SKP Group
SKP GST Update
29 September 2017
Recent developments in GST and other Indirect Taxes

The 21st GST Council meeting was held on 9 September 2017 in Hyderabad. The Government has subsequently issued several notifications to enforce the decision of the council.
 
The GST Council has rationalised GST rates for certain goods and services 

 
Description of goods and services Old rate New rate
Works contract services provided to the central government, state government, union territory, a local authority or a governmental authority by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of a civil structure or any original works:
  • Specifically excluded (Lower rate not applicable)
    A civil structure or any other original works meant predominantly to be used for commerce, industry, or any other business or profession;

     
  • Specifically included (Lower rate applicable)
    A structure meant predominantly for use as
    (i) An educational
    (ii) A clinical
    (iii) An art or cultural establishment
18% 12%
Walnuts, whether or not shelled 12% 5%
Duty Credit Scrips 12% 5%
Computer monitors not exceeding 20 inches, Set-top box for television 28% 18%
 

Tax deducted at source (TDS) provisions under GST
The government vide notification number 33/2017 Central tax has notified the provisions of sub-Section (1) of Section 51 of CGST act in respect of TDS by government entities -
  • The specified government entities shall be liable to deduct TDS at one percent from the payment made or credited to supplier of taxable goods or services or both
  • No deduction shall be made if the location of the supplier and the place of supply are in a State or Union territory which is different from the State or Union territory of registration of the recipient
  • Applicable where the total value of such supply, under a contract, exceeds two lakh and fifty thousand rupees
  • The effective date from which TDS is to be deducted will be notified separately
 TRAN-1 for claiming transitional credit
  • The due date of submitting the declaration in form GST TRAN-1 under Rule 117 is extended till 31 October 2017
  • TRAN-1 can be revised once on or before 31 October 2017 
Job workers having Turnover of less than 200,000
  • Earlier job workers having turnover of less than INR 200,000  (INR 100,000 in case of special category) who were engaged in inter-state taxable supply were required to obtain GST registration
  • Vide Notification number 7/2017 - Integrated Tax, such job workers are exempted from availing GST registration even though they are engaged in inter-state taxable supply
 Tax rate on branded packaged food items
  • The government has sought to plug the loophole of businesses avoiding the 5% GST on branded packaged food items by deregistering the brand name.
  • Henceforth, nil rate of GST will be applicable to such businesses only if they forgo all actionable claims and enforceable rights in court in relation to the brand.
  • Mere deregistration of a brand is not sufficient to fall under nil tax rate. 
The Maharashtra government has issued a trade circular which clarifies the following
  • Every person registered under Goods and Services Tax Act has to display a registration certificate at his principal place of business and any additional place of business. Also, GST identification number shall be displayed on the name board exhibited at entry of principal place of business and any additional place of business
  • Furthermore, any person registered under Section 10 as a composition dealer, shall specify the word “Composition taxable person not eligible to collect tax on supplies” on top of the bill of supply. Similarly, he shall also mention “composite taxable person” on the name board exhibited at entry of principal place of business and any additional place of business
  • Strict penalty will be levied for failure to issue an invoice in contravention of tax invoice rules
 Amendment to Customs Valuation Rules­
  • Earlier, landing charges were levied at 1% of assessable value on a notional basis.
  • Following the judgement in the case of M/s Wipro Ltd. Vs Assistant Collector of Customs-2015 (319) ELT 177 (S.C.) dated 16 April 2015, the government has amended the customs valuation rules that landing charges shall be levied on an actual basis and not on a notional basis.
  • ‘Place of Importation’ has been defined to mean the customs station where the goods are brought for being cleared for home consumption or for being removed for deposit in a warehouse. It has been further clarified that handling loading and unloading charges would not be included in valuation which is incurred at the place of importation. Only such charges would be included which are incurred for delivery to the place of importation.
  • All costs of transhipment of goods within India have been excluded from valuation to bring in uniformity across various modes of transhipments.
Transitional input credit under reverse charge mechanism on service tax paid after 30 June 2017
  • For those services which were received and paid before 1 July 2017 and in respect of which tax was paid on 5 or 6 July 2017, input tax credit can be claimed by filing a revised ST-3. An immediate and viable window has been made available for this purpose on ACES portal.
  • All original ST-3 return filed up to 31 August 2017 for the period April to June 2017 shall be deemed to have been filed on 31 August 2017. Accordingly, revised return can be filed up to 15 October 2017 that is within 45 days from filing of original ST-3 return.
  • Once details of such credit are reflected in revised ST-3, the assessee may include the same under GST TRAN-1.
SKP's comments
  • Given the frequent downtimes and sluggish behaviour of the GST online portal, the government has shown a liberal approach by extending deadlines for various compliance.
  • Reduction in rates of various goods and services is an effort to rationalise the skewed rates of certain goods while following the equivalence principle is keeping the rates at the same level as under the erstwhile regime.
  • The calibrated approach adopted by the government would succeed provided the response is quick and the online systems to implement the measures function effectively.
SKP
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This update contains general information which is provided on an “as is” basis without warranties of any kind, express or implied and is not intended to address any particular situation. The information contained herein may not be comprehensive and should not be construed as specific advice or opinion. This update should not be substituted for any professional advice or service, and it should not be acted or relied upon or used as a basis for any decision or action that may affect you or your business. It is also expressly clarified that this update is not intended to be a form of solicitation or invitation or advertisement to create any adviser-client relationship.

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