Yet another major rejig in lowering tax rates of 29 goods and 53 services. Few amongst are Bio diesel, Agric equipment, new and second-hand vehicle, water bottle, job work, and many services in construction, insurance and financial sectors estimating about Rs.1000 crores loss to the ex-chq.
Policy announcement of merging GSTR 1,2 and 3 into one return, Pan based Single registration for various service providers across India subject to certain conditions, Invoice matching with the least effort by the trade, tightening anti-profiteering measures due to fall in revenue since the implementation, inclusion of real estate, petroleum products subsuming of stamp duty and registration charges into GST net.
Extension of due date till mar 31st 2018 for cancellation of registration of the migrated persons and relaxation of cancellation of voluntary registration even before completion of one year of registration.
While the above decision Is given effect under force of law, the sector that are benefited under such likely amendments are extracted below. The wordings of the press release are given as such for the benefit of the readers to track while notification/ circular Is issued
Persons supply services
- To exempt legal services provided to Government, Local Authority, Governmental Authority and Government Entity (Legal consultancy services)
- To reduce GST rate on construction of metro and monorail projects. (construction, erection, commissioning or installation of original works) from 18% to 12%. (construction)
- To levy GST on the small housekeeping service providers, notified under section 9 (5) of GST Act, who provide housekeeping service through ECO, @ 5% without ITC (Maintenance service)
- To levy GST on the small housekeeping service providers, (through E commerce treated as supplier of service within the state) notified under section 9 (5) of GST Act, who provide housekeeping service through ECO, @5% without ITC to exempt services provided by the Naval Insurance Group Fund by way of Life Insurance to personnel of Coast Guard under the Group Insurance Scheme of the Central Government retrospectively w.e.f. 1.7.2017(Insurance)
- To exempt IGST payable under section 5(1) of the IGST Act, 2017 on supply of services covered by item 5(c) of Schedule II of the CGST Act, 2017( renting of immovable property , construction of a complex, building, civil structure) to the extent of aggregate of the duties and taxes leviable under section 3(7) of the Customs Tariff Act, 1975 read with sections 5 & 7 of IGST Act, 2017 on part of consideration declared under section 14(1) of the Customs Act, 1962 towards royalty and license fee includible in transaction value as specified under Rule 10 (c) of the Customs Valuation ( Determination of Value of Imported Goods Rules,2007 ). In short no duplicate levy of tax on the underlined service under customs and GST
- allow ITC of input services in the same line of business at the GST rate of 5% in case of tour operator service. (TOS becomes cheaper in the hands of operator)
- To reduce GST rate (from 18% to 12%) on the Works Contract Services (WCS) provided by sub-contractor to the main contractor providing WCS to Central Government, State Government, Union territory, a local authority, a Governmental Authority or a Government Entity, which attract GST of 12%. Likewise, WCS attracting 5% GST, their sub-contractor would also be liable @ 5%. (Same rate applicable in the supply chain services across the board which ultimately results in Govt. service)
- To enhance the exemption limit of Rs 5000/- per month per member to Rs 7500/- in respect of services provided by Resident Welfare Association (unincorporated or nonprofit entity) to its members against their individual contribution. (Relief of Rs.2500/- in exemption limit for flat owners who are covered now)
- To reduce GST rate on transportation of petroleum crude and petroleum products (MS, HSD, ATF) from 18% to 5% without ITC and 12% with ITC. (Transport cost my become cheaper for transporters who avails ITC on their services)
- To exempt dollar denominated services provided by financial intermediaries located in IFSC SEZ, which have been deemed to be outside India under the various regulations by RBI, IRDAI, SEBI or any financial regulatory authority, to a person outside India. (Status of financial intermediaries in SEZ are at par with SEZ financial services unit in respect of $ related Services)
- To amend entry 3 of notification No. 12/2017-CT(R) so as to exempt pure services provided to Govt. entity. (Already it is exempted – Not clear as to what the amendment is going to be)
- To expand pure services exemption under S. No. 3 of 12/2017-C.T. (Rate) so as to include composite supply involving predominantly supply of services i.e. up to 25% of supply of goods- Works contract and other composite supply service now enjoys tax abatement to the extent of 75 % of the contract subject to service is pre-dominant of 75 %- More prone to disputes)
- To reduce job work services rate for manufacture of leather goods (Chapter 42) and footwear (Chapter 64) to 5%. (leather and foot wear business)
- To enhance the limit to Rs 2 lakh against Sl. No. 36 of exemption notification No. 12/2017-C.T. (Rate) which exempts services of life insurance business provided under life micro insurance product approved by IRDAI up to maximum amount of cover of Rs. 50,000. (life insurance business)
- To exempt reinsurance services in respect of insurance schemes exempted under S.Nos. 35 and 36 of notification No. 12/2017-CT (Rate) [It is expected that the premium amount charged from the government/insured in respect of future insurance services is reduced. (general and life insurance business
- To exempt subscription of online educational journals/periodicals by educational institutions who provide degree recognized by any law from GST.
- To extend the concessional rate of GST on houses constructed/ acquired under the Credit Linked Subsidy Scheme for Economically Weaker Section (EWS) /Lower Income Group (LIG) / Middle Income Group-1 (MlG-1) / Middle Income Group-2 (MlG-2) under the Housing for All (Urban) Mission/Pradhan Mantri Awas Yojana (Urban) and low-cost houses up to a carpet area of 60 square meters per house in a housing project which has been given infrastructure status, as proposed by Ministry of Housing & Urban Affairs, under the same concessional rate.( For the benefit of construction industry who are into specific section and to the consumers who are going to be in the same segment )
- To exempt government’s share of profit petroleum from GST and to clarify that cost petroleum is not taxable per se. (If earlier the share of profit was considered for GST, to the extent petroleum cost becomes cheaper)
- To provide in CGST rules that value of exempt supply under sub-section (2) of section 17, shall not include the value of deposits, loans or advances on which interest or discount is earned (This will not apply to a banking company and a financial institution including a non-banking financial company engaged in providing services by way of extending deposits, loans or advances)( ITC need not be reversed on interest or discount earned where common input supplies are used for output supplies which are both taxable and exempted)
- To defer the liability to pay GST in case of TDR (Transfer of development rights) against consideration in the form of construction service and on construction service against consideration
- in the form of TDR to the time when the possession or right in the property is transferred to the land owner by entering into a conveyance deed or similar instrument (eg. allotment letter). No deferment in point of taxation in respect of cash component. (Construction industry is benefited as the tax liability is postponed to a future period)
- To tax renting of immovable property by government or local authority to a registered person under reverse Charge while renting of immovable property by government or local authority to un-registered person shall continue under forward charge (Taxable person has the RCM liability when he pays rent to Govt on immovable property)
Persons supplying Goods
To exempt service by way of transportation of goods from India to a place outside India by air.
To exempt service by way of transportation of goods from India to a place outside India by sea and provide that value of such service may be excluded from the value of exempted services for the purpose of reversal of ITC. The above exemptions may be granted with a sunset clause up to 30th September, 2018.