TaxTMI 
TaxTMI 
Minutes of the 23rd GST Council Meeting held on 10 November 2017
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..... Deemed ratification by the GST Council of notifications, circulars and orders issued by the Central Government 4. Decisions of the GST Implementation Committee (GIC) for information of the Council 5. Modification of Rules on Anti-Profiteering 6. Issues recommended by the Fitment Committee for consideration of the GST Council i. Changes in GST/IGST rates on Goods (Annexures I, II, III, IV) ii. Dual levy of IGST on the royalty paid for import of pictures on a tangible media where the rights have been granted for a temporary period (Temporary transfer or permitting the use or enjoyment of any intellectual property right) iii. GST rate on job work in relation to manufacture of handicrafts iv. Amendment in Notification No. 21/2017-CT(R) dated 22.8.2017 regarding Public Distribution System (PDS) and Fair Price Shops (FPS) v. Alignment of the entry at item (vi) of Sl. No.3 of Notification No. 11 /2017- CT(R) with the entries at items (ii), (iii), (iv) and (v) of Sl.No.3 vi. GST on Tour Operator services, request for allowing input tax credit of services in the same line of business at the existing rate of 5....
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....it ii. Constitution of 'Law Review Committee' and 'Advisory Group of Law Review Committee' for the Information of the Council iii. Simplification of Return filing process 13. Date of the next meeting of the GST Council 3. The Hon'ble Chairperson welcomed the Members of the Council. He thanked the Government of Assam and Dr. Himanta Biswa Sarma, Hon'ble Finance Minister of Assam for excellent arrangements made for the Meeting and the warm hospitality extended to the delegates. 4. Before commencement of discussion on the agenda items, the Hon'ble Minister from Kerala made a suggestion that the Council could start the meeting by first taking up the Agenda item 6 (Issues recommended by the Fitment Committee) in order to have sufficient time to discuss this important subject. The Hon'ble Minister from Punjab stated that the Agenda notes should be sent at least seven days in advance. He further added that the Minutes could be circulated within 10 days of the conclusion of the Meeting and comments could be obtained within next 10 days so that this Agenda item need not be discussed. Dr. Hasmukh Adhia, the Finance and Revenue Secr....
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....d until consensus was reached. He observed that there was a system of going through the Agenda seriatim and this should be continued and the key items would be discussed in detail. The Hon'ble Deputy Chief Minister of Bihar stated that his impression was that since July, 2017, the progress was slow and there was a need to work at a faster pace and take decisions as quickly as possible. The Hon'ble Minister from Assam suggested to discuss the issues Agenda item-wise. The Hon'ble Minister from West Bengal suggested to avoid long presentations and to circulate presentations in advance. After these preliminary discussions, the Hon'ble Chairperson took up discussion on Agenda items. Discussion on agenda items Agenda item 1: Confirmation of the Minutes of the 22^nd GST Council meeting held on 6 October, 2017 6. The Secretary invited any comments on the Minutes of the 22^nd Council Meeting (hereinafter referred to as the Minutes). No Hon'ble Member made any comments on the Minutes and hence the Council approved the Minutes. 7. In view of the above, for agenda item 1, the Council decided to adopt the Minutes of the 22^nd Meeting of the Council without any ch....
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....al revenue shortfall and that the revenue settlement constituted a large pmt of revenue of these States. He stated that the States needed to examine whether all goods entering into their States were being captured in the tax returns. He stated that for this, goods imported by dealers from other States on the basis of data from Form 'C' in pre-GST regime needed to be compared with IGST used for payment of SGST/CGST after introduction of GST to assess if there is any under reporting of goods imported. 8.3. The Hon'ble Minister from Jammu & Kashmir stated that small States like Puducherry, Goa, Jammu & Kashmir, Sikkim and Arunachal Pradesh were not expected to lose revenue and the figures showing loss of revenue for such States were counter-intuitive. The Hon'ble Minister from Kerala stated that mostly the big producer-States also had large consumption base. The Hon'ble Minister from Punjab stated that among the general category States, Punjab had the third largest shortfall (39% of revenue), which was very worrisome. He stated that the States with big metro cities had done well in revenue collection. He suggested that the Chief Economic Advisor (CEA) could do a....
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....ter from Kerala stated that presently, no data was available to States to do analysis of Form 'C' or return-wise analysis of taxpayers. The Joint Secretary, DOR, stated that the GSTN had been advised to share data with the States. The Hon'ble Minister from West Bengal stated that the Model-2 States were not getting MIS and because of this, no analysis was possible. The Hon'ble Minister from Goa stated that his State had 41% revenue shortfall but the period was too short to do any meaningful analysis. He observed that for Goa, the tourist season was starting from this month and would last till March, 2018 and he expected the revenue situation to improve during this period. He cautioned against too much of pessimism with regard to revenue collection. He supported the observation of the Hon'ble Deputy Chief Minister of Bihar regarding the need to take quick decisions and observed that sentiments of the small persons in the market who were affected by GST needed to be taken into account. He observed that as revenue position was reasonably good, the proposals of tax reduction could be taken up for consideration and these could relate to small traders and small consum....
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....aharashtra, Gujarat, Jharkhand, Tamil Nadu, Chhattisgarh and Sikkim were on expected lines. He observed that the actual amount of settlement for manufacturing States like Gujarat and Maharashtra was high but it was not high when seen in terms of their total revenue collection which showed that a large component of goods imported were used for re-exporting manufactured goods to other States. 8.10. The Hon'ble Minister from Punjab sought a response regarding their demand for compensation. The Secretary stated that the earlier certification given by the Government of Punjab was incorrect, and therefore, the actual amount was not released. The Hon'ble Minister from Punjab stated that a clarification in this regard had been sent 25 days back. 8.11. The Hon'ble Minister from Tamil Nadu stated that though revenue showed buoyancy in his State during August, September and October, 2017, while reconciling the details of collection provided by GSTN with their State Treasury data, it was noticed that the details did not tally as there was delay in reconciliation among banks, RBI and GSTN. He urged that the delay in reconciliation should be avoided. He further stated that as r....
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....d on 6 October, 2017. These are listed in the presentation at Annexure 4 of the Minutes. 12.1. The Hon'ble Minister from Kerala stated that Circular No. 10/10/2017-GST dated 18 October, 2017 relating to movement of goods including jewellery from the place of business of the supplier for supply on approval basis (that is, allowing goods to be moved from the place of business of the registered supplier to another place within the same State or to a place outside the State on delivery challan along with the e-Way bill and the invoice to be issued at the time of delivery of goods) was creating problems in respect of movement of jewellery and gold. He observed that very large stocks of jewellery were being moved without any document and they were not getting reflected in returns, leading to large scale evasion of tax. He stated that his State would send a detailed note on this issue. The Secretary stated that the Law Committee of officers could look into this issue. The Council agreed to this suggestion. 12.2. The Hon'ble Minister from West Bengal stated that the GIC decision to amend rule 86 CGST /SGST Rules to provide for order of utilisation of input tax credit between ....
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....ke the Council to be drawn into legal disputes. In view of this, it was proposed that while the Council would have important responsibility of monitoring the pe1formance of the NAA, the power of termination of the services of the Chairman and the Technical Members of the NAA could be exercised by the Chairperson of the Council in his capacity as the Union Finance Minister. He stated that, keeping this in view, certain amendments to Rules 124(4) and 124(5) of the CGST Rules were proposed, which read as follows: In principal rules, in Rule 124, - i. in sub-rule ( 4 ), the second proviso shall be substituted, namely: - "Provided further that the Central Government with the approval of the Chairperson of the Council may terminate the appointment of the Chairman at any time. " ii. in sub-rule (5), the second proviso shall be substituted, namely: - "Provided further that the Central Government with the approval of the Chairperson of the Council may terminate the appointment of the Technical Member at any time." 14.1. The Secretary added that this issue was discussed during the meeting of the officers held on 9 November, 2017 in Guwahati and....
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.... that the Fitment Committee had also recommended changes in GST/IGST rates on certain other goods, as summarised in Annexure III of the Agenda Notes, based on recommendations of the various State Governments or the Central Government. He added that there was one more Annexure IV in the Agenda Notes, which listed out goods on which the Hon'ble Chief Minister of Karnataka had recommended Nil rate of GST on various hand-made products, produced and marketed by producer co-operative societies and their federations. The Hon'ble Chief Minister of Karnataka had inter alia stated that this would benefit a large segment of rural population and would give a boost to rural employment and sustainability. Joint Secretary (TRU-1), CBEC informed that goods covered under all these Annexures were discussed during the meeting of the Fitment Committee on 30 and 31 October 2017 and the recommendations in respect of Annexure I, II and Ill were placed for consideration before the Council. He added that the Fitment Committee could not reach consensus in respect of goods covered under Annexure IV. Discussion on Annexure 1: (Goods proposed to be retained at 28%) 17. Starting discussion on goods co....
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....happy to see that now a more realistic approach was being adopted. He stated that granite and marble were different products and small marble, etc. which cost about Rs. 30 per sq. ft. should not be taxed at the rate of 28%. He further suggested that as common people smoked bidi, it should not be taxed at the rate of 28%. He stated that practical taxation demanded goods used by common people should be taxed at the rate of 18%. The Hon'ble Minister from Meghalaya supported the suggestions of the Hon'ble Ministers of West Bengal and Punjab. He stated that other than sin goods and goods of high luxury, all others should be taxed at the rate of 18%. He observed that this would also simplify billing by shopkeepers and departmental stores by reducing multiplicity of rates. 17.2. The Hon'ble Minister from Tamil Nadu welcomed the proposal of the Fitment Committee to reduce the rate of goods, presently attracting 28% tax rate, to 18%, except for items contained in Annexure 1 of the Agenda Note. He expressed his appreciation for proposal to reduce the rate of tax on wet grinder with stone to 12% and on Idli dosa batter, chutney power and kadali mittai (groundnut sweets) to 5%. ....
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.... years. He suggested to wait for another two months to do a full analysis of impact of GST. He further stated that in this meeting, a message could go that the Council cared for the concerns of the people but an overall balanced approach should be maintained. 17.4. The Secretary stated that the categories of goods on which 28% rate of tax was proposed to be continued included those: (i) on which cess was charged such as tobacco and cars; (ii) white goods, like washing machine, dish washers, television, air conditioner which have huge revenue implication and which are mostly produced by large manufacturing units; (iii) on building materials, such as cement, paints, granite and marble tiles, ceramic and vitrified tiles, etc. He further stated that items like cement were mostly produced by large manufacturers and it earlier also attracted a combined tax incidence of 29% and, was therefore, rightly kept in the 28% rate slab. He added that most of the marble units enjoyed Central Excise exemption as their turnover was below Rs. 1.5 crore and they operated on 2% CST (Central Sales Tax). For such commodities, revenue implication on account of rate reduction could not be worked out and ....
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....posals on tax reduction for goods in Annexure I was in the range of Rs. 16,000 crore. He added that these commodities were largely consumed by middle class and upper middle-class sections of the population and if tax on these was to be brought down to 18%, then, on principles of equity, the rates of tax in other slabs should also be reduced proportionately. He expressed his support for reducing the rate of tax on intermediate goods from 28% to 18%. 17.6. The Hon'ble Chief Minister of Puducherry stated that the approach that goods like cement, which was not manufactured by MSME, should not be put in the lower tax slab was not correct. He suggested that the approach should be to reduce tax on goods of mass consumption and on those goods which people required by way of necessity. He recalled that during the debate on the Constitution amendment relating to GST in the Parliament, it was proposed to cap the GST rate at 18% and observed that 28% rate slab should not be there for all items presently appearing in Annexure I. He stated that item at Sr.No.30 of Annexure I (Air-conditioning machines) would also cover air coolers which was used by poorer people. The Joint Secretary (TRU-....
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....r than sin goods and high luxury goods. He stated that this would also help in curbing lobbying and speculation. He observed that in the marble and granite sector, a taxpayer under VAT declared an annual turnover of Rs. 20 crore but also claimed exemption of Rs. 1.5 crore under Central Excise. He observed that high rates of Central Excise duty led to such anomaly which encouraged the taxpayer to 'manage' with the tax administration. He observed that taxing marble and granite at the rate of 28% would encourage evasion but if it was reduced to 18%, more revenue would be realised. He added that a very high degree of profiteering was going on in the marble and granite sector. He observed that if ceramic tiles were to be taxed at the rate of 18%, marble and granite should also be taxed at the rate of 18%. He further added that buses operating on bio-diesel were easily classifiable and definable under HSN and they should attract a lower rate of tax. He stated that while this would not have large revenue implication, it had implication for the future in checking environmental pollution. 17.9. The Hon'ble Minister from Uttar Pradesh stated that if the rate of tax was reduced....
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....Paper, the Fitment Committee had made its recommendations on the basis of certain principles which should be accepted though it had a revenue implication of about Rs. 16,000 crore. He added that even the European Union had slabs of tax between 19% and 25%. He stated that while rate of tax on items of mass consumption should be reduced, the goods kept in the 28% rate slab should not be frozen and suggestions should still be taken from States for further removing the items kept in the 28% rate slab. He observed that in a State like Bihar, air-conditioner was used by a miniscule number of people. He further added that the proposed rate of tax on cement was the sum total of the earlier VAT and Central Excise rates. He observed that even earlier, only 227 items were in the rate slab of 28% but the general perception created was that 28% rate of tax was applied on a large number of goods. He suggested to accept the recommendations of the Fitment Committee and to consider further suggestions from States for reduction of tax. He added that a big message would go to the public at large if the proposal contained in the agenda note for moving goods from 28% rate slab to 18% rate slab was acce....
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....ed to the 18% rate slab, there would be lot of unknown unknowns. He suggested that decisions should be taken on the basis of the information already shared. He supported the view that there should be lesser number of tax rates but advised that movement in this direction should be gradual and that the Fitment Committee could examine items such as re-used tyres with proper revenue analysis. He stated that the Fitment Committee's proposal could be accepted with the understanding that further rationalisation could be done in future. 17.14. The Hon'ble Minister from Uttar Pradesh stated that his State had 50 khandsari sugar units which mostly worked in small scale sector. He suggested to exempt khandsari sugar from tax as it was a product of Gur which was exempted and sugar attracted tax rate of 5 %. The Hon'ble Chairperson suggested that the rate of tax on khandsari sugar and gur should be kept at par and should be exempted. The Council agreed to this proposal. 17.15. The Hon'ble Deputy Chief Minister of Delhi wondered how an assessment was made that the government could afford to lose revenue of Rs. 16,000 crore and why not Rs. 20,000 crore. He suggested to reduc....
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....ated that items like electrical switches and wires, pipeline, plastic products, etc. were largely produced by MSMEs and they did not pay Central Excise duty and therefore tax rate on these was being brought down to '18%. The Hon'ble Chief Minister of Puducherry stated that sanitary wares were proposed to be taxed at the rate of 28% whereas these goods were taxed at a much lower rate in other countries, like 10% in Australia, 15% in Canada, 17% in China, 8% in Japan, 10% in South Korea and 7.5% in USA. The Hon'ble Chairperson responded that the rate of tax on sanitary items was proposed to be brought down to 18%. The Hon'ble Chief Minister of Puducherry stated that it needed consideration as to why MSMEs were closing down. 17.17. The CEA stated that the Fitment Committee had followed an approach of pragmatic incrementalism which had served the Council well but given the present state of economy, it was worth the risk to deviate from this approach and limit 28% tax rate only for sin and luxury goods. He stated that this could be a risky step but it would definitely improve the climate of compliance. The Hon'ble Minister from Kerala stated that reduction of rate....
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....tems such as chocolate and eatables, shaving and beauty products, marble and granite and detergent powder could be taken out from the slab of 28% and put in the slab of 18%, as optically, some of them should not be in the 28% rate slab. He stated that as the revenue position improved in the next three months, further reduction in the list of goods presently in the 28% rate slab could be looked at. The Hon'ble Minister from Assam supported the proposal and stated that after this pruning, barely 30 to 40 items would remain in the 28% rate slab. The Hon'ble Minister from Karnataka also supported the proposal of the Hon'ble Chairperson. 17. 19. The Hon'ble Minister from Punjab requested to address the issue of agricultural items and the Hon'ble Deputy Chief Minister of Delhi requested to address the issue of hybrid cars. The Hon'ble Chairperson stated that tax was earlier reduced on hybrid cars but this had not led to decline in prices and, therefore, one needed to move cautiously on this item. The Hon'ble Minister from Jammu & Kashmir raised a question as to why item at Sr. No.33 of Annexure I had such a specific entry on washing machine. The Secretary e....
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....ion would be about Rs. 1,000 crore. He stated that the total revenue implication for reduction on all the above items would be around Rs. 4272 crore. He added that rate reduction was not proposed at this stage for other items covered in Sr. Nos. 22 and 23 (new and old tyres), 26, 27, 28, 29 ( internal combustion engines and their parts), 34, 35 (transmission shafts, electric accumulators, etc.), 39 (electrical ignition or starting equipment), 40 (electric instantaneous or storage water heaters), 50 (parts and accessories of motor vehicles) and 52 (motorcycles) as the total revenue implication would be more than Rs. 10,000 crore. 17.21. The Hon'ble Minister from Goa supported the proposal and observed that this would be a very good progress and the rate of tax on other goods should not be reduced. The Hon'ble Minister from Jammu & Kashmir suggested that rate of tax on goods covered under Sr. No.42 (monitors and projectors, not incorporating television reception apparatus; reception apparatus for television etc.) should also be taken to 18% slab. The Hon'ble Minister from Karnataka again requested to reduce the rate of tax on bio-diesel buses as revenue implication wou....
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....sal and observed that this was a sin good and it was also carcinogenic. 18. The Hon'ble Chairperson suggested that the proposal of the Secretary for rate reduction (recorded in paragraph 17.20 above) on additional goods covered under Annexure I could be approved by the Council. The Council agreed to this suggestion. Discussion on Annexure ll: Rationalisation of GST rates on goods (based on recommendations of the Sub-Group of Fitment Committee) 19. The Secretary stated that Annexure II of the Agenda item 6(i) covered proposals in relation to those goods where there were different rates of tax under the same Chapter. He stated that a Sub-Group of the Fitment Committee on Rate Rationalisation had examined the rate of tax Chapter-wise and suggested rationalisation of rates, wherever required. He invited Shri P.K. Mohanty, Consultant (GST), CBEC, to give some examples of classification related rationalisation. The Consultant (GST), CBEC, stated that it was desirable to keep same rate of tax on similar category of goods but there were certain anomalies in this regard which were attempted to be corrected in Annexure II. He gave certain examples in this regard like: (i) dried ....
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.... this should be exempted. He stated that idols of deities were exempted across world, be it USA, UK, Canada, Malaysia, Singapore, etc. This was an item of local importance and small artisans of the State were engaged in this field. Therefore, these items may be exempted. The Secretary stated that clay idols were already exempted and it would not be desirable to exempt stone statues of deities. 19.4. The Hon'ble Minister from Karnataka expressed his support for the proposals contained in Annexure II. He observed that keeping in view the fact that rate of tax on several value-added products in the food sector (like idli batter, seasonings, curry powder and curry mixes) had been reduced, rate of tax on pickles should also be brought down from 12% to 5%. He added that pickles were earlier made at home but now these were mostly bought from the market and there was not much input tax credit on pickles. He added that revenue implication of this rate reduction would not be very high. The Hon'ble Minister from Goa stated that all pickles were made in cottage industry, and therefore, tax on the same should be reduced. 19.5. The Hon'ble Minister from Karnataka further stated....
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....uced from 18% to 12% under Serial No.22 of Annexure II of Agenda Notes, should be exempted from tax. The Hon'ble Chief Minister of Puducherry supported this proposal. The Hon'ble Chairperson stated that too much of rate difference could lead to classification problem and unintended effects such as a diet coke becoming cheaper than normal coke. In view of this, he suggested not to further reduce tax on diabetic food. 19.10. The Hon'ble Chief Minister of Puducherry stated that idli and dosa batter should not be taxed at the rate of 5% and should be exempted from tax. The Secretary stated that if these were exempted, then no input *tax credit would be available to idli and dosa batter manufacturers while branded rice might be used for making such items. The Hon'ble Chief Minister of Puducheny stated that idli and dosa batter was largely used by middle and poorer sections of society and enquired regarding the tax implication for exempting these items. The Secretary stated that small suppliers of idli and dosa batter having an annual turnover of less than Rs. 20 lakh would not be taxed in any case and the bigger producers would be able to take input tax credit. He add....
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....re was mostly made in tribal areas. The Hon'ble Deputy Chief Minister of Manipur also supported the proposal. The Hon'ble Minister from Uttar Pradesh suggested that rate of tax on cane should also be reduced along with that on bamboo. The Hon'ble Ministers from West Bengal and Assam also supported this proposal. The Hon'ble Chairperson stated that all bamboo products were kept at the rate of 12% except furniture. The Hon'ble Minister from West Bengal stated that furniture should be taxed at the rate of 5%. The Hon'ble Chairperson observed that it was desirable that furniture as a class should be taxed at the same rate or else it would lead to confusion when furniture had a mix of cane and wood. The Hon'ble Minister from West Bengal stated that normally, wood and bamboo or cane furniture was not available in the same lot as the USP (unique selling proposition) of cane or bamboo furniture would be that it was made wholly of bamboo or cane. The Hon'ble Chairperson suggested that furniture wholly made of bamboo or cane or rattan could be taxed at the rate of 12% instead of the current rate of 18%. The Council agreed to this suggestion. 21.2. The Hon&#....
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.... the rate of 5% so that they could claim input tax credit. The Secretary suggested that the Fitment Committee could examine these issues. The Council agreed to this suggestion. 21.5. The Hon'ble Minister from Haryana stated that the rate of tax on parts of agricultural implements was brought down from 18% to 12% and suggested to include springs used in cultivator and tiller in this category and tax them at the rate of 12%. He stated that these were used exclusively as parts of agricultural implements and could be classified under Chapter Heading 8430 which attracted tax at the rate of 12%. The Joint Secretary (TRU-I), CBEC, stated that parts were classifiable along with machinery and they attracted the same rate. He clarified that classification of items could not be shifted under the HSN. The Hon'ble Minister from Haryana reiterated that spring had a very specific use, and it could be included as an agricultural part and taxed at the rate of 12%. The Secretary suggested that the Fitment Committee could look into this issue. The Council agreed to this suggestion. 22. After further discussion, the Council approved the proposals contained in Annexure III. Annexure IV....
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....dmade carpets to Delhi was causing a great deal of financial stress to the industry and almost 50% of the industry had shut down. He stated that there was a need to quickly find a mechanism by which tax would not be charged upfront. He warned that if this issue was not addressed quickly, an important part of the national heritage could be lost very soon. He further stated that revenue from handmade carpets was not very high and a decision needed to be taken quickly so that this season was not lost for the carpet weavers. He suggested that one way to address this issue could be to treat movement of carpets from Kashmir to Delhi for sale as a supply for long term exhibition or goods taken on approval basis. The Secretary stated that already a notification had been issued that if goods were taken on approval basis, no IGST was chargeable until the customer placed an order. The Hon'ble Minister from Jammu & Kashmir stated that this proposal did not help as the suppliers of Jammu & Kashmir had a place of business in Delhi, and therefore, movement from Jammu & Kashmir became a taxable supply. The Secretary observed that handmade carpet was a luxury item and thus very expensive, and t....
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....epending upon handicraft sector or where handicraft sector was very strong to examine definition of handicraft goods based on its way of manufacture and cultural & heritage linkages and to look into specific issues of handicraft items and suggest possible solutions. He suggested that some States like Jammu & Kashmir, Odisha, Tamil Nadu and some States from North-East could be made members of this Committee. The Council agreed to this suggestion. The Hon'ble Chairperson further stated that regarding the problem relating to handmade carpets, the State of Jammu & Kashmir could suggest a solution which could be taken up for decision in the GIC. 23.4. The Hon'ble Minister from Karnataka welcomed the rationalisation of rate structure on goods and also suggested to have a look at rationalisation of rate of tax in the services sector as the rate of service tax in the services sector had gone up from 15% to 18%. The Secretary suggested that the Fitment Committee could examine this aspect. The Council agreed to this suggestion. 24. ln respect of agenda item 6(i), the Council took the following decisions: (i) To keep the goods listed in Annexure I of the agenda note to ....
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....aw, IGST would be computed and charged twice on the royalty value payable by the importer, namely 18% (i) under Section 3(7) of the Customs Tariff Act, 1975 and (ii) under Section 5(1) of the IGST Act. He informed that Shri V.K. Garg, Advisor (Finance), Punjab had stated that this was a structural issue and would be relevant in all cases where something was defined as goods under the Customs Act and as service under the GST law, such as for ocean transport, franchisee, etc. and suggested to address it structurally as a single issue by following the global practice. The Secretary suggested that this Agenda item could be postponed and the Fitment Committee could re-examine it. 26. The Council agreed to postpone this agenda item and the Fitment Committee to reexamine the proposal. Agenda item 6(iii): GST rate on job work in relation to manufacture of handicrafts 27. The Secretary stated that under this Agenda item, it was proposed that the rate of tax on services provided by way of job work in relation to manufacture of those handicraft goods in respect of which a casual taxable person has been exempted from obtaining GST registration could be prescribed at 5% with full input....
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....Column (3) of Serial No. 11 B to read, 'Services provided by Fair Price Shops to Central Government/State Governments or Union Territories by way of sale of food grains, kerosene, sugar, edible oil, etc. under Public Distribution System against consideration in the form of commission or margin. ' 29.1. He informed that this Agenda item was discussed during the officers' meeting held on 9 November, 2017 and they agreed to the same. He suggested that the Council could agree to the proposal. The Council agreed to the proposal. 30. For Agenda item 6 (iv), the Council approved the proposal to amend the Notification No.12/2017-CT(R) dated 28 June, 2017 and corresponding lGST, SGST and UTSGT notifications so as to remove entries against Serial No. 11A in the Table and to change entry in Column (3) of Serial No. 11B to read, 'Services provided by Fair Price Shops to Central Government/State Governments or Union Territories by way of sale of food grains, kerosene, sugar, edible oil, etc. under Public Distribution System against consideration in the form of commission or margin' subject to vetting by the Union Law Ministry. Agenda item 6(v): Alignment of the entr....
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....18% with input tax credit for goods and services. 33.1. The Secretary informed that this Agenda item was discussed during the meeting of the officers held on 9 November, 2017 in Guwahati and there were differing viewpoints. For instance, Shri R.K. Tiwari, Additional Chief Secretary, Uttar Pradesh, had suggested to keep only two rates of tax - 5% without input tax credit and 18% with input tax credit. The Advisor (Finance), Punjab had pointed out that tax on tour operators had been levied since 1998 and the tax was levied only on his part of service. He had further informed that once accommodation came under Service Tax in 2012, the tax at the rate of 5% was erroneous and suggested to levy tax at the rate of 18% with input tax credit. He had also pointed out that earlier there was only abatement on the value of services rendered but the tax rate was always 15%. The Secretary stated that in view of differing viewpoints, it was agreed to defer this Agenda item so that it could be re-examined by the Fitment Committee. He suggested that the Council could agree to this suggestion. The Council agreed to the suggestion. 34. For Agenda item 6(vi), the Council agreed to defer considera....
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.... processed coffee beans or powder, pulses (dehusked or split), jaggery etc. fall outside the defmition of agricultural produce as given in notification No. 11 /2017-CT(R) and 12/2017-CT(R) both dated 28 June, 2017 and corresponding notifications issued under JGST and UTGST Acts. 35.2. The Secretary informed that this proposal was also discussed during the meeting of the officers held on 9 November, 2017 in Guwahati wherein Shri Sanjeev Kaushal, Additional Chief Secretary, Haryana, and Dr. C. Chandramouli, Additional Chief Secretary (Commercial Taxes), Tamil Nadu, had suggested that processed spices, processed dry fruits and processed cashew nuts should also fall outside the definition of agricultural produce. He further informed that the Additional Chief Secretary (CT), Tamil Nadu, had suggested to remove the word ' etc.' from the proposed clarification, but CCT, Gujarat, had suggested to retain this word so that other similar products could also get covered in this definition. He recommended that the Council could agree to the proposal in the Agenda item and also add dry fruits and spices in the proposed clarification. The Council agreed to the suggestion. 36. For Ag....
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....ogy software would attract 18% GST. He stated that with this amendment, temporary or permanent transfer of Intellectual Property (other than Information Technology software) would attract tax at the rate of 12% (irrespective of whether transfer of Intellectual Property is a supply of goods or services) and temporary or permanent transfer of Intellectual Property in respect of Information Technology software would attract 18% GST (irrespective of whether permanent transfer of Intellectual Property in respect of supply of Information Technology software is a supply of goods or services). This amendment was proposed as a dispute/litigation avoidance measure. The Secretary stated that this Agenda item was discussed during the officers' meeting held on 9 November, 2017 in Guwahati and agreed upon. He suggested that the Council could also agree to this proposal. The Council agreed to the proposal. 38. For Agenda item 6(viii), the Council approved the following: (i) permanent transfer of Intellectual Property right in respect of goods other than Information Technology software shall be taxed at the rate of 12%; and (ii) permanent transfer of Intellectual Property right in respect o....
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....g this Agenda item, the Secretary stated that it was proposed to exempt from tax, general insurance policies where total premium was paid by the State Government. It was further proposed to exempt from tax general insurance policy where total premium was paid by employees or by students of colleges/private schools. 41.1. The Secretary stated that with regard to the above, it was proposed to clarify that services provided to the Central Government, State Government, Union Territory under any insurance scheme for which total premium is paid by the Central Government, State Government, Union Territory are exempt from GST under serial no. 40 of Notification No 12/2017- Central Tax (Rate). Further, service provided by the State Government by way of general insurance (managed by government) to employees of the State Government/ Police Personnel, employees of electricity department or students are exempt vide entry 6 of Notification No. 12/2017-Central Tax (Rate) which exempts Services by Central Government, State Government, Union Territory or local authority to individuals. 41.2. The Secretary stated that another proposal under this Agenda item was that services by way of admissio....
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....saged wherein appeals against orders of Additional/Joint Commissioner would lie with the Commissioner (Appeals) and appeals against orders of Deputy/Assistant Commissioner and Superintendents would lie with the Additional Commissioner (Appeals). He said that it was proposed to insert a new Rule 109(A)(1) in the CGST Rules to specify the appellate authority as detailed above. He added in view of the opinion of the Union Law Ministry, it was proposed to insert a separate Rule 109(A)(2) relating to appeals to be filed by the Department. The proposed draft rules are as below:- "109A. Appointment of Appellate Authority- (1) Any person aggrieved by any decision or order passed under this Act or the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act may appeal to- (a) the Commissioner (Appeals) where such decision or order is passed by the Additional/Joint Commissioner (b) the Additional Commissioner (Appeals) where such decision or order is passed by the Deputy/Assistant Commissioner or Superintendent within three months from the date on which the said decision or order is communicated to such person. (2) An officer directed unde....
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....ble on the common portal. In view of this, it was proposed to insert the following Rules at the end of Chapter 10 (Refund) and Chapter 12 (Advance Ruling) of the CGST Rules 2017: "Notwithstanding anything contained in this chapter, in respect of any process or procedure prescribed herein, any reference to electronic filing of an application, intimation, reply, declaration, statement or electronic issuance of a notice, order or certificate on the common portal shall, in respect of that process or procedure, include manual filing of the said application, intimation, reply, declaration, statement or issuance of the said notice, order or certificate, in such Forms as appended to these rules." 45.1. A format of GST RFD-01A and RFD-01B was also part of the Agenda Note. He added that a similar notification would be issued by the State Governments. He informed that this was approved when the Agenda item was discussed during the officers' meeting held on 9 November 2017 in Guwahati and suggested that the Council could also approve the same. The Council approved the proposal. 45.2. The Secretary stated that the second proposal under this Agenda item was to add an explan....
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....ement or issuance of the said notice, order or certificate, in such Forms as appended to these rules"; (ii) the format of GST RFD-01A and RFD-01 Bas contained in the Agenda Note; (iii) the State Governments to insert similar rules in Chapter 1 0 (Refund) and Chapter 12 (Advance Ruling) of the SGST Rules 2017 and the formats of GST RFD-OIA and RFD-01B as contained in the Agenda Note; (iv) to add the following explanation at the end of Rule 42 and 43 of the CGST Rules 201 7- "For the purposes of this rule, it is hereby clarified that the supply of services having place of supply in Nepal or Bhutan against which payment is received in Indian Rupees, in accordance with Reserve Bank of India guidel ines, shall be treated as taxable supply". Agenda item 7(iii): Centralized UIN for Foreign Diplomatic Missions I UN Organizations 47. Introducing this agenda item, the Secretary stated that proposal was aimed at providing minimal compliance and easy refund to Foreign Diplomatic Missions and UN Organizations having a Unique ldentity Number (UIN). He explained that refund of taxes would not be available to foreign diplomatic missions/UN organisations in....
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....ission / UN Organization by Central Government and all compliance for such agencies may be done by the Central Government in co-ordination with Ministry of External Affairs (MEA); (ii) Matching of supplies stated by the UIN holder in his FORM GSTR-11 with FORM GSTR-1 may be done away with for the time being until filing of FORM GSTR-1 stabilises, and instead refund may be given to Foreign Diplomatic Missions/UN Organizations against all the invoices containing their UINs which have been declared by them in their FORM GSTR-11, subject to verification; (iii) Refund of CGST/SGST/UTGST/IGST may be given by the Central Government and the refund amount may be settled through the settlement mechanism; (iv) To implement the above in principle decision, GIC to approve the changes in the CGST/SGST/ UTGST Rules, as recommended by the Law Committee. Agenda item 7(iv): Reversal of Late Fee paid by registered persons who failed to furnish the return in FORM GSTR 3B for August and September 2017 within due date 49. Introducing this Agenda item, the Secretary stated that a large number of taxpayers were unable to file their FORM GSTR-3B within due date for July, August, September, 2....
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.... Central Government/State Government and statutory bodies by DA VP (Directorate of Advertising and Visual Publicity). He stated that as per the Law Committee recommendations, the following guiding principles were proposed for distribution of IGST for advertisements supplied through various media: S No. Media of Advertisement Guiding Principle 1 Newspapers Amount actually paid for placing an advertisement in a particular State - Information through Release order 2 Publications Same principle as above 3 Printed material Proposed distribution breakup of the leaflets at the time of placing the Release order so that the statewise breakup is known at the time of printing 4 Outdoor - Hoardings (than those on trains of Indian Railways) Other Amount actually paid to every State 5 Hoardings on Trains Length of track in every State 6 Personal media (such as utility bills etc.) Amount actually paid to every State 7 Advertising on Railway tickets Ratio of total railway stations in each State 8 Radio Amount actually paid to Stations in every State 9 Television BARC figures/viewership, adjusted in the ratio ....
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....uiding principles for distribution of IGST for advertisements supplied through various media by the Directorate of Advertising and Visual Publicity (DA VP) listed in paragraph 51 above except for Radio which needed further consideration. Agenda item 7 (vi): To restrict the maximum amount of late fee payable to the extent of output tax liability in a return by exercising powers under Section 128 of the CGST Act, 2017 53. Introducing this agenda item, the Secretary stated that representations had been received that in some cases, late fee payable for delayed filing of Return exceeded the principal amount of tax and interest by a very large amount and this was deterring the small and medium business from filing Returns. He stated that the Law Committee had recommended that the maximum amount of late fee payable by a taxpayer could be restricted to the amount of tax payable in a return in case such amount was less than 5,000 rupees by exercising the powers conferred under Section 128 of the COST Act. He further stated that during the officers' meeting held on 9 November, 2017, it was also decided that the late fee for taxpayers who filed Nil returns should be only Rs. 20 per ....
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....ided that where the supplier of a taxable service was an insurer or a banking company or a financial institution, he shall issue a consolidated tax invoice. In this regard request was received that since the recipient of supplies wanted to claim the corresponding input tax credit on each individual supply instead of taking credit on the aggregate value in a consolidated manner, it was proposed to amend the Rule by substituting the word ' shall' with the word 'may' . He added that the States could also amend the SGST Rules accordingly. He further stated that this agenda item was discussed in the officers' meeting held on 9 November, 2017 and agreed upon. He suggested that the Council could also approve this proposal. The Council approved the proposal. 58. For Agenda item 8(ii), the Council approved to substitute the word ' shall' with the word 'may' in Rule 54(2) of the COST and SGST Rules Agenda item 8(iii): Presentation on GST on real estate sector 59. The Secretary suggested that consideration of this Agenda item could be deferred due to paucity of time. The Council agreed to the suggestion. 60. For Agenda item 8(iii), the Council a....
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.... the ToR-1 mandated to examine as to whether turnover of exempted goods can be excluded from the total turnover threshold for levying tax under the Composition Scheme and the recommendations of the GoM were as follows: i. Annual turnover eligibility for composition scheme under the CGST/SGST law should be increased to Rs. 2 crore from the present limit of Rs. 1 crore by amending section 10(1) of the CGST Act and SGST Acts and after amendment in the law, the annual turnover threshold for composition to be increased to Rs. 1.5 crore. ii. The facility of Composition Scheme should not be made available to Associated Enterprises as defined in section 2(12) of the CGST/SGST Acts if the combined aggregate turnover of such Associated Enterprises exceeds the threshold limit prescribed for Composition Scheme. iii. Apply a uniform rate of 1% under composition scheme for manufacturers and restaurants instead of the present rates of2% and 5% respectively. iv. Composition rate for traders may be 0.5% if a tax payer chooses to pay tax on his aggregate turnover and the rate may be 1% if he chooses to pay tax only on his turnover of taxable goods. v. Com....
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....uld also discourage more taxpayers from coming into the regular tax net. He, therefore, suggested that there should be a restriction for composition taxpayers to buy from unregistered dealers and if they were allowed to buy from unregistered dealers, the composition taxpayers should be made to pay tax under reverse charge mechanism without the benefit of input tax credit. He further stated that he was not in favour of making available input tax credit to registered persons receiving inward supplies from composition taxpayers and to fix the Composition rate for traders at 0.5% if the taxpayer chose to pay tax only on his turnover of taxable goods. He stated that this would entail maintenance of detailed accounts and to pay tax or file quarterly returns and it would be cumbersome and unwieldy for small taxpayers. 65.5. The Secretary expressed a note of caution regarding the proposal to provide for a lower rate of tax where a composition dealer chose to pay tax on the combined turnover of taxable and exempt goods. He stated that a trader could introduce invoice of one exempt item to get the advantage of the lower rate of tax of 0.5%. For instance, he could be selling mostly televis....
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....ax paid copper and did not get input tax credit on his inputs and these taxes were embedded at his level and not passed on to the fan manufacturer in the form of credit. Consequently, the amount of tax paid on copper would be embedded in the price of the fan sold to the consumers, even if input tax credit of 1% tax on copper wire sold by a composition copper wire manufacturer to a fan manufacturer was allowed. He added that Composition scheme had never been the means to allow flow of input tax credit and buyers of goods from composition taxpayer were largely those who did not need input tax credit. Composition scheme was not attractive to those businesses who wanted to be part of the input tax credit chain. It was for the taxpayer in the composition scheme to build the business model in such a way that he took advantage of other leverages available within the composition scheme. He added that it would be difficult to recreate value addition chain within the composition scheme. Therefore, the composition scheme was mostly popular amongst the taxpayers selling goods to non-registered buyers who did not need input tax credit and normal GST registration was the best mechanism to permit....
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....ssam observed that though the Council was discussing Inspector raj, but the trader had no issue with them. He stated that all Associations had accepted and expressed no difficulty in dealing with inspectors. 65.9. The Chief Economic Advisor stated that the heart of the issue was that when a composition dealer sold to a buyer, who needed input tax credit, the composition taxpayer was obliged to opt out of composition scheme. Therefore, the need was to simplify the compliance burden. The Hon'ble Minister from Jammu & Kashmir reiterated that keeping in view these issues, there could be one composition scheme for B2C suppliers and another modified composition scheme for B2B suppliers. 65. 10. The Hon'ble Minister from Assam stated that in case optional scheme for traders for taxable and exempted goods was not considered, then supply of exempted goods by a composition taxpayer should be exempted from tax. The Hon'ble Minister from Odisha also suggested to impose tax of 1% on supply of taxable goods by a composition taxpayer. The Hon'ble Deputy Chief Minister of Bihar stated that this would require change in law. The FS, Karnataka, stated that this could be done thr....
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....sibly apply to supply of services by composition taxpayers. The FS, Karnataka explained that this proposal was to cover such composition dealers who undertook supply of services along with goods (such as sale of cooler along with annual maintenance contract), which presently made them ineligible for the composition scheme. He stated that by applying Section 162 of the CGST/SGST Acts (removal of difficulties), supply of exempt services (in the nature of income from interest) was already permitted under the composition scheme. In the same manner, supply of services by composition taxpayers up to a value of Rs. 5 lakh could be exempted through a notification. He added that under Jaw, 1% tax could not be charged from composition taxpayers on the value of supply of services. The Secretary suggested that composition taxpayers could be permitted to supply services up to a value of Rs. 5 lakh. 65.14. The Hon'ble Minister from Jammu & Kashmir stated that by this proposition, distinction between the goods and services was being reintroduced under GST. The Secretary stated that such distinction already existed in the law which allowed composition for goods but not for services except, ....
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....tion suppliers could be totally lost to the consuming States and compensation was not a sufficient assurance. He stated that the buyer in the composition scheme could hide the purchases from the State, which would hinder the tax compliance and if this was compounded over five years, the economy of the State would be ruined. He added that due to non- compliance, the goods coming to his State under composition could be resold along with GST, leading to rise in prices and this would cause a great deal of ill-will against GST. He stated that there should be special consideration for smaller States and they could be excluded from the scheme of inter-State supplies under the composition scheme. He warned that if this proposal was considered, they might have to bring back check-gates. The Hon'ble Minister from West Bengal supported the reservations expressed by the Hon'ble Deputy Chief Minister of Manipur and stated that this was not a good proposal for the consuming states. Shri Anirudh S. Singh, Special Secretary (Tax and Excise), Arunachal Pradesh, and Ms. Dipa Basnet, Secretary (Commercial Tax), Sikkim supported the view of the Hon'ble Deputy Chief Minister of Manipur. The....
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....at a way must be found to permit outward inter-State supplies to composition taxpayers. 65.18. The Hon'ble Minister from Jammu & Kashmir observed that almost 60% of their revenue came from outside the State. The Hon'ble Chairperson raised a question how to address the concerns of the small consuming States when such a sharp division persisted in the House and in view of the high sensitivity of the North-Eastern States. The Hon'ble Deputy Chief Minister of Delhi stated that the question was more in relation to small scale industries and SMEs but the discussion had veered towards raising the turnover limit under the composition scheme. He added that if such restrictions were not removed, there might not be any gain by just raising the annual value turnover value under composition scheme. He added that the moot question was how to protect the interest of large number of small traders for whom the existing composition scheme was of little help. The Hon'ble Minister from Assam stated that this proposal was for the benefit of border areas and it was an erroneous perception that revenue of States like Manipur would suffer. He added that the amount involved might not be ....
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.... among the members of GoM, did not make any recommendation on ToR-3. 65.21. The JS, GSTC further presented and explained the recommendations on the ToR-4, which mandated to examine the Tax Structure of different categories of Restaurants, with a view to their possible rationalization/reduction, which are as follows: i. There should not be any distinction between restaurants based on air conditioning and all standalone restaurants with or without air conditioning and whether or not serving liquor be taxed at the rate of 12% with ITC. ii. A restaurant within the premises of a hotel which has tariff for all rooms at Rs. 7500/- or less per night be taxed at the rate of 12% with JTC. iii. A restaurant within the premises of a hotel which has room tariff of more than Rs. 7,500 per night (even for a single room) be taxed at the rate of 18% with ITC. iv. Outdoor catering be taxed@ 12% with lTC. v. Notwithstanding the above recommendations, GoM proposed that GST Council needs to take a view in light of TRU' s observation that revenue loss could be in the range of Rs. 4,000 crore on account of above proposal. 65.22. Initiating the discus....
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....input tax credit and imposing a rate of 5% without input tax credit would make them unhappy. 65.23 . The Hon'ble Chairperson stated that the organized chains of restaurants were factoring the input tax credit and transferring its benefits to the consumers, but standalone restaurants had not transferred the benefits of input tax credit to the consumers. The anxiety and keenness shown by these restaurants to permit input tax credit was a method of profiteering by them without benefiting the consumers. He added that sectors like automobile had passed on the benefit of input tax credit but restaurants despite having an advantage of 7- 8% input tax credit, had not reduced the prices and this sector had brought bad name to GST. He raised a question as to how to ensure that benefit of input tax credit was passed on by these restaurants to the consumers. The Hon'ble Minister from West Bengal stated that this could be addressed by removing the distinction between AC and non-AC restaurants and fixing a flat tax rate of 5% without input tax credit. The Secretary informed that the estimated revenue loss. by reducing the tax rate from 18% to 1 2% with input tax credit would be about ....
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.... input tax credit on rentals etc. He suggested to keep two tax rates for restaurants under composition scheme, namely 5% for smaller restaurants and 8-9% for larger restaurants. The Secretary stated that a change in law would be required for charging tax on restaurants at a rate higher that 5% under the composition scheme. He suggested to prescribe a tax rate of 5% without input tax credit even if it entailed sacrificing an additional revenue of Rs. 1,000 crore. He further raised a question regarding method of taxing the bigger restaurants in hotels - whether to be based on room rent of a hotel or turnover of restaurant. He added that setting a tax rate for restaurants in hotels on the basis of star rating was not desirable as star rating itself was optional. 65.26. The Hon'ble Minister from Goa stated that 5% rate of tax on all standalone restaurants would also apply to big restaurant chains like KFC and McDonald and he suggested that rate of tax could be based on turnover of restaurants. The Hon'ble Chairperson stated that big restaurant chains would pay very little tax as they had large input tax credit. The Hon'ble Deputy Chief Minister of Bihar and the Hon'b....
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....could lead to tax evasion. He cautioned that having such big difference of tax rate between restaurant and outdoor catering, would lead to the practice of issuing bill from the restaurant for the outdoor catering and that they had similar experience in case of differential tax rate on liquor. The Principal Secretary, Finance, Odisha proposed a tax rate of 5% without input tax credit for the outdoor catering. The Hon'ble Minister from Jharkhand stated that many persons carried on only catering business, and for them, rate of tax should be kept at 5% without input tax credit. He added that many outdoor caterers did only dry catering, that is, provided labour while the food, etc. was bought by the customer. Advisor, Finance, Punjab also supported this suggestion. He stated that several people only did catering business and theoretically, they could claim that they had set up a restaurant to cater to a Function at a venue. He suggested that rate of tax for outdoor catering where only food was being provided should be kept at 5%. The Hon'ble Chairperson observed that low rate of tax for one sector would lead to demand for lowering tax for other services sector also. The Hon'ble ....
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.... tax payers instead of the present Rs. 50 per day (each under CGST and SGST Act) subject to a maximum ceiling of Rs. 5000 under each Act. This could apply from October 2017. The Hon'ble Deputy Chief Minister of Bihar expressed his agreement to this decision. The Council also agreed to this suggestion. 65.32. In respect of recommendation to dispense with the payment of tax on advance for all tax payers, the Secretary informed that tax on advance payment for supply of goods had already been removed for a taxpayer having annual turnover up to Rs.l.5 crore and this could be extended to all tax payers. He added that the same dispensation might not be appropriate for the services, as they were intangible in nature and prone to be misused. He mentioned that in the case of services, the taxpayer might not issue invoice after having rendered the services against the advances received and further informed that payment of tax on advances in respect of services existed even during Service tax regime. The Hon'ble Minister from Assam stated that this issue had been raised because of blockage of working capital. The Council agreed to dispense with payment of tax on the advance received for....
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....nder composition scheme for manufacturers and traders. The turnover for traders shall be counted only for supply of taxable goods. No change for composition scheme for restaurant. ii. Supply of services by Composition taxpayer up to Rs. 5 lakh per annum shall be allowed by exempting the same. iii. Annual turnover eligibility for composition scheme shall be increased to Rs. 2 crore from the present limit of Rs. 1 crore by changing the law. Thereafter, eligibility for composition shall be increased to Rs. 1.5 crore per annum. iv. To allow composition scheme to providers of job work services by changing the CGST/SGST law and to decide the value limit after the change in law. v. The changes recommended by GST Council at (iii) above to be implemented only after the necessary amendment of the CGST Act and SGST Acts. vi. All stand-alone restaurants irrespective of being air conditioned or otherwise, shall attract tax at the rate of 5% without input tax credit. Food parcels (or takeaways) from restaurants shall also attract tax at the rate of 5% without input tax credit. vii. Restaurants in hotel premises having declared room tariff of ....
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....rters, etc. He informed that through the portal, so far, 2.37 crore returns had been filed, one crore payment transactions had occurred, 64 lakh taxpayers had migrated from old system and 30.36 lakh new registrations had been done. He further informed that following major issues had been highlighted by GoM. a. Data sharing issues relating to Model 1 and Model 2 States. b. APls release and support. c. Timeline Management. d. Deployment of additional manpower on the project as well as resident engineers in the States. e. Improvement in error handling and error message display. f. Making user interface more user friendly. 67.2. The CEO, GSTN further informed that in respect of above major issues, out of 47 items identified originally in the first meeting of the GoM, 27 were targeted for completion by October 2017 but only 17 items could be completed and 4 items were in progress. He mentioned delay of 3-5 to 15 days occurred in delivery of facilities. He further informed that Infosys was focusing on further improvements, like improvement of error messages; complete review of error handling, error messaging by an expert agency; pr....
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.... and SGST Acts provided his aggregate annual all-India turnover did not exceed Rs. 20 lakh except when he opted for voluntary registration. He further added that the annual turnover limit of Rs. 20 lakh would not be applicable for ' Special Category States' other than the State of Jammu & Kashmir and that for other than the State of Jammu & Kashmir, it would be Rs. 10 lakh. 71.1. He informed that this proposal was not discussed by the Law Committee but was discussed during the officers' meeting held on 9 November, 2017 in Guwahati and was agreed upon. He suggested that Council could approve the proposal. The Council approved the proposal. 72. For Agenda item 12(i), the Council approved: (i) to exempt a supplier of services providing services through e-commerce platform from obtaining registration compulsorily under Section 24(ix) of the CGST and SGST Acts provided his aggregate annual all-India turnover did not exceed Rs. 20 lakh for normal States and Rs. 10 lakhs for Special Category States except the State of Jammu & Kashmir for which the annual turnover limit shall be Rs. 20 lakh; (ii) this exemption would not apply for a supplier opting for voluntary registrat....
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....w Review Committee' had to submit its final recommendations by 31 December, 2017. These recommendations would be placed before the Council for consideration. The Council took note of the information. 74. For Agenda Item 12 (ii), the Council took note of the information regarding the constitution of the 'Law Review Committee' and the 'Advisory Group of the Law Review Committee '. Agenda item 12(iii): Simplification of Return filing process 75. introducing this agenda item, the Secretary stated that this Agenda item relating to GST Return filing was discussed during the officer's meeting held on 9 November 2017 in Guwahati and a presentation was also made on this agenda item by Shri Upender Gupta, Commissioner (GST Policy), CBEC. Based on the suggestions made during the officers' meeting, the presentation was revised and the revised presentation is attached as Annexure 7. He stated that it was agreed during the 22nd Meeting of the Council held on 6 October 2017, that taxpayers with an annual turnover below Rs. 1.5 crore shall file quarterly Return and pay tax quarterly and FORM GSTR 3-B was to continue till the month of December, 2017 for all taxp....
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.... members of this Committee were proposed to be Chief Commissioner of Commercial Tax (CCCT), Andhra Pradesh; Commissioners of Commercial Taxes (CCTs) of Gujarat, Punjab and Karnataka; Commissioner (GST Policy), CBEC; Commissioner (Central Excise), CBEC; Joint Secretary, Department of Revenue; CEO, GSTN and other members as may be co-opted. 75.2. Hon'ble Deputy Chief Minister of Delhi stated that no invoice matching would be possible on the basis of GSTR-2A. He observed that when invoice matching was postponed beyond 31 March, 2018, it would be desirable that all taxpayers, irrespective of their turnover, should be made to file returns quarterly. He stated that the present arrangement based on categorisation of taxpayers with annual turnover below Rs. 1.5 crore was causing problems. The Secretary stated that matching could be an annual exercise for this year and matching modalities for the next year could be decided at a later date. The Hon'ble Deputy Chief Minister of Delhi stated that the basic concept of GST should not be compromised only on account of certain problems relating to GSTN. 75.3. The Hon'ble Minister from West Bengal stated that the general perceptio....
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....a stated that the proposal of the Hon'ble Deputy Chief Minister of Bihar to extend the facility of quarterly returns for taxpayers with annual turnover up to Rs. 5 crore could be considered only after getting an assurance from GSTN that they could implement this change. The Hon'ble Minister from Uttar Pradesh also supported the proposal to extend the facility of quarterly return filing for taxpayers with annual turnover up to Rs. 5 crore. 75.6. The Hon'ble Minister from Jammu & Kashmir stated that a lot of relaxation in law had been given during the present and the last meeting of the Council. He stated that if Composition scheme was made more attractive, more relaxation in GST Law would not be needed. He added that GSTR-3B was only an aggregate of transaction and no uploading of invoices was required. He stated that if the system of invoice matching was not retained, it was a fundamental departure from the GST architecture. He added that GST was also an ethical issue which aimed to replace cash economy with a more formal economy. The Secretary stated that composition scheme was mainly for B2C suppliers. Taxpayers making B2B supplies needed input tax credit and they ....
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....n'ble Ministers from Assam and Goa supported the proposal to give the facility of quarterly return filing for taxpayers up to annual turnover of Rs. 5 crore. The Hon'ble Minister from Goa stated that the issue could be revisited next year and there could also be more buoyancy in tax collection next year. The Secretary reiterated that upon switching to the regular cycle of returns, there would be an expectation from an additional4% taxpayers to remain in the quarterly return filing cycle and advised against building such an expectation. The Hon'ble Minister from Jammu & Kashmir stated that since the number of taxpayers did not change dramatically by increasing the annual turnover limit for quarterly return filing from Rs. 1.5 crore to Rs. 5 crore, there was no justification for changing the annual turnover limit. The Hon'ble Deputy Chief Minister of Delhi stated that the problem was because there were some regular filers of returns and some were quarterly filers. The Hon'ble Chairperson stated that the software as well as the taxpayers were getting prepared for monthly filing of Returns and it would not be desirable to increase the expectations of taxpayers with annu....
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.... members as may be co-opted. Other Issues: 77. The Hon'ble Minister from Tamil Nadu circulated a written speech during the meeting of the Council in which his view points on different Agenda items were communicated. The same are recorded suitably as part of record of discussion in the relevant Agenda items. 78. The Government of Arunachal Pradesh circulated a written proposal regarding reduction of tax on bamboo and cane products and furniture. In the paper, it was stated that India has the second largest reserves of bamboo in the world and leveraging this could spur employment and income generation especially in North-East India, which has over 66% of India's bamboo reserves. He stated that in Arunachal Pradesh, bamboo had diverse application like in houses, bridges, smoking pipes, trays, knives, baskets, ornaments, etc. The design, style and pattern varied from one tribe to the other but the skill to transform the simple bamboo into visually appealing masterpieces was the same. Around 70% to 80% of bamboo in the State was wasted owing to lack of a dedicated market and the GST rate of 18% on bamboo and cane had only added fuel to the fire. He further stated that w....
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....Meghalaya 18 Odisha 19 Puducherry 20 Punjab 21 Rajasthan 22 22 Tamil Nadu Shri D. Jayakumar Reforms 23 Telangana Shri Etela Rajender Finance Minister 24 Uttar Pradesh Shri Rajesh Agrawal Finance Minister 25 Uttarakhand 26 West Bengal Shri Prakash Pant Dr. Amit Mitra Finance Minister Finance Minister Minister - Finance & Excise Chief Minister Finance Minister Minister - Industries Minister for Fisheries &Personnel and Administrative ***** Page 60 of 101 JAYNA BOOK DEPOT Estd. 1949 JAYNA MINUTE BOOK Annexure 2 List of Officials who attended the 23rd GST Council Meeting on 10 November 2017 Shri Mahender Singh Shri John Joseph Shri P.K. Jain Shri Sandeep M. Bhatnagar Shri M. Vinod Kumar Shri Upender Gupta Shri Udai Singh Kumawat Shri Amitabh Kumar Shri Manish Kumar Sinha Smt. Hemambika R. Priya Shri G.D. Lohani Shri Viney Kumar Paul Shri Ravindra R. Bangar Shri D.S.Malik SI State/Centre Name of the Officer No 1 Govt. of India Dr. Hasmukh Adhia 2 Govt. of India Dr. Arvind Subramanian 3 Govt. of India Ms. Vanaja Sarna 4 Govt. of India 5 Govt. of India 6 Govt. of India Shri P.K. Mohanty 7 Govt. of India 8 G....
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....55 Bihar Shri Sanjay 56 Bihar Mawandia 57 Chandigarh Shri Parimal Rai 58 Chandigarh Shri Sanjeev Madaan Name of the Officer Shri Mahesh Kumar Shri Rakesh Agarwal Shri Sandeep Bhutani Shri Manoj Kumar Shri A B Pandey Shri Prakash Kumar Shri Jagmal Singh Shri Nitin Mishra Dr. D Sambasiva Rao Shri Arun Kumar Mishra Kumar Charge Assistant Commissioner Assistant Commissioner Superintendent Superintendent Chairman CEO VP (Services) EVP Special Chief Secretary (Revenue) Chief Commissioner (CT) Additional Commissioner (CT) Special Secretary (Tax & Excise) Nodal Officer (GST) Additional Chief Secretary Principal Secretary (Finance) Commissioner (CT), Assam Additional Secretary (CT) Additional Commissioner (CT) Adviser to Administrator ETO 59 Chandigarh Shri Ramesh Kr. Choudhry AETO 60 Chhattisgarh Shri Amitabh Jain 61 Chhattisgarh Ms. Sangeetha P Dadra & Nagar 62 Shri Gaurav Singh Rahawat Haveli 63 Daman & Diu 64 Delhi 65 Delhi 66 Delhi 67 Goa 68 Goa Shri Rajan Satardekar 69 Gujarat 70 Gujarat 71 Haryana 72 Haryana 75 76 73 Haryana 74 Himachal Pradesh Himachal Pradesh Himachal Pradesh Dr. P.D. Vaghela Shri Sa....
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....er (CT) Joint Commissioner (CT) Commissioner (GST) Joint Commissioner (GST) Principal Secy (Finance) Commissioner (CT) Deputy Commissioner of Taxes Asstt. Commissioner of Taxes Secretary, Taxation Addl. Commissioner of State Tax Joint Commissioner of State Tax Commissioner of Taxes Additional Commissioner Principal Secretary (Finance) Commissioner (CT) Joint Commissioner (CT) Secretary (Finance & CT) Commissioner (CT) ACS (Taxation) Advisor (Finance) Excise and Taxation Commissioner DETC Secretary (Finance) Commissioner (CT) Secretary (Commercial Taxes) Joint Commissioner (CT) ACS (Commercial Taxes) Addl.Comm, Commercial Taxes Principal Secretary CHAIRMAN'S INITIALS JAYNA BOOK DEPOT CHAIRMAN'S INITIALS MINUTE BOOK SI No State/Centre 115 Telangana 116 Telangana Name of the Officer Shri V Anil Kumar Shri Laxminarayan Jannu Shri N. Darlong Shri Ashin Barman 117 Tripura 118 Tripura 119 Uttar Pradesh Shri R.K. Tiwari Shri Mukesh Kumar 120 Uttar Pradesh Meshram 121 Uttar Pradesh 122 Uttar Pradesh 123 Shri Vivek Kumar Shri Mukti Nath Verma 124 Uttarakhand Uttarakhand 125 West Bengal 126 West Bengal 127 West Bengal Mrs. Sow....
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.... Karnataka Madhya Pradesh CHAIRMAN'S INITIALS JAYNA BOOK DEPOT MINUTE BOOK Estd. 1949 B JAYNA States with least shortfall in October 2017 revenue 20 18 16 14 Sl. No. Name of the State Percentage shortfall in October 2017 revenue 1 Delhi -0.2 2 Maharashtra 2.6 3 Andhra Pradesh 4 Tamil Nadu 5 Telangana 6 Kerala 7 Haryana 8 Gujarat 9 Uttar Pradesh 4.4 4.4 6.5 14.4 16.5 16.6 17.2 Percentage shortfall in October 2017 revenue - States with least shortfall 12 10 8 6 4.4 4.4 4 2.6 2 0 Sl. No. Dell Maharashtra Andhra Pradesh Tamil Nadu 6.5 16.5 17.2 16.6 14.4 Telangana Kerala Haryana Gujarat Uttar Pradesh States showing maximum improvement in 3 months. Name of the State Percentage reduction in shortfall in October 2017 revenue as compared to August 2017 revenue Sl. No. Name of the State Percentage reduction in shortfall in October 2017 revenue as compared to August 2017 revenue 1 Tripura -37.3 8 Delhi -17.7 2 Manipur -31 Madhya 9 -17.7 3 Haryana -23.8 Pradesh 4 J & K -23.7 10 Odisha -17.4 Andhra 11 Kerala -16.9 5 -23.5 Pradesh 12 Nagaland -15.1 6 Mizoram -23.3 13 ....
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....l Nadu Chattisgarh 16 Sikkim JAYNA BOOK DEPOT Estd. 1949 JAYNA MINUTE BOOK Annexure 4 Presentation for the 23rd Meeting of GST Council by Commissioner (GST Policy), CBEC बाजार Presentation for the 23rd Meeting of GST Council Ag 3: Ratification of Notifications, Circulars and Orders INATION TAX MARKET Deemed ratification of the following notifications, circulars and orders issued after the 22nd GST Council meeting : Act/Rules CGST Act/CGST Rules IGST Act UTGST Act GST (Compensation to States) Act Circulars Orders Type Central Tax Central Tax (Rate) Integrated Tax Integrated Tax (Rate) Union territory Tax Union territory Tax (Rate) Compensation Cess (Rate) Under the CGST Act Removal of Difficulty Order, to remove difficulties in implementing provisions of composition scheme. Notification Nos. 38 to 54 51 to 40 9 to 11 32 to 42 4 to 17 $1 to 40 6 to 7 8, 11, 12, 13 Order-01/2017- Central Tax Page 71 of 101 CHAIRMAN'S INITIALS CHAIRMAN'S INITIALS MINUTE BOOK Ag 4: Decisions of GIC from 6.10.2017 (22nd GSTC) (1/6) Decision by Circulation B INATION TAX MARKET Field for Compensation Cess was missing and....
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.... FORM GST TRAN-1 (Last date to 30.11.2017) ✓ Order No. 05/2017-GST, Order No. 06/2017, Notification No. 51/2017 53/2017 CT, Notification No. 52/2017 - CT, Notification No. CT, Order No. 07/2017 and Order No. 08/2017 all dated 28th October 2017 issued Page 73 of 101 CHAIRMAN'S INITIALS CHAIRMAN'S INITIALS MINUTE BOOK Ag 4: Decisions of GIC from 6.10.2017 (22nd GSTC) (5/6) • Decision by Circulation (contd.) • NATION TAX MARKET Extension of due dates for filing of FORM GSTR-2 and FORM GSTR-3 for the month of July, 2017, till 30th November 2017 and 11th December 2017 Notification No. 54/2017 - CT dated 30th October 2017 issued Ag 4 : Decisions of GIC from 6.10.2017 (22nd GSTC) (6/6) • Decision by Circulation (contd.) Approval for issuance of circulars regarding NATION TAX MARKET ■Procedure for procurement of supplies from registered supplier by EOU/EHTP/STP/BTP units under deemed export benefits under section 147 of the CGST Act, 2017 ✓ Circular No. 14/2017 dated 06.11.2017 issued ■Due date for generation of FORM GSTR-2A and FORM GSTR-1A in accordance with the extension of due date of filing FORM GSTR-1 a....
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....he Embassy etc. is not registered will not be available. For eg. Hotel Services ⚫ Refund available after reconciliation of GSTR - 11 with FORM GSTR-1 of the supplier. Therefore, refund to Diplomatic Mission / UN organization dependent on compliance by vendors To further facilitate such agencies: ✓ Centralized UIN for such agencies in coordination with MEA ✔ No reconciliation between FORM GSTR-1 and FORM GSTR-11 ✓ All refunds to be processed through Central Government and funds settled through settlement procedure Page 76 of 101 JAYNA BOOK DEPOT MINUTE BOOK Estd. 1949 JAYNA Ag 7(iv): Re-credit of late fee for late filing of FORM GSTR- 3B for the month of July, August & September 2017 14 NATION TAX MARKET • Notification No. 28/2017-CT dated 1st September 2017 & Notification No. 50/2017-CT dated 24th October, 2017 issued to exempt late fee for late filing of FORM GSTR-3B for the month of July, August and September For those taxpayers, who had already paid late fee, such late fee needs to re-credited to their Electronic Cash Ledger Fee will be remitted back to "Fee" head of the electronic cash ledger but cannot be used by the ta....
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....IGST Act, 2017 Page 78 of 101 JAYNA BOOK DEPOT Estd. 1949 JAYNA MINUTE BOOK Ag 7(vi): Restrict the maximum amount of Late fee . . • NATION TAX MARKET Late fee of two hundred rupees per day is payable by the taxpayer for delayed filing of the return including the return in FORM GSTR-3B, subject to a maximum amount of ten thousand rupees Late fee was waived off for all registered persons who failed to furnish the return in FORM GSTR-3B for the month of July, August and September 2017 In certain cases, the late fee payable for delayed filing of the return is exceeding the principal amount of tax and interest payable in the return by a huge amount ✓ Proposed to restrict the maximum amount of late fee payable by a taxpayer to the amount of tax payable in a return in case the said amount is less than Rs. 5000/- by exercising the powers conferred by section 128 of the CGST Act. ✓ Decision in Officers Meeting: The late fee for nil filers may be Rs 20/- per day (Rs. 10/- CGST and Rs. 10/- SGST) Ag 8(i) : Extension of due dates for certain forms . INATION TAX MARKET Based on the deadlines provided by GSTN in the 3rd meeting of the GoM on IT ....
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....e through an E- Commerce operator ⚫ Proposal to exempt suppliers of services providing service through an e- commerce platform from obtaining compulsory registration under section 24(ix) of the Act provided their aggregate all India turnover does not exceed twenty lakh rupees except where he opts for voluntary registration Under Section 23 (2) of the CGST Act 213 ***** Page 80 of 101 JAYNA BOOK DEPOT Estd. 1949 JAYNA MINUTE BOOK Annexure 5 Report of the Group of Ministers on Composition Scheme and Restaurant sector Report of the Group of Ministers on Composition Scheme and Restaurant sector 23rd Meeting of GST Council at Guwahati on 10th November 2017 Background ■Council in 22nd Meeting decided to constitute a Group of Ministers (GoM) to: examine measures to make the Composition Scheme more attractive for MSME; and ➤revisit GST Tax Structure on Restaurants CHAIRMAN'S INITIALS Page 81 of 101 Terms of Reference 1. Whether turnover of exempted goods can be excluded from the total turnover threshold for levying tax under the Composition Scheme; 2. Can Composition Scheme be extended to Taxpayers making inter-state outward supplies ....
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....d goods are also taxed (20-30% of the turnover is of exempt items) â– Composition taxpayer pays more tax than normal taxpayer ✰ Make Composition scheme more viable by allowing: # supply of services upto a certain value # supply of Job work service up to a certain limit in order to use idle capacity ✰ Against the proposal Changes require amendment in the Act Composition is turnover based tax * Room for disputes and litigation on exempted/non-exempted turnover Increase the compliance burden- need separate records Expose small traders to audit Page 84 of 101 JAYNA BOOK DEPOT Estd. 1949 JAYNA MINUTE BOOK ToR-1: Recommendation by GoM Annual turnover eligibility be increased to Rs 2 crore from Rs 1 crore (Require amendment in Acts) Threshold turnover be increased to Rs 1.5 crore • Associated Enterprises should be allowed benefit of Composition only till their combined aggregate turnover is below the threshold limit • • • Uniform rate of 1% for manufacturers and restaurants. Optional scheme for traders: â–Tax @ 0.5%- on aggregate turnover Tax @ 1%- on turnover of taxable goods. Allow supply of Services under composi....
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.... Pre-GST: -All non-AC restaurants were exempt from service tax - AC Restaurants charged Service tax @ 6% (60% abatement) - VAT charged in the range of 5-15% by States - ITC was allowed on all goods and services (except for food items chapter 1 to 22) In GST, tax on non-AC restaurant is already at 12% with ITC and it will not be fair to change it to 12% without ITC Simplify tax structure and reduce multiplicity of rates Difficult to enforce different rates of tax for the same restaurant based on AC and non-AC portion Reservations Large amount of ITC is taken on beverages which is at 28%. TRU's assessment: Revenue loss of about Rs.4000 crore on account of pruning of rate from 18% to 12%. Page 87 of 101 14 CHAIRMAN'S INITIALS CHAIRMAN'S INITIALS MINUTE BOOK • • • • TOR-4: Recommendation by GoM No distinction in tax rate based on AC or Non-AC restaurants Tax rate @12% with ITC: -on all standalone restaurants with or without AC and whether or not serving liquor - on restaurant in hotel premises having room tariff less than Rs 7500/- per night Tax rate @18% with ITC, on restaurant in hotel premises having room tariff more than Rs 7....
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....ash Ledger Supplies Return in Form GSTR-1 Viewing of Invoices uploaded by Supplier in GSTR-2A by Buyer Offline Utility for GSTR-1 for upload of invoices Form GST PMT-07 - Grievance for payment Creation, saving and filing of Return Refund Table 6A of GSTR 1 (facility to file their export data) RFD-01 workaround to handle Refund of ITC of the inputs/input services attributed to export of goods form GSTR-3B Filing of Return Forms GSTR-1 and GSTR-2 Details of outward supplies of goods or services-GSTR-1A Offline Utility for GSTR-2 Offline Tool for GSTR-3B Offline tool for ITC-04 Offline Tool for GSTR-4 Transitional Forms Tran Form 1-Transitional ITC/Stock Statement Tran Form 3-Credit distribution Tran Form 1-Revised GIN 9 10 11 No. of GSTR 1 returns filed for the month of July No. of GSTR 2 returns filed for the month of July No. of 3 (B) returns filed for the month of July No. of 3 (B) returns filed for the month of August Data on Registration and Return S.No 1 2345 678 Details Total No. of new applications received for registration No. of applications approved No. of applications rejected No. of applications which are still in process No.....
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....TAX MARKET Nov-2017 Bar Chan Total Generations Total Verifications X Total Rejections 793942 120000 110000- 100000- 70000- 60000- 109475 ||.||||||| 0000- 30000- 20000- 1437 Date Cong 2011-es By National Cerre 0 77 # CBEC / State / UT 1 1 CBEC 2 Status of Permanent Resident Engineers (as on 10th Nov) State/UT Chhattisgarh Jharkhand ETA for Permanent RE 9-Nov-17 4699 GIN 9-Nov-17 2 Delhi 3 Andhra Pradesh 13-Nov-17 4 3 Chandigarh 5 Bihar Goa 13-Nov-17 13-Nov-17 4 Haryana 6 Gujarat 13-Nov-17 5 Punjab 7 Himachal Pradesh 13-Nov-17 6789 Tamil Nadu 8 Jammu and Kashmir 13-Nov-17 9 Kerala 13-Nov-17 Telangana 10 Maharashtra 13-Nov-17 Assam 11 Meghalaya 13-Nov-17 Dadra & Nagar 12 Mizoram 13-Nov-17 Haveli 13 Nagaland 13-Nov-17 11 Karnataka 14 15 Odisha Sikkim 13-Nov-17 13-Nov-17 12 Madhya Pradesh 16 Uttar Pradesh 13-Nov-17 13 Manipur 17 Uttarakhand 13-Nov-17 14 Rajasthan 18 Arunachal Pradesh 22-Nov-17 19 15 Tripura Puducherry 24-Nov-17 20 Daman & Diu 30-Nov-17 16 West Bengal 21 Lakshadweep 30-Nov-17 22 Andaman and Nicobar Islands 11-Dec-17 15 ***** CHAIRMAN'S INITIALS Pa....
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....nce de-incentivising the tax-payer ⚫ Tedious Return Forms: The return forms are extremely complex and tedious, this coupled with a poor user interface makes it extremely difficult for taxpayers to file their returns. · User Interface / Product Management Taxpayer is confused what to submit and what to file, where liabilities will freeze, where payment can be refunded. A simple process flow with adequate training needs to be put in place. ⚫ High number of interventions: 3 returns across 20 days, makes it impossible for the taxpayer to keep revisiting the system. ⚫ Human Errors / Rounding – off Errors: With more than 13 Cr. invoices uploaded, human errors / clerical errors are bound to creep in. GST Snapshot (Registrations & Returns) NATION TAX MARKET Sl. No. Details As on 31.07.17 As on 07.11.17 1 No. of transited (migrated) taxpayers 71,28,581 71,96,446 2 Of which, how many are yet to be migrated 27,35,378 7,66,888 3 No. of completely migrated taxpayers (1-2) 43,93,203 64,29,558 4 Total No. of new applications received for registration (5+6+7) 13,51,336 34,30,356 5 No. of applications approved 10,56,973 29,78,841 6....