28th GST Council Meeting

The 28th GST Council Meeting was held on 21st July 2018 in New Delhi. In the 28th GST Council Meeting, the Government has slashed the GST rates on various goods and services and simplified the GST return filing mechanism, further improving ease of doing business. In this article, we look at the highlights of the decisions taken in the 28th GST Council Meeting.

GST Return Filing

In the 27th GST Council Meeting, the Government had announced that the procedure for filing GST return would be changed and a simplified GST return filing mechanism would be introduced. This move by the Government will tremendously improve ease of doing business as 93% of the taxpayers have a turnover of less than Rs 5 Cr and these taxpayers would benefit substantially from the simplification measures proposed improving their ease of doing business. Accordingly, the Government has provided more information about this mechanism in the 28th GST Council Meeting.

GST Returns of Small Taxpayers

The GST Council has approved quarterly GST return filing for small taxpayers having less than Rs.5 crores of turnover. Quarterly return filing will be similar to the monthly return; however, GST payments would still have to be made monthly. Only small taxpayers making B2C supply or making B2B and B2C supply can enrol for quarterly GST return filing. Small taxpayers involved in only B2B supply cannot file quarterly returns under this scheme.

Simplified Monthly Returns

The monthly returns that have to be filed by taxpayers has also been simplified. The new GST return would be simple with two main tables. In one table, the taxpayer would have to report sales and in another report purchases for availing input tax credit. Invoices can now be uploaded continuously by the seller and continuously viewed and locked by the buyer for availing input tax credit. This process would ensure that for the most part, return is automatically filled based on the invoices uploaded by the buyer and the seller. Simply put, the process would be “UPLOAD – LOCK – PAY” for most tax payers.

NIL Return Filing by SMS

A new facility would soon be introduced by the GSTN wherein taxpayers can file NIL GST Return by simply sending an SMS.

GST Migration Re-opened

Those businesses that had VAT or Service Tax or Central Excise registration were required to migrate and obtain GSTIN. This migration was also later closed. The 28th GST Council has now approved the proposal for opening the migration window for taxpayers, who received provisional IDs but could not complete the migration process. Those taxpayers who filed Part A of FORM GST REG-26, but not Part B can approach the jurisdictional Central Tax/State Tax nodal officers with the necessary details on or before 31st August, 2018 to complete the GST migration procedure. All such taxpayers who are now migrating will also be not levied a penalty for late filing GST return. However, such taxpayers will have to file GST return first along with the payment of late fee. On filing the GST return, the GSTN would provide credit by way of a reversal of the amount paid as late fees in the cash ledger under the tax head.

GST Rate Changes

The Government has reduced the GST rates for various goods and services across the board as follows:

Rate Reduction from 28% to 18%

Paints and varnishes (including enamels and lacquers)
Glaziers’ putty, grafting putty, resin cement
Refrigerators, freezers and other refrigerating or freezing equipment including water cooler, milk coolers, refrigerating equipment for leather industry, ice cream freezer etc.
Washing machines.
Lithium-ion batteries
Vacuum cleaners
Domestic electrical appliances such as food grinders and mixers & food or vegetable juice extractor, shaver, hair clippers etc
Storage water heaters and immersion heaters, hair dryers, hand dryers, electric smoothing irons etc
Televisions upto the size of 68 cm
Special purpose motor vehicles. e.g., crane lorries, fire fighting vehicle, concrete mixer lorries, spraying lorries
Works trucks [self-propelled, not fitted with lifting or handling equipment] of the type used in factories, warehouses, dock areas or airports for short transport of goods.
Trailers and semi-trailers.
Miscellaneous articles such as scent sprays and similar toilet sprays, powder-puffs and pads for the application of cosmetics or toilet preparations.

Rate Reduction from 28% to 12%

Fuel Cell Vehicle. Further, Compensation cess shall also be exempted on fuel cell vehicle.

Footwear

5% GST rate will now be applicable for footwear having a retail sale price up to Rs. 1000 per pair. 18% GST rate will be applicable for footwear having a retail sale price exceeding Rs.1000 per pair.

GST Rate Change Recommendations

The GST Council has also recommended for the following rate changes in the 28th GST Council Meeting:

Rate Reduction from 18% or 12% or 5% to 0%

Stone/Marble/Wood Deities
Rakhi [other than that of precious or semi-precious material of chapter 71]
Sanitary Napkins,
Coir pith compost
Sal Leaves siali leaves and their products and Sabai Rope
PhoolBhariJhadoo [Raw material for Jhadoo]
Khali dona.
Circulation and commemorative coins, sold by Security Printing and Minting Corporation of India Ltd [SPMCIL] to Ministry of Finance.

Rate Reduction from 12% to 5%

Chenille fabrics and other fabrics under heading 5801
Handloom dari
Phosphoric acid (fertilizer grade only).
Knitted cap/topi having retail sale value not exceeding Rs 1000

Rate Reduction from 18% to 12%

Bamboo flooring
Brass Kerosene Pressure Stove.
Hand Operated Rubber Roller
Zip and Slide Fasteners
Handbags including pouches and purses; jewellery box
Wooden frames for painting, photographs, mirrors etc
Art ware of cork [including articles of sholapith]
Stone art ware, stone inlay work
Ornamental framed mirrors
Glass statues [other than those of crystal]
Glass art ware [ incl. pots, jars, votive, cask, cake cover, tulip bottle, vase ]
Art ware of iron
Art ware of brass, copper/ copper alloys, electro plated with nickel/silver
Aluminium art ware
Handcrafted lamps (including panchloga lamp)
Worked vegetable or mineral carving, articles thereof, articles of wax, of stearin, of natural gums or natural resins or of modelling pastes etc, (including articles of lac, shellac)
Ganjifa card

Rate Reduction from 18% to 5%

Ethanol for sale to Oil Marketing Companies for blending with fuel
Solid bio fuel pellets

Rate Reduction from 12% to 5%

Handmade carpets and other handmade textile floor coverings (including namda/gabba)
Handmade lace
Hand-woven tapestries
Hand-made braids and ornamental trimming in the piece
Toran

Redund of Accumulated Input Tax Credit

In respect of fabrics, GST is applicable at the rate fo 5% subject to the condition that refund of accumulated ITC on account of inversion will not be allowed. However, considering the difficulty faced by the Fabric sector on account of this condition, the GST Council has recommended for allowing refund to fabrics on account of inverted duty structure. The refund of accumulated ITC would be allowed only with the prospective effect.