The Council, comprising federal and state finance ministers, seriously discussed the collections in regard to the composition scheme as out of the 17,00,000 dealers that have registered for the scheme, only Rs 3 billion was collected in the first quarter.
"The scheme has not been enthusiastically responded. Most of the people have registered themselves below Rs 20,00,000. There seemed to be cases of under-declaration," said Jaitley.
The GST revenue mop-up has been steadily declining over the month as from over Rs 950 billion (Rs 95,000 crore) collected in July, it has come down to about Rs 810 billion (Rs 81,000 crore) in November.
Five major decisions of the 25th GST Council meeting are:
- GSTR 3B return filing will continue and all buyers and sellers will continue to load their invoices. Initially, there will be 3B return and the supplier invoice would be adequate. The Council felt that once the GoM, IT Committee and Nandan Nilekani discuss the matter and formalise it, then it will be circulated among the ministers and approval will be taken during the next GST Council meeting. (Read more
- In view of a hefty Rs 350 billion (Rs 35,000 crore) unclaimed credit lying in form of IGST collections, the Council also decided to provisionally divide the amount equally between the Centre and states.
- The Council decided to slash the GST rate on 54 services and 29 items, including old and used motor vehicles, public transport buses run on bio-fuels, sugar-boiled confectionery and packaged water. The changes will be effective from January 25. (Full report
ALSO READ: GST Council meet: Here's the complete list of revised items
- The Council also reaffirmed that from January 15 e-way Bill system has started operating on a trial basis. "From February 1 inter-state e-way bill will be necessary. Fifteen states have said that from February 1, intra-state, they will also start e-way bill," said Jaitley. (More details)
- The Council also accepted the report of the CBEC Chairperson Vanaja Sarna-headed committee on handicraft sector. Now, the fitment committee will decide on which handicraft items the rates could be lowered.
The major recommendations of the Council today included:
- To exempt supply of services by way of providing information under RTI Act, 2005 from GST.
- To exempt legal services provided to Government, Local Authority, Governmental Authority and Government Entity.
- To reduce GST rate on the construction of metro and monorail projects (construction, erection, commissioning or installation of original works) from 18 percent to 12 percent.
- To levy GST on the small housekeeping service providers, notified under section 9 (5) of GST Act, who provide housekeeping service through ECO, at five percent without ITC.
- To reduce GST rate on services by way of admission to theme parks, water parks, joy rides, merry-go-rounds, go-carting and ballet, from 28 per cent to 18 per cent.
- To reduce GST rate on transportation of petroleum crude and petroleum products (MS, HSD, ATF) from 18 per cent to five per cent without ITC and 12 per cent with ITC.
- To exempt dollar-denominated services provided by financial intermediaries located in IFSC SEZ, which have been deemed to be outside India under the various regulations by RBI, IRDAI, SEBI or any financial regulatory authority, to a person outside India.
- To exempt services by way of fumigation in a warehouse of agricultural produce.
- To reduce GST to 12 per cent in respect of mining or exploration services of petroleum crude and natural gas and for drilling services in respect of the said goods.
- To exempt government's share of profit petroleum from GST and to clarify that cost petroleum is not taxable per se.
The Council also recommended rationalisation of certain exemption entries. These included:
- To provide in CGST rules that value of exempt supply under sub-section (2) of section 17, shall not include the value of deposits, loans or advances on which interest or discount is earned.
However, this will not apply to a banking company and a financial institution including a non-banking financial company engaged in providing services by way of extending deposits, loans or advances.
- To tax renting of immovable property by the government or local authority to a registered person under reverse charge while renting of immovable property by the government or local authority to an un-registered person shall continue under forwarding charge.
- To add, in the GST rate schedule for goods at 28 per cent, actionable claim in the form of a chance to win in betting and gambling including horse racing.
The Council also made certain clarifications regarding the above. These included:
- Services provided by senior doctors/consultants/technicians hired by the hospitals, whether employees or not, are healthcare services which is exempt.
- Hospitals also provide healthcare services. The entire amount charged by them from the patients, including the retention money and the fee/payments made to the doctors, is towards the healthcare services provided by the hospitals to the patients and is exempt.
- Food supplied to the in-patients as advised by the doctor/nutritionists is a part of a composite supply of healthcare and not separately taxable. Other supplies of food by a hospital to patients (not admitted) or their attendants or visitors is taxable.