Diesel vehicles having 10-13 passenger capacity, 1500 cc engine cap and 4000 mm length has a new cess rate of 3% as against the previous rate of 15%

Other Updates on GST Rates of Goods and Services

• The warehousing charges of cereals, pulses, fruits, nuts and vegetables, spices, copra, sugarcane, jaggery, raw vegetable fibers such as cotton, flax, jute etc., indigo, unmanufactured tobacco, betel leaves, tendu leaves, rice, coffee and tea is subjected to exemption
• The validity of conditional exemption of GST on export freight by air or sea extended for another year
• Exemption of service charges of the intermediary interim between supplier of goods and recipient of goods under the condition when both the parties are located outside the taxable territory
• Registered authors to pay GST on royalty charged from publishers under forward charge and detect regular GST compliance

Services Introduced under RCM

• GST payment of securities lending service under RCM fixed at the merit rate of 18%. GST on securities lending service for the period prior to RCM period should be paid on forward charge basis. IGST should be paid on supply of these services. In case CGST or SGST or UTGST have been paid, the taxpayers do not have to pay the tax again.
• RCM to suppliers paying GST at the rate of 5% on renting vehicles from registered person other than LLP or proprietorship and when the services are provided to their entities.

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