Kindly note  that  GST Council in the 31st meeting held on 22nd December, 2018 at New Delhi took various decisions relating to changes in GST rates of goods &  services,  law amendments and issued clarifications etc.

For the sake of the convenience of the members, we have reproduced following decisions of the GST Council for easy understanding,   as per press releases issued by PIB/ CBIC:

Policy Recommendations made by the  GST Council

The GST Council made  following policy recommendations:

• Refund on account of Assessment/Provisional Assessment/Appeal/Any Other Order;

• Tax paid on an intra-State supply which is subsequently held to be inter-State supply and vice-versa;
• Excess payment of Tax; and
• Any other refund.

13. Late fee shall be completely waived for all taxpayers in case FORM GSTR-1, FORM GSTR-3B &FORM GSTR-4 for the months / quarters July, 2017 to September, 2018, are furnished after 22.12.2018 but on or before 31.03.2019.

14. Taxpayers who have not filed the returns for two consecutive tax periods shall be restricted from generating e-way bills. This provision shall be made effective once GSTN/NIC make available the required functionality.

15. Clarifications shall be issued on certain refund related matters like refund of ITC accumulated on account of inverted duty structure, disbursal of refunds within the stipulated time, time allowed for availment of ITC on invoices, refund of accumulated ITC of compensation cess etc.

16. Changes made by CGST (Amendment) Act, 2018, IGST (Amendment) Act, 2018, UTGST (Amendment) Act, 2018 and GST (Compensation to States) Amendment Act, 2018 and the corresponding changes in SGST Acts would be notified w.e.f. 01.02.2019.

• Recommendations made regarding Rate changes and clarification in Goods

There are no chemical sector specific rate changes.    We  are nevertheless providing below details for information as exporters might be using the same in  their overall  business activities.

1. GST rate reduction on goods which were attracting GST rate of 28% :

1. 28% to 18%

• Pulleys, transmission shafts and cranks, gear boxes etc., falling under HS Code 8483

• Monitors and TVs of upto screen size of 32 inches

• Re-treaded or used pneumatic tyres of rubber;

• Power banks of lithium ion batteries. Lithium ion batteries are already at 18%. This will bring parity in GST rate of power bank and lithium ion battery.

• Digital cameras and video camera recorders

2. 28% to 5%

• Parts  and accessories for the carriages for disabled persons

2. GST rate reduction on other goods,-

1. 18% to 12%

• Cork roughly squared or debagged

• Articles of natural cork

• Agglomerated cork

2. 18% to 5%

• Marble rubble

3. 12% to 5%

• Natural cork

• Walking Stick

• Fly ash Blocks

Miscellaneous

• Exemption from IGST/Compensation cess on vehicles imported for temporary purposes under the Customs Convention on the Temporary importation of Private Road Vehicles (carnet de passages-en-douane).

• Uniform GST rate of 12% on Flexible Intermediate Bulk Container (FIBC) from existing 5%/12% (depending on the value)

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III. GST on solar power generating plant and other renewable energy plants

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• GST rate of  5% rate has been prescribed on renewable energy devices & parts for their manufacture (bio gas plant/solar power based devices, solar power generating system (SGPS) etc) [falling under chapter 84, 85 or 94 of the Tariff]. Other goods or services used in these plants attract applicable GST.

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• Certain disputes have arisen regarding GST rates where specified goods attracting 5% GST are supplied along with services of construction etc and other goods for solar power plant.

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• To resolve the dispute the Council has recommended that in all such cases, the 70% of the gross value shall be deemed as the value of supply of said goods attracting 5% rate and the remaining portion (30%) of the aggregate value of such EPC contract shall be deemed as the value of supply of taxable service attracting standard GST rate.

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IV. Clarifications:

• Sprinkler system consisting of nozzles, lateral and other components would attract 12% GST rate under S.No. 195B of notification No. 1/2017-Central Tax (Rate) dated 28.6.2018

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• Movement of Rigs, Tools & Spares and all goods on wheels on own account where such movement is not intended for further supply of such goods but for the provision of service does not involve a supply (e.g., movement of testing equipment etc.) and is not be liable to GST.

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• The goods with description Bagasse Board [whether plain or laminated] falling under Chapter 44 attract GST at the rate of 12%.

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• Concessional GST rate of 5% applies to the LPG supplied in bulk to an OMC by refiners/fractioners for bottling for further supply to household domestic consumers.

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• While animal/cattle/aquatic/poultry feed are exempt vide S. No. 102 of notification No. 2/2017-Central Tax (Rate), this exemption would not apply to their inputs such as fish meal, meat bone meal, bran, sharps, oil cakes of various oil seeds etc.

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• Manure of determination of classification of vitamins, pro-vitamins etc. as animal feed supplements

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• Polypropylene Woven and Non-Woven Bags and PP Woven and Non-Woven Bags laminated with BOPP falls under HS code 3923 and attract 18% GST rate.

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• 18% GST is applicable on wood logs including the wood in rough/log used for pulping.

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• Turbo charger is classified under heading 8414 and attracts 18% GST and not 5% GST.

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• Scope of concessional rate of 5% GST rate for specified equipment for waste to energy plant.

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• Decisions taken  regarding GST rate on services

GST Council took following decisions relating to changes in GST rates, ITC eligibility criteria, exemptions and clarifications on connected issues.  

Reduction in GST rates/exemptions on services:

 GST rate on third party insurance premium of goods carrying vehicles shall be reduced from 18% to 12%

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• Services provided by GTA to Government departments/local authorities which have taken registration only for the purpose of deducting tax under Section 51 shall be excluded from payment of tax under RCM and the same shall be exempted. 

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• Exemption on services provided by Central or State Government or Union Territory Government to their undertakings or PSUs by way of guaranteeing loans taken by them from financial institutions is being extended to guaranteeing of such loans taken from banks.

Rationalization

• Parliament and State legislatures shall be extended the same tax treatment with regard to payment of tax under RCM (reverse charge mechanism)as available to Central and State Governments.

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• Security services (supply of security personnel) provided to a registered person, except Government Departments which have taken registration for TDS and entities registered under composition scheme, shall be put under RCM.

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• Services provided by unregistered Business Facilitator (BF) to a bank and agent of Business correspondent (BC) to a BC shall be put under RCM.

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Clarifications

• To clarify that “printing of pictures” falls under service code “998386: Photographic and videographic processing services” of the scheme of classification of services and attract GST @18% and not under “998912: Printing and reproduction services of recorded media, on a fee or contract basis” which attracts GST @12%.

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• To clarify that the incentives paid by RBI to Banks under “Currency Distribution and Exchange Scheme” (CDES)are taxable.

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• To clarify under section 11(3) of the CGST Act, 2017 that scope of entry for multi-modal transport with GST rate of 12% inserted w.e.f. date 26.07.2018, covers only transport of goods from a place in India to another place in India, that is, only domestic multi-modal transport.

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• To clarify that the banking company is liable to pay GST on the entire value of service charge or fee charged to customers whether or not received via business facilitator or the business correspondent.

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In-Principle approval given for Law Amendments during 31st Meeting of the GST Council

The GST Council gave in principle approval to the following amendments in the GST Acts:

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• Creation of a Centralised Appellate Authority for Advance Ruling (AAAR) to deal with cases of conflicting decisions by two or more State Appellate Advance Ruling Authorities on the same issue.

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• Amendment of section 50 of the CGST Act to provide that interest should be charged only on the net tax liability of the taxpayer, after taking into account the admissible input tax credit, i.e. interest would be leviable only on the amount payable through the electronic cash ledger.

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The above recommendations of the Council will be made effective only after the necessary amendments in the GST Acts are carried out.

Formation of GoM as Recommended by the GST Council in Its 31st Meeting held on 22.12.2018.

The GST Council has approved the proposal to form a 7 Member Group of Ministers to study the revenue trend, including analysing the reasons for structural patterns affecting the revenue collection in some of the States. The study would include the underlying reasons for deviation from the revenue collection targets vis a vis original assumptions discussed during the design of GST system, its implementation and related structural issues.

The Group of Ministers will be assisted by the committee of experts from Central Government, State Governments and the NIPFP (National Institute of Public Finance and Planning), who would study and share the findings with GoM. The GoM in turn would give its recommendation to the GST Council. 

The members of the GoM and the Committee of experts would be announced in due course of time.

Certain important issues referred by GST Council to various Committees / GoM

The GST Council decided to refer the following issues to Committees / GoM indicated against them:

1. Extending the Composition scheme to small service providers. The rate of tax and threshold limit to be proposed - Law Committee and Fitment Committee.

2. Tax rate on lotteries – Committee of States.

3. Taxation of residential property in real estate sector – Law Committee and Fitment Committee.

4. Threshold limit of exemption under GST regime – GoM on MSMEs.

GST council in its next meeting would take a view on the above issues in its next meeting.

Members are requested to take note of  above recommendations based on PIB/ CBIC press releases. The said CBIC/ PIB press notes are available for reference using below links:

Kindly note that above information is provided based on press notes of CBIC/ PIB.  For exact details of changes, the notification/Circular/ Clarification the council will update you as and when they are issued.   

Thanking you,

Yours faithfully,

(S.G BHARADI)
EXECUTIVE DIRECTOR
CHEMEXCIL