The Finance minister’s declaration of slashing the corporate tax rate from 30% to 25.17% brought a major rise in the Indian equity market. Many other changes and reforms were addressed by the FM in the press conference held on 20thSeptember 2019 before the commencement of the 37th GST council meet. Against the backdrop of economic growth hitting a six-year low of 5% for the first quarter of the current fiscal, these reforms  are believed to help the economy get a much-needed push.

Let us take a look at the major issues and sectors dealt and discussed during the 37th GST council meeting held in Panaji, Goa on 20th September 2019.

GST Council Recommendations

The following recommendations relating to legal and procedural changes where made during the 37th GST council meeting

The sectors dealt and discussed  during the meet are discussed under the following heads:

Goods

The council brought some key changes in the tax rates charged on certain goods. For instance, there is no tax levied  on plates and cups made of flowers, leaves and bark . Whereas the council elevated the tax on caffeinated beverages from 18% to 28%+12% cess.

This table gives a brief idea about the GST Rate Revision :

GoodsCurrent RateNew Rate
Plates and cups made of flowers, leaves and bark5%Nil
Dried tamarind5%Nil
Caffeinated Beverages18%28%+12% cess
Parts of Slide Fasteners18%12%
Supplies to Railways5%12%
Marine Fuel 0.5% (FO)18%5%
Wet Grinders(consisting stone as a grinder)12%5%
Cut and polished semi- precious stones3%0.25%
Woven/ Non-woven polyethylene bags18%12%

The rate changes shall be made effective with effect from 1st October,2019

GST Compensation Cess

Item Current Rate New Rate
Cess on Petrol Motor Vehicles (Capacity of 10-13 passengers) 15% 1%
Cess on Diesel Motor Vehicles (Capacity of 10-13 passengers) 15% 3%

Goods that are exempted from GST

Item Current Rate Until
Import of specific defence equipment not manufactured indigenously

NIL 2024
Silver imported for re-export as jewellery NIL N/A

Miscellaneous changes :

  • Aerated drink manufacturers removed from composition scheme
  • Restrictions on claiming refund of composition cess on tobacco products
  • Uniform GST rate of 12% to be levied on polypropylene bags and sacks used for packing of goods
  • Jewellery exports to now attract zero GST

Services

This table gives a brief idea about the GST Rate Revision related to service sector :

Hospitality & Tourism

 For Transaction value per unit per day Current Rate New Rate
Hotels (Room Tariff of  Rs 1000 or less) nil nil
Hotels (Room Tariff from Rs 1,001 to Rs 7,499) 18% 12%
Hotels (Room Tariff of Rs.7500 or above) 28% 18%
Outdoor Catering (without ITC) 18% 5%

Job Work

Service Current Rate New Rate
Diamond Job work 5% 1.50%
Other Job work 18% 12%

The following are the service sectors that are exempted from GST

Warehousing : service of proving storage  facilities to store agricultural products like cereals, pulses , coffee, tea etc. exempted from GST.

Transportation:exemption of GST on export freight by air or sea by another year, i.e. till 30.09.2020.

Insurance:BANGLA SHASYA BIMA” (BSB) crop insurance scheme is exempted

Export:exemption on services provided by an intermediary to a supplier of goods or recipient of goods when both the supplier and recipient are located outside the taxable territory.

Law and Procedure related changes

The GST Council, in its meeting, recommended the following Law & Procedure related changes :

Following relaxations given to MSME’s with regards to filing returns for FY 2017-18 and FY 2018-19

  • Composition Taxpayers  are not required to file FORM GSTR-9A for the said tax periods;
  • Filing annual returns for taxpayers with annual turnover of up to Rs 2 crore to be made optional for FY 18 & FY 19

Miscellaneous changes :

  • Simplification of forms GSTR-9, GSTR-9A & GSTR-9C
  • Extension of last date for filing of appeals against orders of Appellate Authority before theGST Appellate Tribunal
  • Restrictions to be imposed on recipients in availing input tax credit in case details of outward supply are not provided
  • Council amended rules regarding Refund by Appellate Authority.
  • Council amended rules regarding GST Practitioners and Consumer Welfare Fund

Closing remarks

The focus of the meeting was taking steps that could help in  boosting the economy by providing incentives to the corporate sector , thus slashing of corporate tax was the highlight. One can very clearly see that the government is trying to promote exports and supporting small and medium industries by giving them relief  in filing the annual tax return if their annual threshold is 2 crore or less for financial year 2018-19. It can also be inferred that the government is determined to promote tourism in the country as it can play a critical role in reducing the economic downfall to some extent. Hence the GST rates levied on hotels have been visibly reduced.

On the other hand, caffeinated beverages would become expensive , and aerated drinks have been removed from the compensation scheme.

However , going against the speculations there was no major change seen the in-automobile sector nor any relief was given to biscuit manufacturers.