37th GST Council Meeting held on 20th Sep 2019 Recommendations

37th GST Council meeting is to be held on the 20th of September in Goa. Smt. Nirmala Sitharaman, the Union Finance Minister, will chair this Council meeting. Take a look at the points which are likely to be discussed in the upcoming Council meeting.

Highlights of 37th GST Council Meet

A summarised list of announcements is as follows:

GST Rate changes

Here is a list of principle rate revisions passed by GST Council

GST Rate Revision effective from 1 October 2019

Item	Current Rate	New Rate
Plates and cups made of flowers, leaves and bark	5%	Nil
Caffeinated Beverages	18%	28%+12% cess
Supplies of Railways wagons & coaches (without refund of accumulated ITC)	5%	12%
Outdoor Catering (without ITC)	18%	5%
Diamond Job work	5%	1.50%
Other Job work	18%	12%
Hotels (Room Tariff of Rs.7501 or above)	28%	18%
Hotels (Room Tariff from Rs 1,001 to Rs 7,500)	18%	12%
Woven/ Non-woven Polyethylene Packaging bags	18%	12%
Marine fuel	18%	5%
Almond Milk		18%
Slide fasteners	18%	12%
Wet grinders (consisting of stone as a grinder)	12%	5%
Dried Tamarind	5%	Nil
Semi-precious stones- cut & polished	3%	0.25%
Specified goods for petroleum operation under HELP*	Applicable Rate	5%

*Hydrocarbon Exploration Licensing Policy

Item	Current Rate	New Rate
Cess on Petrol Motor Vehicles (Capacity of 10-13 passengers)	15%	1%
Cess on Diesel Motor Vehicles (Capacity of 10-13 passengers)	15%	3%

GST Exemption available for:

• Supplies to FIFA- specified persons for the Under-17 Women’s Football World Cup in India
• Supply to the Food and Agriculture Organisation (FAO) for specified projects in India
• Imports of certain defence goods not made indigenously (up to 2024)
• Supply of silver/platinum by specified agencies (Diamond India Ltd) for export
• Import of Silver or Platinum by specified agencies (Diamond India Ltd)

Expectations from the 37th GST Council Meeting

1.Simplification of GSTR-9

The original due date of GSTR-9/9A/9C was on the 31st of December 2018. This has been extended four times and the latest due date is 30th November 2019. Only 15% of taxpayers had filed their annual return when the third extension of due date took place. This figure shows the challenges involved in filing the annual return.

Taxpayers and professionals are facing hardship while reporting HSN summary of purchases, Input Tax Credit (ITC) bifurcation between goods and services, ITC breakup for expenses and while reconciling with Books of Accounts to mention a few.

The compliance level of GSTR-3B was found to be almost double when compared with GSTR-1. This proves that people are looking for a simplified return like GSTR-3B, which is a summary return.

Businesses are hoping that the government focuses more on the simplification of GSTR-9 rather than providing for an extension of the due date. The government may in the upcoming Council meeting consider removing certain disclosure requirements less significant. Alternatively, it may replace an existing return with a summarised return, which can be easily understood by a taxpayer. It is also expected that the Council may take a decision on providing an exemption to small taxpayers for the annual return compliance requirement for FY 2017-18.

2. Implementation of New Return Filing System Can Be Deferred

The new return filing system is going to be implemented from October 2019. The government provided the prototype returns and they are in a view that the taxpayers and professionals can get a look and feel of how the new return system works under the new return system. But under these prototype returns, all the features are not enabled.

The new return filing system requires reporting of additional information when compared to the present system. The taxpayers need sufficient time to adopt a proper book-keeping and invoice management system which fulfils their disclosure requirements under the new system. The Council may take a decision on deferment of the new return system for smooth implementation.

The GST network also recommended for the launch of the simplified new GST returns system from January 2020. The GST Council may also look into the proposal of two deadlines for small and large taxpayers under new simplified GST returns.

3. Council to Focus on the GST Rate Cuts Concerning the Auto Sector

The auto industry is demanding for a GST rate cut to 18% from the current GST rate of 28%. The Finance Minister has assured that the government is aware of the troubles in the auto sector. FM also added that the concerns related to the automobile industry will be taken up in the upcoming Council meeting.

In the previous GST Council meeting, the GST rates on electric vehicles were reduced from 12% to 5%. A conclusive decision around GST rate cuts with regards to the auto industry is expected to happen in the next Council meeting.

4. Council may Look at the ITC Treatment in the Healthcare Sector

Several hospitals have claimed that their yearly profit margins have gone down by around 8% since there is no Input Tax Credit (ITC) benefit. Currently, except for cosmetic surgeries, implants, and hair transplant, all other health care services are exempt from GST charges.

Since ITC cannot be claimed on them, the cost of inward supplies is increasing. Hence, the healthcare service providers are now urging for an output GST of 5% on such taxable services without ITC. It is most likely that the Council will take this discussion further in the upcoming GST Council meeting.

5. Council is Likely to Review the Present Revenue Position

With an aim to increase the revenue collection, the Council is likely to initiate additional steps to bring down tax evasion. In comparison to the GST revenue collections made in June (Rs 0.99 lakh crore), there has been a slight increase in the collections made in July (Rs 1.02 lakh crore). Also, the revenue collections for July are higher in comparison to the average monthly revenue collection in the previous financial year.

However, the collections made until now have not been sufficient enough to meet the yearly targets. According to the Union Budget 2019-20, the government brought down the GST revenue collection targets to Rs 6.63 lakh crore versus the previous target of Rs 7.61 lakh crore that were mentioned in the Interim Budget 2019-20.

6.Other Expected Decisions

The GST rate cut or rate structure modification has to be approved by Fitment Panel before placing for the decision in GST Council. The GST council may take the decision on rate cut or rate structure modification with respect to the list given below

1. Five-star hotels
2. Outdoor catering
3. Match sticks, Cups & Plates
4. Lotteries
5. Biscuits