The GST Council in its 37th meeting headed by Union finance minister on 20th September, 2019 has announced the reduction of GST rates on few items, ITC eligibility criteria, exemptions and clarifications on connected issues. The new tax rates shall be in effect from 1st of October 2019.
Key Highlights from the Council meeting are:
- There will be no GST on Hotels with room tariffs of up to Rs 1,000 need, For those with tariffs of Rs 1,001-7,500, the tax will be 12%, and for those offering rooms at more than Rs 7,500 a night, the levy will be 18%.
- On Outdoor catering with tariff for accommodation of Rs. 7501, 5% of taxes shall be payable instead of 18%. The catering services within the premises with tariff of unit of accommodation of Rs 7501 shall remain at 18%.
- GST council has reduced tax rates on job work in diamond industry to 1.5% from 5% and for machine job work in engineering industry the rates has been reduced from 18% to 12%. However, supply of job work in relation to bus body building would remain 18%.
- The services provided by way of storage or warehousing of certain food supplies has been exempted from GST prospectively.
- The validity of conditional exemption of GST has been increased on export freight by air or sea by another year, i.e. till 30.09.2020.
- Exemption has been provided to the crop insurance scheme of West Bengal government: Bangla Shasya Bhim and the service of Life Insurance to Armed Forces under group insurance scheme.
- The services provided by an intermediary to a supplier of goods or recipient of goods when both the supplier and recipient are located outside the taxable territory has been exempted.
- The registered authors have been given an option to pay GST on royalty charged from publishers under forward charge and observe regular GST compliance.
- Grant of liquor licence by State Governments against payment of license fee has been notified as “no supply” to remove implementational ambiguity on the subject.
- Payment of GST on securities lending service under reverse charge mechanism (RCM) at the merit rate of 18% has been allowed and it has been clarified that GST on securities lending service for period prior to RCM period shall be paid on forward charge basis. IGST shall be payable on supply of these services and in cases where CGST/SGST/UTGST have been paid, such taxpayers will not be required to pay tax again.
- Suppliers shall pay GST at 5% on renting of vehicles, from registered person other than body corporate (LLP, proprietorship) allowed on RCM when the services are provided to body corporate entities.
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