Suresh Nandlal Rohira, Partner, Grant Thornton India LLP said on 20th GST Council meeting that ”  “The GST council in its 20th meeting on 5th August made a very important decision for the logistics industry  allowing forward charge @ 12 percent, with full input tax credit, for Goods Transport  Operators.  This would now allow the logistics industry to avail input tax credit  on their input services and also address the cost issues towards procurement from unregistered players.

The representation made by Grant Thornton along with Industry Players was well received by the Council.”

M.S Mani, Senior Director, Deloitte Haskins & Sells LLP

Today’s GST Council meeting marks the beginning of a series of monthly meetings that are expected to address various implementation aspects  and provide a platform to address various issues highlighted by business on an ongoing basis. This is expected to provide a regular decision making forum for various issues that need to be sorted out in order to make GST successful.

The confidence displayed by the government in the ability of industry to regulate itself is welcome and signifies a partnership approach between the government and business. Ideally the government should not be in a rush to determine whether businesses have passed on the benefits of a reduced tax rate or increased input tax credit as these are complex matters which will take some time to determine. In any case, for most businesses, the pricing is determined by market forces and hence the government need not be very worried as businesses may be compelled by market forces to pass on the benefits to the consumer “

The decision to reduce the tax on job work in the textile sector to a uniform level of 5% would benefit the textile sector as there are multiple levels of job work and multiple processes that are necessary in this sector and having a uniform rate would make it simple for the sector to comply and also avoid inverted duty structures in some cases.

The decisions on eway bills, specifically the fact that there would be no checkposts, while in the right direction,  could pose hardships to business as free movement of goods across states could  be impacted.  Monitoring the distance between the dispatch location and the receiving location would be an extremely difficult task and would lead to disputes. In an ideal GST system there is no place for eway bills except possibly in respect of certain sensitive products.

The decision to reduce the GST on government works contracts to 12% with input tax credits would reduce costs of some infrastructure and development works undertaken both by the central and state governments and prevent increase in project costs.

The rate reductions announced today on certain products indicates that the  government is willing to modify rates where there are cogent reasons put forth by business and is expected to give confidence to businesses that several other products where there are issues on rates would be deliberated in the next meeting.

Extract of Decisions taken on Services at 20th GST Council Meeting on 5 August, 2017

S. No. Description of service From To
1. Job work services in respect of the textiles and textile products (including MMF yarn, garments, made-ups, etc. falling in Chapters 50 to 63) 18%/5% 5%
2 Services by way of printing of newspapers, books (including Braille books), journals and periodicals where only content is supplied by the publisher and the physical inputs including paper used for printing belongs to the printer 18% with full ITC 12% with full ITC
3 Services by way of printing of newspapers, books (including Braille books), journals and periodicals using physical inputs owned by others (including an unregistered publisher/supplier) 18% with full ITC 5% with full ITC
4 Works contract services provided to Government, local authority or governmental authority and in respect of post-harvest storage infrastructure for agricultural produce, mechanized food grain handling system 18% with full ITC 12% with full ITC
5 Margin/commission payable to Fair Price Shop Dealers by Central/ State Governments 18% with full ITC Nil
6 Admission to planetarium 28% with full ITC 18% with full ITC
7 Rent-a-cab service Allowed option of 12% GST with full ITC. 5% GST with no ITC will also continue
8 Goods Transport Agency Service (GTA) Allowed option of 12% GST with full ITC under forward charge. 5% GST with no ITC will also continue. (However, the GTA has to give an option at the beginning of financial year)
9 In case of small house-keeping service providers (plumbers/carpenters) providing services through Electronic Commerce Operators (ECO), liability to pay GST placed on ECO
10 Partnership firm or a firm includes LLP ( Limited liability Partnership) for the purposes of levy (including exemption therefrom) of GST on legal services.
11 To clarify that legal services (including representational services) provided by an individual advocate or a senior advocate or a firm of advocates (including LLP) provided to a business entity in taxable territory are covered under reverse charge mechanism
12 Goods required by FIFA and Services provided by and to FIFA and its subsidiaries in connection with FIFA U­17 World Cup to be hosted in India in 2017 shall be exempted from GST
13 New crop insurance schemes Pradhan Mantri Fasal Bima Yojana (PMFBY) introduced from Kharif 2016­-17 in place of National Agricultural Insurance Scheme (NAIS) and Modified National Agricultural Insurance Scheme (MNAIS), and Restructured Weather Based Crop Insurance Scheme (RWCIS) introduced in place of Weather Based Crop Insurance Schemes , shall be extended exemption from GST.

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6 responses to “13 Decisions taken on Services at 20th GST Council Meeting”

  1. Jaco Mathew says:

    The rate change for Works Contract is for all central and State works? What about private work contracts, Is it 18% or 12%?

    • K.A.RAJENDRAN says:

      I HOPE A DISTINCTION IS MADE IN THE CATEGORY OF SERVICE PROVIDERS. ON THIS BASIS PRIVATE WC WILL BE CHARGED @ 18%

  2. sHANMUGAVEL says:

    t is mentioned that job work charges in respect of textile will attract 5% gst instead of 18%. Whether they can avail ITC ?

    • K.A.RAJENDRAN says:

      IN SIMILAR SITUATIONS FOR EXAMPLE GTA SERVICE WITH ITC 12% AND WITHOUT 5%.
      I HOPE THE SAME PRINCIPLE WILL APPLY HERE ALSO

  3. Jatin Lamba says:

    If a GTA opt for 12% GST with full ITC then service provided to another GTA will be 0 % or 12 %

  4. H R Subramanya Iyer says:

    Dear Sir,

    It is mentioned that job work charges in respect of textile will attract 5% gst instead of 18%. Whether they can avail ITC ?

    Thanks and Regards
    HR Subramanya Iyer
    Consultant – Indirect Taxes

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