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GST Council reduces rates on hotels, jewellery and automobiles

GST Council Reduces Rates On Hotels, Jewellery And Automobiles

The All-Powerful GST Council On Friday More Than Doubled The Tax On Caffeinated Beverages But Slashed The Same On Hotel Tariffs And Some Goods With A View To Addressing Sectoral Concerns In A Slowing Economy.

The Tax Changes Came On A Day The Government Announced Big Bang Reduction In Corporate Tax Rates To Boost Private Investments And Pull The Economy Out Of A Six-Year Low Growth And A 45-Year High Unemployment Rate.

The GST Council, Headed By Union Finance Minister Nirmala Sitharaman And Having Representatives Of All States, However, Did Not Take A Decision On Cutting Tax On Automobiles As Well As Items Like Biscuits Which Had Seen Fall In Sales On Slowing Consumption And Demand.

Key Takeaway Of 37th GST Council Meeting In Relation To Law And Procedural Related Changes

  1. Relaxation in the filing of annual returns for MSMEs for FY 2017-18 and FY 2018-19 as under:
  • Waiver of the requirement of filing FORM GSTR-9A for Composition Taxpayers for the said tax periods; and
  • Filing of FORM GSTR-9 for those taxpayers who (are required to file the said return but) have an aggregate turnover up to Rs. 2 crores made optional for the said tax period.
  1. A Committee of Officers to be constituted to examine the simplification of Forms for Annual Return and reconciliation statement.
  2. Extension of the last date for filing of appeals against orders of Appellate Authority before the GST Appellate Tribunal as the Appellate Tribunals are yet not functional.
  3. In order to nudge taxpayers to timely file their statement of outward supplies, the imposition of restrictions on availment of the input tax credit by the recipients in cases where details of outward supplies are not furnished by the suppliers in the statement under section 37 of the CGST Act, 2017.
  4. New return system now to be introduced from April, 2020 (earlier proposed from October, 2019), in order to give ample opportunity to taxpayers as well as the system to adapt and accordingly specifying the due date for furnishing of return in FORM GSTR-3B and details of outward supplies in FORM GSTR-1 for the period October, 2019 – March, 2020.
  5. Issuance of circulars for uniformity in the application of the law across all jurisdictions:
  • Procedure to claim a refund in FORM GST RFD-01A subsequent to favourable order in appeal or any other forum;
  • Eligibility to file a refund application in FORM GST RFD-01A for a period and category under which a NIL refund application has already been filed; and
  • Clarification regarding the supply of Information Technology enabled Services (ITeS services) (in supersession of Circular No. 107/26/2019-GST dated 18.07.2019) being made on own account or as an intermediary.
  1. Rescinding of Circular No.105/24/2019-GST dated 28.06.2019, ab-initio, which was issued in respect of post-sales
  2. Suitable amendments in the CGST Act, UTGST Act, and the corresponding SGST Acts in view of the creation of UTs of Jammu & Kashmir and Ladakh.
  3. Integrated refund system with disbursal by a single authority to be introduced from September 24, 2019.
  4. In principle decision to link Aadhar with the registration of taxpayers under GST and examine the possibility of making Aadhar mandatory for claiming refunds.
  5. In order to tackle the menace of fake invoices and fraudulent refunds, in-principle decision to prescribe reasonable restrictions on the passing of credit by risky taxpayers including risky new taxpayers.

In All, The GST Council Revised Rates On 20 Goods And 12 Services.

  • Caffeinated beverages will be charged with 28 per cent tax plus a 12 per cent compensation cess in place of the current tax rate of 18 per cent.
  • To boost job-creating hospitality industry and tourism, the GST (goods and services tax) on hotel rooms with tariffs of up to Rs 1,000 per night will be nil. The same for tariff of between Rs 1,001 and Rs 7,500 per night has been cut to 12 per cent from the existing 18 per cent. Similarly, the tax on room tariff of above Rs 7,500 has been slashed to 18 per cent from the existing 28 per cent.
  • The Council cut the GST rate on slide fasteners (zips) to 12 per cent from 18 per cent on marine fuel to 5 per cent from 18 per cent on wet grinders to 5 per cent from 12 per cent and to nil on dried tamarind and plates and cups made up of leaves/flowers/bark from current 5 per cent.
  • Also, the GST was cut to 0.25 per cent on cut and polished semi-precious stones from present 3 per cent.
  • A 5 per cent GST would be applicable on specified goods used for oil and gas exploration and production under the licensing policy.
  • Passenger vehicles of engine capacity 1,500 cc in case of diesel, 1,200 cc in case of petrol and length not exceeding 4,000 mm designed for carrying up to 9 persons attract compensation cess of 1 per cent for petrol and 3 per cent for diesel vehicle over and above the 28 per cent tax rate.

Stock Quint

The Changes Will Have “Very Minor” Revenue Implication As An Increase In Tax Would Make Up For Reductions.

With The Upcoming Vacation And Festive Season, This Was A Much Sought For Relief By This Industry Especially For The Premium Segment Hotels. Aligned To This Government’s Agenda Of Deterring Consumption Of Deleterious Drinks, A Significant Hike In GST Has Been Proposed On Caffeinated Drinks. This Now Brings Rates On Such Drinks At Par With Aerated Beverages.

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