07 October 2019

Decisions of the 37th GST Council meeting notified

The Government has issued various notifications to implement the decisions taken in the 37th GST Council meeting. We have captured the key amendments along with the relevant notifications in this alert.

Change in GST rates

Commodity Old rate Revised rate Notification ref.
Marine fuel 0.5% (FO) 18% 5% Notification No. 14/2019-Central Tax (Rate) dated 30 September 2019
Caffeinated beverages 18% 28%*
Cut and polished semi-precious stones 3% 0.25%
Specified goods for petroleum operations under Hydrocarbon Exploration Licensing Policy or Open Acreage Licensing Policy Various rates 5% Notification No. 16/2019-Central Tax (Rate) dated 30 September 2019
Import of specified defense goods not being manufactured indigenously Various rates Exempt Notification No. 35/2019-Customs dated 30 September 2019
*Additional 12% as GST Compensation Cess as per Notification No. 2/2019-Compensation Cess (Rate) dated 30 September 2019.
 
Service Old rate Revised rate Notification ref.
Hotel accommodation – Daily tariff above INR 7500  28% 18%
 
Notification No. 20/2019-Central Tax (Rate) dated 30 September 2019
Hotel accommodation – Daily tariff of more than INR 1000 but up to INR 7500 18%/12% (based on tariff)  12%
Outdoor catering other than in premises having a daily tariff of a unit of accommodation of more than INR 7500 18% 5% without ITC
Machine job work in the engineering industry (other than bus bodybuilding) 18% 12%
Intermediary services when both supplier and recipient of goods are located outside the taxable territory 18% Exempt Notification No. 20/2019-Integrated Tax (Rate)
 
Other amendments having implications on taxability

Research and development services to be treated as exports
  • The place of supply for supply of specified research and development services pertaining to the pharmaceutical sector should be the location of the recipient of services, provided such supply fulfills the following conditions:
    • The service provider is located in India and the recipient is located outside India;
    • All other conditions to qualify as ‘export of services’ are fulfilled. 
  • The list of specified services includes the following:
    • Integrated discovery and development;
    • Evaluation of the efficacy of new chemical/ biological entities in animal models of disease
    • Drug metabolism and pharmacokinetics of new chemical entities
    • Clinical trials etc.
[Notification No. 4/2019-Integrated Tax (Rate) dated 30 September 2019]
 
Option to pay GST at transaction value on disposal of specified goods used in petroleum operations
An option has been provided to pay GST at the rate of 18% on the transaction value on disposal of specified goods belonging to petroleum operations, provided a certificate is obtained from the specified officer certifying that the said goods are non-serviceable and have been mutilated before disposal.
 
[Notification No. 16/2019-Central Tax (Rate) dated 30 September 2019]
 
Amendments to goods/services under RCM
The government vide Notification No. 22/2019-Central Tax (Rate) dated 30 September 2019 has made the following changes/additions to goods/services covered under Reverse Charge Mechanism (RCM):
  • Renting of motor vehicle brought under RCM
    The services of renting of a motor vehicle have been brought under RCM in cases where the following conditions are fulfilled:
    • Service provider - Person other than a body corporate, paying GST at 5% on renting of motor vehicles, subject to input tax credit restrictions;
    • Service recipient - Body corporate located in the taxable territory.
       
  • RCM on author's services made optional
    Authors have been provided an option to charge GST under forward charge on the supply of services of transfer or permitting the use or enjoyment of copyright, subject to fulfillment of certain conditions.

     
  • Lending of securities brought under RCM
    GST on services of lending of securities under Securities Lending Scheme, 1997 of Securities and Exchange Board of India should be paid by the recipient of services i.e. the borrower of securities.

     
  • Supply of cement by unregistered dealer compulsorily under RCM - Notification No. 24/2019-Central Tax (Rate) dated 30 September 2019
Supply of cement by unregistered dealers has been compulsorily brought under RCM. Therefore, builders/promoters would be required to pay GST under RCM on supply of cement irrespective of whether their supplies from registered dealers cross the 80% threshold criteria.
 
Note: The above changes have been made applicable with effect from 1 October 2019.
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