The GST Council had announced rate cut on several items, in the middle of a chorus of demands for measures towards addressing the slowing economy. Finance Minister Nirmala Sitharaman had stated that all GST rates shall be effective from 1st October.
1. The major takeaways from the GST Council 37th meeting:
• GST Council approved proposal to increase rates on caffeinated drinks from 18% to 28%, also an additional 12 % compensation cess. Aerated drinks would no longer be an under-compensation scheme.
• GST Council approved the proposal to cut rates on hotel tariffs. Rooms with tariff Rs 7,500 and more shall now be taxed at 18%. Before the cut, the GST rate on this category was 28%. GST on rooms with tariff amid Rs 1001 and Rs 7,500 now stands at 12%. No GST is required on tariffs up to Rs 1,000.
• GST on cups, plates made from flower, leaves as well as bio-friendly material was reduced to zero from 5%.
• GST on goods under Chapter 12 which contains supplies towards railways was hiked to 12% from 5%. This is without the refund on the collected input tax credit (ITC).
• Compensation cess on petrol motor vehicles with 10-13 individual capacity reduced towards 1%, while on diesel vehicles it was reduced to 3%. Prior to the cut, the compensation cess was at 15%.
• GST on marine fuel has been cut to 5% vs 18% earlier.
• A Uniform GST rate of 12% on Polypropylene/Polyethylene Woven as well as Non- Woven Bags and sacks, whether or not laminated, of a kind used for the packing of goods (from present rates of 5%/12%/18%)
• Exemption from GST/IGST was given on import of specified defense goods not being manufactured indigenously, it is being extended only up to 2024. The supply of goods and services to FIFA and other specified persons also has been exempted for Under-17 Women's World Cup in India.
2. The GST Council took following decisions regarding changes in GST rates, ITC eligibility standards, exemptions and clarifications on connected concerns.
• The GST council had also cut the tax rate on job work for engineering services towards 12% from 18% and on diamond supply to 1.5% from 5%.
• In a respite for the IT and ITeS sectors, the council also had approved exemptions on outsourcing. It has exempted pharma corporations that carry out specific research and development for foreign corporations from GST.
• Also, the council had raised tax on caffeinated beverages to 28% from 12% now and levied a 12% cess. GST was also increased on railway wagons towards 12% from 5% to address the concerns of accumulation of input tax credit. It also limited the refund of compensation cess on tobacco.
3. Measures for Export Promotion
Exemption from GST/IGST:-
1. During import on Silver/Platinum through specified nominated agencies
2. Supplying of Silver/Platinum through specified nominated agency towards exporters for exports of Jewellery,
3. Inclusion of Diamond India Limited (DIL) in the list of nominated agencies qualified for IGST exemption on imports of Gold/ Silver/Platinum in order to supply at Nil GST to Jewellery exporters.
4. GST concession in specific cases for a particular period
• Exemption towards Fishmeal for the period 01.07.17 to 30.09.19. There were uncertainties as regards taxability of fishmeal considering the interpretational issues. However, any tax collected for this period would be required to be deposited.
• 12% GST during the period 1.07.2017 to 31.12.2018, on a pulley, wheels as well as other parts (falling under Heading 8483) and used as parts of agricultural machinery.
5. The Passenger vehicles with an engine capacity 1500 cc for diesel, 1200 cc for petrol and length not beyond 4000mm designed for carrying up to 9 people attract compensation cess of 1% for petrol as well as 3% for a diesel vehicle. The GST Council had recommended the same compensation cess rate for vehicles having these qualifications (length and engine capacity) but designed for carrying more than 10 people but up to 13 persons. (Presently these vehicles attracts compensation cess @ of 15%)
6. Additional miscellaneous Changes:
• Aerated drink manufacturers would be excluded from the composition scheme.
• Option towards paying GST @ of 18% on transaction value at the time of disposal of specified products for petroleum operations (on which concessional GST rate of 5% was paid during original supply) provided that the products are certified by means of Director General Hydrocarbon (DGH) as non-serviceable.
• Constraint on refund of compensation cess on tobacco products (for inverted duty structure)
• Suggesting modalities for permitting concessions on spare parts imported momentarily through foreign airlines in order to repair their aircraft, while in India in transit in terms of the Chicago Convention on Civil Aviation.
• Few other changes of technical nature for the sake of clarity in the application of notification.
7. Clarifications with regard to the applicability of GST rate regarding few goods recommended by GST Council which inter-alia contains:
• Only the heating of leguminous vegetables (gram/lentil) for removing moisture, or towards softening and puffing it or removing the skin, and not subjecting to any additional processing or addition of any other ingredients (salt, oil, etc.) shall be classified under HS code 0713.
• Every “mechanical sprayers” falling under HS Code 8424 shall attract 12% GST.
• Parts like Solar Evacuation tubes for solar power based devices like the solar water heater, solar steam, generation systems, shall be eligible to 5% GST rate.
• Exclusive parts as well as accessories suitable for usage solely or principally with a medical device (falling under headings 9018, 9019, 9021 or 9022) shall fall in respective headings and attracts GST at the concessional rate of 12%.
• Almond milk is classified under HS code 22029990 and attracts GST rate of 18%.
• Imported stores for Navy shall be entitled to exemption from IGST
The changed rate shall be made effective with effect from 1st October 2019.
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