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23rd GST Council Meeting – Summary of Decisions and Changes

As the day concluded, the direction of the Indian economy was re-defined and re-tuned with the biggest tax reshuffling since GST’s inception and a bunch of minor and major tweaks were done across the key  elements of the GST regulations, in the 23rd GST Council meeting which ended in Guwahati on November 10th, 2017. All the changes will take effect from November 15th, 2017.

Let’s look at the entire scenario under the following headings:

  • Changes in the tax slabs
  • Changes in the composition scheme
  • Relaxed deadlines for filing returns
  • Softened fines on late filing
  • Miscellaneous announcements

Changes in the tax slabs:-

Taxes on over 200 items have been squeezed and a whopping 88% of the items from the highest slab of 28% have been switched to 18%. Out of the 228 items in the 28% category, only 50 have been retained and the rest 178 have been slid downwards to different tax brackets. 2 items saw a dip from 28% to 12%, 6 items from 18% to 5%, 8 items from 12% to 5% and 6 items from 5% to nil.

A quick look at the entire reshuffling:

  • Items which moved from 28% to 18%:

Wires | Cables | Insulated conductors | Electrical insulators | Electrical plugs | Switches | Sockets | Fuses | Relays | Electrical connectors | Electrical boards, panels, consoles, cabinets | Particles of fibre board and ply wood | Articles of wood, wooden frames, paving blocks | Furniture | Mattresses | Beddings and similar furnishing | Trunks | Suitcases | Vanity cases | Brief cases | Travelling bags and other hand bags | Cases | Detergents | Washing and cleaning preparations | Liquid or cream for washing the skin | Shampoos | Hair creams | Hair dyes (natural, herbal or synthetic) and similar other goods | Henna powder or paste not mixed with any other ingredient | Pre-shave, shaving or after-shave preparations | Personal deodorants | Bath preparations | Perfumery, cosmetic or toilet preparations | Room deodorizer | Perfumes and toilet waters | Beauty or make-up preparations | Fans | Pumps | Compressors Lamp and light fittings | Primary cell and primary batteries | Sanitary ware and parts thereof of all kinds | Articles of plastic | Floor coverings | Bath showers | Sinks | Washbasins | Seats | Sanitary ware of plastic |Slabs of marbles and granite| Goods of marble and granite such as tiles | Ceramic tiles of all kinds |Miscellaneous articles such as vacuum flasks | Lighters | Wrist watches | Clocks | Watch movement | Watch cases | Straps parts | Articles of apparel & clothing accessories of leather, guts, fur skin, artificial fur and other articles such as saddlery and harness for any animal | Articles of cutlery, stoves, cookers and similar non electric domestic appliances | Razor and razor blades | Multi-functional printers | Cartridges | Office or desk equipment | Doors | Windows and frames of aluminium | Articles of plaster such as boards and sheets |Articles of cement or concrete or stone and artificial stone|Articles of asphalt or slate | Articles of mica | Ceramic flooring blocks | Pipes | Conduits | Pipe fittings |Wall papers and wall covering | Glass of all kinds and articles thereof such as mirror, safety glass, sheets, glassware | Electrical, electronic weighing machinery | Fire extinguishers and fire extinguishing charge |Fork lifts | Lifting and handling equipment’s | Bulldozers | Excavators | Loaders | Road Rollers | Earth moving and leveling machinery | Escalators | Cooling towers | Pressure Vessels | Reactors Crankshaft for sewing machine | Tailor’s dummies | Bearing housings | Gears and gearing | Ball or roller screws | Gaskets | Electrical apparatus for radio and television broadcasting | Sound recording or reproducing apparatus | Signalling, safety or traffic control equipment for transports | Physical exercise equipment | Festival and carnival equipment | Swings | Shooting galleries | Roundabouts | Gymnastic and athletic equipment | All musical instruments and their parts | Artificial flowers | Foliage and artificial fruits | Explosives | Anti-knocking preparations | Fireworks | Cocoa | Butter | Fat | Oil powder | Extract essence ad concentrates of coffee | Miscellaneous food preparations | Chocolates | Chewing gums | Bubble gums | Malt extract and food preparations of flour, groats, meal, starch or malt extract | Waffles and wafers coated with chocolate or containing chocolate |Rubber tubes and miscellaneous articles of rubber | Goggles | Binoculars | Telescope | Cinematographic cameras and projectors | Image projectors | Microscopes | Specified laboratory equipment | Specified scientific equipment such as for meteorology, hydrology, oceanography and geology | Solvents | Thinners | Hydraulic fluids and anti-freezing preparation.

  •  Items which moved from 28% to 12%:

Wet grinders consisting of stone as grinder | Tanks and other armored fighting vehicles

  • Items which moved from 28% to 5%:

Certain aircraft engines | Aircraft tyres and seats

  • Items which moved from 18% to 12%:

Condensed milk | Refined sugar and sugar cubes | Pasta Curry paste | Mayonnaise and salad dressings | Mixed condiments and mixed seasoning diabetic food | Medicinal grade oxygen | Printing ink | Hand bags and shopping bags of jute and cotton | Hats (knitted or crocheted) | Parts of specified agricultural, horticultural, forestry, harvesting or threshing machinery | Specified parts of sewing machine | Spectacles and frames | Furniture wholly made of bamboo or cane.

  • Items which moved from 18% to 5%:

Puffed rice chikki, peanut chikki, sesame chikki, revdi, tilrevdi, khaza, kazuali, groundnut sweets gatta, kuliya | Flour of potatoes put up in unit container bearing a brand name | Chutney powder | Fly ash | Sulphur recovered in refining of crude | Fly ash aggregate with 90% or more fly ash content.

  • Items which moved from 12% to 5%:

Desiccated coconut | Narrow woven fabric including cotton newar [with no refund of unutilized input tax credit], idli, dosa batter | Finished leather, chamois and composition leather | Coir cordage and ropes, jute twine and coir products | Fishing net and fishing hooks | Worn clothing |Fly ash brick.

  • Items which moved from 5 to 0%:

Guar meal | Hop cone (other than grounded, powdered or in pellet form) | Certain dried vegetables such as sweet potatoes, maniac | Unworked coconut shell | Fish frozen or dried (not put up in unit container bearing a brand name) | Khandsari sugar.

  • Item which moved from 3% to 0%:

Bangles of lac / shellac

A relaxation, which the nation was optimistically looking up to, was correcting the taxation slab on the restaurants [AC/non AC]. The government has declared, that it will not differentiate between an AC and a non AC restaurant and both of them will be flatly charged at 5 %. However, the category is excluded from availing the benefits of the Input Tax Credit. The in-house restaurants in the 5 star hotels and the outdoor catering will be taxed at 18% with Input Tax Credit entitlement. The annual revenue implication to the government for these tax reduction changes to take effect will be around Rs. 20,000 crores.

Changes in the composition scheme:-

The bulleted points are as follows:

  • Manufacturers and traders would now operate at a standard rate of 1%
  • The threshold to opt GSTR-3B along with payment of tax will now need to be filed by 20th of the next month till March 2018
  • Threshold for the composition scheme has been increased to Rs. 1.5 crores from the current limit of Rs. 1 crore.

Relaxed deadlines for filing returns:-

The bulleted points are as follows:

  • GSTR-3B along with payment of tax will now need to be filed by 20th of the next month till March 2018
  • Taxpayers have been divided into two categories for filing GSTR-1 till March 2018. The two categories are:- Businesses with an annual aggregate turnover of up to 1.5 crores will file GSTR-1 quarterly.
    Period New Due Date

    July- September

    31-Dec-2017

    October- December

    15-Feb-2018

    January- March

    30-Apr-2018

     

    – Businesses with an annual aggregate turnover of above 1.5 crores will file GSTR-1 monthly.

    Period

    New Due Date

    July – October

    31-Dec-2017

    November

    10-Jan-2018

    December

    10-Feb-2018

    January

    10-Mar-2018

    February

    10-Apr-2018

    March

    10-May-2018

  • The due dates for submitting certain forms has also been extended.

Softened fines on late filing:-

The bulleted points are as follows:

  • Fine for late returns has been slashed by 90% to a mere Rs. 20 per day from Rs. 200 per day for a taxpayer with nil liability.
  • Late fine for not submitting the GSTR-3B within due dates for the months of July, August and September 2017 has been waived off.

Miscellaneous announcements:-

  • Exports of services to Nepal and Bhutan which is already exempted from GST is now eligible to claim Input Tax Credit.
  • Every exporter will get a e-wallet from April 2018, which would carry a notional amount for credit. The refund which they will eventually get will be offset from that amount.

The trade experts and industry watchers see the overall shuffling as a step in the right direction and the government’s commitment and intention to ease out and make GST an easily gulp able affair.

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