Recently, CBIC issued the following three notifications in regards to changes in the rate of tax, changes in RCM list & changes in the exemption list.

Notification No. 27/2019- CTR 30.12.2019: Changes in Rate of Tax w.e.f. 01.01.2020

Notification No. 28/2019-CTR 31.12.2019: Changes in exemption list w.e.f. 01.01.2020

Notification No. 29/2019-CTR 31.12.2019: Change in the list of RCM w.e.f 31.12.2019

The brief of changes take place are as:

1. Changes in exemption list w.e.f. 01.01.2020: Specified services (Long Term Lease of industrial plots or plots for development of infrastructure for financial business) provided by an entity having 20% or more (Earlier it was 50%) ownership of CG, SG, UT to industrial units or developers are exempt from GST subject to the following conditions: (Newly inserted) (Notification No. 28/2019-CTR dated 31.12.2019)

i. Leased plots shall be used for the purpose for which they are allotted, that is, for industrial or financial activity in an industrial or financial business area.

ii. The State Government concerned shall monitor and enforce the above condition as per the order issued by the State Government in this regard.

iii. In case of any violation or subsequent change of land use, due to any reason whatsoever, the original lessor, original lessee as well as any subsequent lessee or buyer or owner shall be jointly and severally liable to pay such amount of central tax, as would have been payable on the upfront amount charged for the long term lease of the plots but for the exemption contained herein, along with the applicable interest and penalty.

iv. The lease agreement entered into by the original lessor with the original lessee or subsequent lessee, or sub- lessee, as well as any subsequent lease or sale agreements, for lease or sale of such plots to subsequent lessees or buyers or owners shall incorporate in the terms and conditions, the fact that the central tax was exempted on the long term lease of the plots by the original lessor to the original lessee subject to above 2 condition and that the parties to the said agreements undertake to comply with the same.

2. RCM w.e.f. 31.12.2019: Renting of motor vehicle designed to carry passengers (Earlier all vehicle covered) where the cost of fuel is included in the consideration charged from the service recipient, provided to a body corporate by any person, other than a body corporate who supplies the service to a body corporate and does not issue an invoice charging central tax at the rate of 6% to the service recipient. (Notification No. 29/2019-CTR dated 31.12.2019)

Auditor Remarks: Earlier the aforesaid services are covered under RCM subject to condition that supplier paying central tax at the rate of 2.5% on renting of motor vehicles with ITC only of input service in the same line of business. Therefore, a few questions like what is the use of ITC of 2.5% for the supplier, etc. Now, the CBIC remove all such drafting errors and clarified the entry.

3. Change in Rate of Tax (w.e.f. 01.01.2020): (Notification No. 27/2019-CTR dated 30.12.2019) 

Old GST Rate Principal Notifications Particulars New Notifications Conditions New GST Rate
12% (HSN  6305, 3923) 01/2017 (CTR) Woven and Non- Woven Bags and sacks of Polyethylene Polypropylene strips, whether laminated or not, of a kind used for packing of goods 27/2019-CTR Nil 18%
12% (HSN 6305 32 00) 01/2017 (CTR) Flexible intermediate bulk containers 27/2019-CTR Nil 18%

 Hope, this may be useful for you.

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  1. Pankaj Singh says:

    respected all,

    {1} if any party is not registered in GST and he is giving us service of transport how much RCM put on it we can take his input.

    {2} which party should be how much percent tax on registered his bill in GST that we can take input.

  2. Sonam Khaitan says:

    Whether normal lease rentals paid on monthly basis is taxable or exempt. And whether any upfront amount paid by subsequent lessee to original lessee on sub lease basis is exempt?

  3. C.P.Ethirajan says:

    RCM on passenger vehicle is applicable from 01/10/2019 itself and not from 01/01/2020. Please see F. No. 354/189/2019-TRU dt:______ which makes it clear about effective date

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January 2021