With the conclusion of the day second of the 14thGST Council meet on May 19, 2017, the gist of the key takeaways from the meeting of the GST Council are as under:
- Finalized four tax rates for services in line with goods:
The GST Council has broadly approved the GST rates for services at Nil, 5%, 12%, 18% and 28% for services including telecom, insurance, hotels and restaurants. The information has been uploaded immediately after the GST Council’s decision and it will be subject to further vetting during which the list may undergo some changes. It is stated that the decisions of the GST Council are being communicated for general information and will be given effect through gazette notifications which shall have force of law.
Gist of the Schedule of GST Rates for Services:
(i) Nil (0% Rate): Most Service tax exemptions will be grandfathered and will continue in GST Regime as well such as:
- Healthcare and Education services,
- Transmission or distribution of electricity by an electricity transmission or distribution utility,
- Services by government, local authority or governmental authority by way of any activity in relation to any function entrusted to a municipality under Article 243W of the Constitution,
- Services provided by a goods transport agency, by way of transport in a goods carriage of agricultural produce etc.
- Services provided by way of pure labor contracts of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of a civil structure or any other original works pertaining to the Beneficiary-led individual house construction / enhancement under the Housing for All (Urban) Mission/ Pradhan Mantri Awas Yojana (PMAY) etc.
(ii) 5% Rate: Category of services falling under the slab of 5% shall be subject to condition pertaining to availability of Cenvat credit such as transport of goods by rail/ in vessel, transport of passenger by rail (other than sleeper class)/ air (in economy class), services of goods transport agency, renting of motor cab, Selling of space for advertisement in print media etc.
(iii) 12% Rate: Category of services falling under the slab of 12% shall be subject to condition pertaining to availability of Cenvat credit such as transport of goods in containers by rail by any person other than Indian Railways, construction of a complex, building, civil structure or a part thereof, intended for sale to a buyer, wholly or partly provided the value of land is included in the amount charged from the service recipient [With full Input Tax Credit (“ITC”) but no refund of overflow of ITC] etc.
(iv) 18% Rate: Category of services falling under the slab of 18% shall be subject to condition pertaining to availability of Cenvat credit such as supply of food/drinks in outdoor catering, composite supply of Works contract [With full ITC], telecom & financial services etc. Further, it may be noted that all other services not specified elsewhere will also fall under the slab of 18% with full availability of ITC.
(v) 28% Rate: Services by way of admission to entertainment events or access to amusement facilities etc., Gambling, supply of food/drinks in air-conditioned restaurant in 5-star or above rated Hotel etc., will attract highest rate of tax i.e. 28%.
(vi) GST and Compensation Cess rate as applicable for goods in certain cases: Further, in the following cases, same rate of GST and Compensation Cess as applicable on supply of similar goods will apply:
- Transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration
- Any transfer of right in goods or of undivided share in goods without the transfer of title thereof
- Supply consisting of transfer of title in goods under an agreement which stipulates that property in goods shall pass at a future date upon payment of full consideration as agreed
Schedule of GST Rates for Services and Service Tax Exemptions to be continued in GST as approved by GST Council can be accessed at below link:
- Approval to services that will fall under the Reverse Charge:
Twelve list of services that will be under reverse charge has been approved by the GST Council such as goods transport agency services, services by an individual advocate or firm of advocates by way of legal services, directly or indirectly, services by a director of a company or a body corporate, import of services, radio taxi or passenger transport services provided through electronic commerce operator etc.
The information has been uploaded immediately after theGST Council’s decision and it will be subject to further vetting during which the list may undergo some changes. Further, it is stated that the decisions of the GST Council are being communicated for general information and will be given effect to through gazette notifications which shall have force of law.
List of Services under Reverse Charge can be accessed at below link:
- 1% Tax Collected at Source (TCS) rate as against 2% cap provided in the Final GST Law for E-commerce players:
The GST Council has also decided that e-commerce players such as Flip kart, Snap deal are required to deduct TCS @1%.
The next meeting of the GST Council is scheduled to be held on June 3, 2017 in New Delhi wherein tax on remaining 6 categories of goods along with taxation of lottery service and the approval of the remaining 2 Draft GST Rules of transition provision and returns will be taken up for discussion. In this regard Mr. Jaitley has said that “Most of the work related to roll out of GST has been completed. Only a few things remain. In goods category, six categories are still to be decided… The residuary rules will be put up for public comments and they need to be approved. We will also be looking at the presentation of the state of preparedness of the GSTN.”
All these series of events are going to enlighten the pave for rolling out of the biggest indirect tax reform from July 1, 2017.
Source: NDTV Profit, Indian Express etc., and video capturing the press conference of Mr. Arun Jaitley after 14th GST Council Meet ends
Hope the information will assist you in your Professional endeavors. In case of any query/ information, please do not hesitate to write back to us.
Disclaimer: The contents of this document are solely for informational purpose. It does not constitute professional advice or recommendation of firm. Neither the authors nor firm and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any information in this document nor for any actions taken in reliance thereon.
Readers are advised to consult the professional for understanding applicability of this newsletter in the respective scenarios. While due care has been taken in preparing this document, the existence of mistakes and omissions herein is not ruled out. No part of this document should be distributed or copied (except for personal, non-commercial use) without our written permission.
(Author can be reached at Email: email@example.com)