Sunday 8 October 2017

CLARIFICATION

Sr.
No.
Questions/ Clarifications sought
Clarifications
1
Will GST be charged on actual tariff or declared tariff for accommodation services? 

Declared or published tariff is relevant only for determination of the tax rate slab. GST will be payable on the actual amount charged (transaction value).

2
What will be GST rate if cost goes up (more than declared tariff) owing to additional bed?

GST rate would be determined according to declared tariff for the room, and GST at the rate so determined would be levied on the entire amount charged from the customer. For example, if the declared tariff is Rs. 7000 per unit per day but the amount charged from the customer on account of extra bed is Rs. 8000, GST shall be charged at 18% on Rs. 8000. 

3
Where will the declared tariff be published?

Tariff declared anywhere, say on the websites through which business is being procured or printed on tariff card or displayed at the reception will be the declared tariff. In case different tariff is declared at different places, highest of such declared tariffs shall be the declared tariff for the purpose of levy of GST.

4
Same room may have different tariff at different times depending on season or flow of tourists as per dynamic pricing. Which rate to be used then?

In case different tariff is declared for different seasons or periods of the year, the tariff declared for the season in which the service of accommodation is provided shall apply.

5
If tariff changes between booking and actual usage, which rate will be used?

Declared tariff at the time of supply would apply.

6
GST at what rate would be levied if an upgrade is provided to the customer at a lower rate?
If declared tariff of the accommodation provided by way of upgrade is Rs 10000, but amount charged is Rs 7000, then GST would be levied @ 28% on Rs 7000/-.
7
Vide notification No. 11/2017-Central Tax (Rate) dated the 28th June 2017 entry 34, GST on the service of admission into casino under Heading 9996 (Recreational, cultural and sporting services) has been levied @ 28%. Since the Value of supply rule has not specified the method of determining taxable amount in casino, Casino Operators have been informed to collect 28% GST on gross amount collected as admission charge or entry fee. The method of levy adopted needs to be clarified.
Relevant part of entry 34 of the said CGST notification reads as under: 
 “Heading 9996 (Recreational, cultural and sporting services) - …
(iii) Services by way of admission to entertainment events or access to amusement facilities including exhibition of cinematograph films, theme parks, water parks, joy rides, merry go rounds, go-carting, casinos, race-course, ballet, any sporting event such as Indian Premier League and the like.  - 14%
(iv)…
(v) Gambling. - 14 %”
As is evident from the notification, “entry to casinos” and “gambling” are two different services, and GST is leviable at 28% on both these services (14% CGST and 14% SGST) on the value determined as per section 15 of the CGST Act. Thus, GST @ 28% would apply on entry to casinos as well as on betting/ gambling services being provided by casinos on the transaction value of betting, i.e. the total bet value, in addition to GST levy on any other services being provided by the casinos (such as services by way of supply of food/ drinks etc. at the casinos). Betting, in pre-GST regime, was subjected to betting tax on full bet value.
8
The provision in rate schedule notification No. 11/2017-Central Tax (Rate) dated the 28th June 2017 does not clearly state the tax base to levy GST on horse racing. This may be clarified. 
GST would be leviable on the entire bet value i.e. total of face value of any or all bets paid into the totalisator or placed with licensed book makers, as the case may be.
Illustration: If entire bet value is Rs. 100, GST leviable will be Rs. 28/-.
9
Whether for the purpose of entries at Sl. Nos. 34(ii) [admission to cinema] and 7(ii)(vi)(viii) [Accommodation in hotels, inns, etc.], of notification 11/2017-CT (Rate) dated 28th June 2017, price/ declared tariff includes the tax component or not?
Price/ declared tariff does not include taxes. 

10
Whether rent on rooms provided to inpatients is exempted? If liable to tax, please mention the entry of CGST Notification 11/2017-CT(Rate)

Room rent in hospitals is exempt.
11
What will be the rate of tax for bakery items supplied where eating place is attached - manufacturer for the purpose of composition levy?
Any service by way of serving of food or drinks including by a bakery qualifies under section 10 (1) (b) of CGST Act and hence GST rate of composition levy for the same would be 5%.
12
Whether homestays providing accommodation through an Electronic Commerce Operator, below threshold limit are exempt from taking registration?
Notification No. 17/2017-Central Tax (Rate), has been issued making ECOs liable for payment of GST in case of accommodation services provided in hotels, inns guest houses or other commercial places meant for residential or lodging purposes provided by a person having turnover below Rs. 20 lakhs (Rs. 10 lakhs in special category states) per annum and thus not required to take registration under section 22(1) of CGST Act. Such persons, even though they provide services through ECO, are not required to take registration in view of section 24(ix) of CGST Act, 2017.
13
Whether legal services other than representational services provided by an individual advocate or a senior advocate to a business entity are liable for GST under reverse charge mechanism?
Yes. In case of legal services including representational services provided by an advocate including a senior advocate to a business entity, GST is required to be paid by the recipient of the service under reverse charge mechanism, i.e. the business entity.
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GSTR-3B FOR JULY, 2017

A.              Registered persons planning not to avail transitional credit for discharging the tax liability for the month of July, 2017 or new registrants who do not have any transitional credit to avail need to follow the steps as detailed below:

I.      Calculate the tax payable as per the following formula: 
 Tax payable = (Output tax liability + Tax payable under reverse charge) – input tax credit availed for the month of July, 2017;   
II.    Tax payable as per (i) above to be deposited in cash on or before 20.08.2017 which will get credited to electronic cash ledger;
III. File the return in FORM GSTR-3B on or before 20.08.2017 after discharging the tax liability by debiting the electronic credit or cash ledger. 

B.              Registered persons planning to avail transitional credit for discharging the tax liability for the month of July, 2017 need to follow the steps as detailed below:

I.      Calculate the tax payable as per the following formula: 
Tax payable = (Output tax liability + Tax payable under reverse charge) – (transitional credit + input tax credit availed for the month of July, 2017);   
II.    Tax payable as per (i) above to be deposited in cash on or before 20.08.2017 which will get credited to electronic cash ledger;
III. File FORM GST TRAN-1 (which will be available on the common portal from 21.08.2017) before filing the return in FORM GSTR-3B;
IV.  In case the tax payable as per the return in FORM GSTR-3B is greater than the cash amount deposited as per (ii) above, deposit the balance in cash along with interest @18% calculated from 21.08.2017 till the date of such deposit. This amount will also get credited to electronic cash ledger;

V.    File the return in FORM GSTR-3B on or before 28.08.2017 after discharging the tax liability by debiting the electronic credit or cash ledger.  
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NEW SERVICE RATE ON 6.10.17

Relief to small units:
 GST rates on job work services is being rationalised as follows: -

S.No
Description of Service
Rate
1
Job work services in relation to all products falling in Chapter 71 (including imitation jewellery)
5%
2
Job work services in relation to food and food products falling under Chapters 1 to 22 of the HS Code (except packing of processed milk into packets)
5%
3
Job work services in relation to products falling under Chapters 23 of the HS Code except dog and cat food put up for retail sale (CTH 23091000)
5%
4
Job work in relation to manufacture of umbrella
12%
5
Job work in relation to manufacture of clay bricks falling under CTH 69010010
5%
6
Services by way of printing on job work basis or on goods belonging to others in relation to printing of all goods falling under Chapter 48 or 49, which attract GST @ 5% or Nil [Heading 9988]
5% 
7
Services by way of printing on job work basis or on goods belonging to others in relation to printing of all goods falling under Chapter 48 or 49, which attract GST @ 12% [Heading 9988]
12%
8
Services by way of printing on job work basis or on goods belonging to others in relation to printing of goods falling under Chapter 48 or 49, other than those covered by (6) and (7) above, [Heading 9988]
18%
9
Services by way of printing in relation to printing of all goods falling under Chapter 48 or 49, which attract GST @ 5% or Nil, where only content is supplied by the publisher and the physical inputs including paper used for printing belong to the printer [(Heading 9989)]
12%
10
Services by way of printing of all goods falling under Chapter 48 or 49 which attract GST @12%, where only content is supplied by the publisher and the physical inputs including paper used for printing belong to the printer
12%
11
Services by way of printing of all goods falling under Chapter 48 or 49 which attract GST @18% or above, where only content is supplied by the publisher and the physical inputs including paper used for printing belong to the printer
18%
12
To issue a clarification with regard to classification of printing products/services.

1.     If a dealer who makes supplies of goods and services referred to in clause (b) of paragraph 6 of Schedule II of CGST Act and /or also receives interest income or makes supply of any exempt service, (s)he will not be ineligible for the Composition Scheme under Section 10 provided all other conditions are met. Further, in computing his aggregate turnover in order to determine his eligibility for composition scheme, interest income and value of supply of any exempt services shall not be taken into account. Removal of Difficulty order under section 172 of CGST/SGST/UTGST Act will be issued.  

2.     The services provided by a GTA to an unregistered person (under GST law) including unregistered casual taxable person other than the recipients liable to pay tax on GTA services under reverse charge shall be exempted from GST.

4.1            Leasing of vehicles purchased and leased prior to 1.7.2017, shall be taxed at 65% of the applicable GST + Cess rate.
         This reduced ate would be applicable for a period of 3 years with effect from 1st July 2017;
         4.2            The vehicles covered by the above leases (i.e. leases of vehicles 
                    purchased and leased prior to 1.7.2017), when
          disposed off/ sold shall also be taxed at 65% of the applicable GST + Cess rate. This reduced rate would be applicable           
          for a period of 3 years with effect from 1st July 2017;

4.3            Sale/supply of vehicles by a registered person, who had procured the vehicle prior to 1st July 2017 and has not availed
         input tax credit of central excise duty, VAT or any other taxes paid on such vehicles, would be taxed at 65% of the
         applicable GST + Cess rate. This reduced rate would be applicable for a period of 3 years with effect from 1st July 2017.
         4.4            Sale by way of auction etc. of used vehicles, seized and  
                  confiscated goods, scrap etc by Central Government, State
          Government, Union Territory or a local authority, to any person, to be subjected to GST under reverse charge under
          section 9 (3) of the CGST Act.
 5. Transport of passengers by motor cab/ renting of motor cab:-
(i)      GST of 5% without ITC and 12% with full ITC available to transport of passengers by motor cab/ renting of motor cab shall be                            extended to any motor vehicle;
(ii)    ITC of input services shall be allowed in the same line of business at GST rate of 5%
 Other rate changes in services:
1.               Works contract services involving predominantly earth works (that is, constituting more than 75% of the value of the works contract) supplied to Central Government, State Governments, Local Authority, Governmental Authority or Government Entity shall be taxed at 5%.
2.               To expand the existing definition of Governmental Authority so as to include any authority set up to carry out any functions entrusted to a Panchayat under Article 243G of the Constitution.
3.               Supply of service or goods by a Government Entity to Central Government, State Government, Union Territory, Local Authority or any person specified by them against consideration received from them in the form of grants, shall be exempted.  “Government Entity” shall be defined as an authority or a board or any other body including a society, trust, corporation which is, -
(i)          set up by an Act of Parliament or State Legislature, or 
(ii)        established by any government,  with 90% or more participation by way of equity or control, to carry out a function entrusted by the Central Government, State Government or a local authority.

4.               The reduced rate of 12% on specified works contract services supplied to the Central Government, State Government, Union Territory, Local Authority and Governmental Authority shall be extended to a Government Entity, where such specified works contract services have been procured by the government entity in relation to the work entrusted to it by the Central Government, State Government, Union Territory or Local Authority.
5.               GST shall be levied @ 12% on works contract services in respect of offshore works contract relating to oil and gas exploration and production (E&P) in the offshore area beyond 12 nautical miles.

6.               GST shall be levied @ 12% with ITC or 5% without ITC for transportation of natural gas through pipeline.
 7.               Exemption to annuity paid by NHAI (and State authorities or State owned development corporations for construction of roads) to concessionaires for construction of public roads.
8.               Upfront amount (called as premium, salami, cost, price, development charges or by any other name)  payable in respect of   service, by way of granting of long term lease  of thirty years, or more) of industrial plots or plots for development of infrastructure for financial business, provided by the State Government Industrial Development Corporations/ Undertakings or any other entity having 50% or more ownership  of Central Government, State Government, Union Territory to (a) industrial units or (b) developers in any industrial or financial business area, may be exempted from GST .
 9.               The services provided by Overseeing Committee members to RBI shall be taxed under the reverse charge mechanism under section 9(3) of the CGST Act, 2017.


10.            Some other technical changes/amendments shall be made in notifications issued under CGST, IGST, UTGST and SGST Acts. 
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NEW AMENDMENT ON 6.10.2017

The GST Council, in its 22nd meeting held at New Delhi on 6th October 2017, has recommended the following facilitative changes to ease the burden of compliance on small and medium businesses:

Composition Scheme

1.    The composition scheme shall be made available to taxpayers having annual aggregate turnover of up to Rs. 1 crore as compared to the current turnover threshold of Rs. 75 lacs. This threshold of turnover for special category States, except Jammu & Kashmir and Uttarakhand, shall be increased to Rs. 75 lacs from Rs. 50 lacs. The turnover threshold for Jammu & Kashmir and Uttarakhand shall be Rs. 1 crore. The facility of availing composition under the increased threshold shall be available to both migrated and new taxpayers up to 31.03.2018. The option once exercised shall become operational from the first day of the month immediately succeeding the month in which the option to avail the composition scheme is exercised. New entrants to this scheme shall have to file the return in FORM GSTR-4 only for that portion of the quarter from when the scheme becomes operational and shall file returns as a normal taxpayer for the preceding tax period. The increase in the turnover threshold will make it possible for greater number of taxpayers to avail the benefit of easier compliance under the composition scheme and is expected to greatly benefit the MSME sector.

2.    Persons who are otherwise eligible for composition scheme but are providing any exempt service (such as extending deposits to banks for which interest is being received) were being considered ineligible for the said scheme. It has been decided that such persons who are otherwise eligible for availing the composition scheme and are providing any exempt service, shall be eligible for the composition scheme.

3.    A Group of Ministers (GoM) shall be constituted to examine measures to make the composition scheme more attractive.

Relief for Small and Medium Enterprises

4.    Presently, anyone making inter-state taxable supplies, except inter-State job worker, is compulsorily required to register, irrespective of turnover. It has now been decided to exempt those service providers whose annual aggregate turnover is less than Rs. 20 lacs (Rs. 10 lacs in special category states except J & K) from obtaining registration even if they are making inter-State taxable supplies of services. This measure is expected to significantly reduce the compliance cost of small service providers.

5.    To facilitate the ease of payment and return filing for small and medium businesses with annual aggregate turnover up to Rs. 1.5 crores, it has been decided that such taxpayers shall be required to file quarterly returns in FORM GSTR-1,2 & 3 and pay taxes only on a quarterly basis, starting from the third quarter of this financial year i.e. October-December, 2017. The registered buyers from such small taxpayers would be eligible to avail ITC on a monthly basis. The due dates for filing the quarterly returns for such taxpayers shall be announced in due course. Meanwhile, all taxpayers will be required to file FORM GSTR-3B on a monthly basis till December, 2017. All taxpayers are also required to file FORM GSTR-1, 2 & 3 for the months of July, August and September, 2017. Due dates for filing the returns for the month of July, 2017 have already been announced. The due dates for the months of August and September, 2017 will be announced in due course.

6.    The reverse charge mechanism under sub-section (4) of section 9 of the CGST Act, 2017 and under sub-section (4) of section 5 of the IGST Act, 2017 shall be suspended till 31.03.2018 and will be reviewed by a committee of experts. This will benefit small businesses and substantially reduce compliance costs.

7.    The requirement to pay GST on advances received is also proving to be burdensome for small dealers and manufacturers. In order to mitigate their inconvenience on this account, it has been decided that taxpayers having annual aggregate turnover up to Rs. 1.5 crores shall not be required to pay GST at the time of receipt of advances on account of supply of goods. The GST on such supplies shall be payable only when the supply of goods is made.

8.    It has come to light that Goods Transport Agencies (GTAs) are not willing to provide services to unregistered persons. In order to remove the hardship being faced by small unregistered businesses on this account, the services provided by a GTA to an unregistered person shall be exempted from GST.

Other Facilitation Measures

9.    After assessing the readiness of the trade, industry and Government departments, it has been decided that registration and operationalization of TDS/TCS provisions shall be postponed till 31.03.2018.

10.          The e-way bill system shall be introduced in a staggered manner with effect from 01.01.2018 and shall be rolled out nationwide with effect from 01.04.2018. This is in order to give trade and industry more time to acclimatize itself with the GST regime.

11.          The last date for filing the return in FORM GSTR-4 by a taxpayer under composition scheme for the quarter July-September, 2017 shall be extended to 15.11.2017. Also, the last date for filing the return in FORM GSTR-6 by an input service distributor for the months of July, August and September, 2017 shall be extended to 15.11.2017.


12.          Invoice Rules are being modified to provide relief to certain classes of registered persons. 
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