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We hope that our previous blog on the 31st GST Council meeting, was helpful for you to quickly go through the key decisions taken during the 31st GST Council Meeting held last Saturday. As promised, here’s a follow-up blog on some other decisions which were taken – primarily related to GST clarifications with respect to rates of goods and services.

Let’s go through these GST clarifications one by one.

GST clarifications on solar power generating & other renewable energy plants

  • Renewable energy devices and parts required for their manufacture – bio gas plant, solar power-based devices, solar power generating systems etc. – 5% GST
  • Other goods and services used in these plants – Applicable GST rates
  • Certain disputes have arisen with regards to the GST rates where specified goods attracting a GST of 5% GST were supplied along with services of construction or along with goods used in solar power plants. To resolve these disputes, the GST Council has recommended that –
    • 70% of the gross value shall be deemed as the value of supply of goods – 5% GST
    • 30% of the gross value shall be deemed as the value of supply of services – Applicable GST rates

GST clarifications – Rate of Goods

  • Supply of gold by nominated agencies to exporters of articles of gold jewellery – Exempt from GST
  • Proceeds received by Government from auction of gifts received by President, Prime Minister, Governor or Chief Minister of a State and public servants, the proceeds of which is used for public or charitable causes – Exempt from GST
  • Animal / Cattle / Aquatic / Poultry Feed – Exempt from GST
  • Movement of rigs, tools & spares and all goods on wheels on own account, where the movement is not intended for further supply of such goods, but for the provision of service – Exempt from GST
  • Vehicles imported for temporary purposes under the ‘Customs Convention on Temporary Importation of Private Road Vehicles’ guidelines – Exempt from IGST / Compensation Cess
  • Footwear – 5% / 18% GST to be applied based on transaction value
  • LPG supplied in bulk to an OMC by refiners / fractioners for bottling for further supply to household domestic consumers – 5% GST
  • Fabric, even if embroidered or has stitching of lace and tikki etc. and even if sold in three-piece fabric as ladies suit set – 5% GST
  • Specified equipment for waste to energy plants – 5% GST
  • Flexible Intermediate Bulk Container (FIBC), which was earlier rated at 5% or 12% based on the value – 12% GST
  • Sprinkler system consisting of nozzles, lateral and other components – 12% GST
  • Bagasse Board (plain or laminated) – 12% GST
  • Polypropylene Woven and Non-Woven Bags and PP Woven and Non-Woven Bags laminated with BOPP – 18% GST
  • Wood logs including the wood in rough / log used for pulping – 18% GST
  • Turbo Charger – 18% GST
  • Fish Meal, Meat Bone Meal, Bran, Sharps, Oil Cakes of various oil seeds, manure of determination of classification of vitamins, provitamins etc. as animal feed supplements – Applicable GST rates
  • Sattu or Chattua – Applicable GST rates

GST clarifications – Rate of Services

  • Parliament and State legislatures as well as Central and State Governments – RCM applicable
  • 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 – RCM applicable
  • Services provided by unregistered business facilitators (BF) to a bank and agents of business correspondents (BC) to other business correspondents – RCM applicable
  • Degrees / diplomas awarded by IIMs (effective 31st January 2018) – Exempt from GST
  • Services provided by IFC and ADB – Exempt from GST
  • Services provided by West Bengal Council / Board of Primary / Secondary / Higher Secondary Education for conduct of examination to its students – Exempt from GST
  • Supply of food and drinks by an educational institution when provided by the institution itself to its students, faculty and staff – Exempt from GST
  • Services provided by godown owner in case of lease with services, where the godown owner, besides leasing the warehouse, undertakes to carry out activities of storage and preservation of stored food grains – Exempt from GST
  • Supply of food and drinks by an educational institution when provided by any other person based on a contractual arrangement – 5% GST
  • Printing of Pictures, which many had assumed to fall under 12% GST bracket – 18% GST
  • Leasing of land and buildings along with equipment – 18% GST
  • License Fee Recovery (LFR) charged for leasing of pumps and reservoirs by the OMCs to petrol pump dealers – 28% GST

Other Important GST Clarifications

  • Incentives paid by RBI to Banks – under “Currency Distribution and Exchange Scheme” (CDES) will be taxable
  • Entry for multi-modal transport – which is rated at 12% GST, covers only transport of goods from one place to another place in India i.e. only domestic multi-modal transport
  • Nature of business establishments supplying food, drinks and other articles for human consumption – will not determine whether the supply is that of goods or services. Rather, it will depend on the constituents of each individual supply and whether the same satisfy the conditions / ingredients of a composite supply or a mixed supply
  • Banking company – is liable to pay GST on the entire value of service charge or fee charged to customers whether received via business facilitators / business correspondents or not

Agenda for future GST Council Meetings

Certain matters did come up for discussion at the 31st GST Council meeting, and it was decided that a call on the same will be taken in the next meeting in January 2019.

  • Extending Composition Scheme to Services – The GST rate and threshold limit will be proposed by the Law Committee and Fitment Committee
  • Lotteries – GST rate to be proposed by Committee of States
  • Residential Property – The GST rate to be proposed by the Law Committee and Fitment Committee
  • Threshold limit of exemption – To be proposed by GoM on MSMEs

Overall, a lot of GST clarifications and decisions have been announced by the GST Council, and the effect of the same will be seen over the next few days. The wait for the next GST Council meeting in January 2019 has already started, and it will be interesting to see what the government has up its sleeve to further simplify GST compliance for businesses and the common man.

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Pramit Pratim Ghosh

Author: Pramit Pratim Ghosh

Pramit, who has been with Tally since May 2012, is an integral part of the digital content team. As a member of Tally’s GST centre of excellence, he has written blogs on GST law, impact and opinions - for customer, tax practitioner and student audiences, as well as on generic themes such as - automation, accounting, inventory, business efficiency - for business owners.