Two years of GST: 125 tweaks to make nationwide tax simpler; reduce burden on small businesses, traders

Two years of GST: 125 tweaks to make nationwide tax simpler; reduce burden on small businesses, traders

In the latest one - 35th GST Council meeting held in Delhi on June 21 - several key decisions, including the extension of the date for filing annual GST returns by two months to August 30 and introduction of a new single-form GST return filing system from January 1, 2020, were taken.

India's Goods and Services Tax (GST) regime has entered its third year. The nationwide tax continues to evolve as the decisions of each GST Council meetings indicate. India's Goods and Services Tax (GST) regime has entered its third year. The nationwide tax continues to evolve as the decisions of each GST Council meetings indicate.

India's Goods and Services Tax (GST) regime has entered its third year. The nationwide tax continues to evolve as the decisions of each GST Council meetings indicate. In the latest one - 35th GST Council meeting held in Delhi on June 21 - several key decisions, including the extension of the date for filing annual GST returns by two months to August 30 and introduction of a new single-form GST return filing system from January 1, 2020, were taken.

While the system is improving, it is far from perfect. Here is a stakeholders' wishlist from industry chamber Confederation of Indian Industry (CII). The key clarifications, tweaks and amendments the industry and business houses demand are meant to reduce sector-specific hardships. It wants input-tax credit (ITC) restrictions applied to non-business uses strictly; transitional credit on capital goods received after the appointed date, clarifications issued in respect of the applicability of GST on securitisation transactions and several such tweaks.

Also Read: E-invoicing: Will government's response to GST frauds be effective?

CII highlights close to 75 instances where GST rates need to be either exempted or tweaked or introduced including a reduction in taxation rates of hybrid vehicles (the GST Council is already examining the case of electric vehicles) and a demand to bring petroleum products under the ambit of GST.

Also Read: Two years of GST: Govt to introduce new reforms in indirect tax regime on July 1

Here is the CII wishlist:

Procedural changes and clarifications:

1.      Place of supply of service provided by intermediary be considered as the location of the recipient of service.

2.      Place of supply in case of lodging accommodation by a hotel, inn, guest house etc. to a registered person be considered the location of the registered person.

3.      Place of supply for services relating to research and development and technical testing be the location of the recipient of services.

4.      Place of supply for export of services of clinical trials specified to be the location of the recipient.

5.      Place of supply of transport of goods services on exports/ to a place outside India be considered a zero-rated supply.

6.      Supplier be permitted to adjust GST on return of expired pharmaceutical goods even after September 30 of the following year.

7.      Inputs received by job workers for defence, nuclear and aerospace purposes to be allowed to be returned within a period of 360 days.

8.      Input Tax Credit restrictions to be applied to non-business uses only.  

9.      Allow ITC on inputs used in the construction of factories/offices constructed including reconstruction, renovation, additions, alterations and repairs done in the course/ furtherance of business.

10.    Allow standard Time limit of 18 months for all months of a financial year for reversal of taxes on sales return.

11.    GST on cross charge of corporate expenses be done away.

12.    Allow ITC refund for 'input services' and 'capital goods' under inverted duty structure.

13.    Allow non-reversal of ITC on investment in securities.

14.    Allow non-reversal of ITC on free samples in healthcare sector.

15.    Allow non-reversal of ITC on non-GST supplies.

16.    Place of supply in case of passenger transportation destined outside India, and provided or received by a person located outside India be specified to be the place where such passenger transportation is destined.

17.    Allow transitional credit on capital goods received after the appointed date.

18.    Extend the time limit of 12 months for availing transitional credit pertaining to the stock as on the appointed date.

19.    Allow transitional credit in respect of payments in relation to Department Audit/ Assessment/ Appeal findings.

20.    Clarification be issued to the effect of GST implication on permanent transfer of IPR.

21.    Clarification be provided in respect of applicability of GST on securitisation transactions.

22.    Allow adjustment of tax wrongfully collected and paid to the central government or state government.

23.    Allow carried forward of credit for Krishi Kalyan cess to be adjusted under GST regime.

24.    Allow input tax credit on demo/ testing vehicles.

25.    Increase time limit for issuance of debit/credit Note.

26.    Extend last date for availing input tax credit against any invoice/debit note by December 31.

27.    Extend Composition scheme of 1 per cent tax rate to small manufacturers of ice-cream on turnover up to Rs 150 lakh.

28.    Allow suppliers to report credit notes pertaining to sales return even beyond the current permissible time.

29.    The entries 'Transfer of business on a going concern, merger, de-merger, conversion of firm/LLP in corporate entity or a corporate entity in firm/LLP' be added in Schedule III.

30.    Liquidated damages be included in Schedule III to avoid unnecessary litigation.

31.    Income from securities be included in Schedule III to avoid unnecessary litigation.

32.    Clarification be issued that transfer of the accumulated credit balances of CGST or IGST is allowed even in case of shifting of factory from one state to another.

33.    Transfer of GST credit on transfer of business be allowed to transfer GST credit attributable to business transferred.

34.    Exempt IGST for import goods to be used in infrastructure projects of national importance and public interest; for example, power, railways etc.

35.    Allow ITC on CSR activities.

36.    Central Advance Ruling Authority be appointed under GST Law for maintaining uniformity in the interpretation of law.

37.    Reduce time period for issuance of show cause notice to be limited to two years along with limitation of passing of adjudication orders.

38.    Include the question 'Determination of Place of Supply' in the provisions for seeking an Advance Ruling from the Authority of Advance Ruling (AAR).

39.    Allow non-reversal of input credit on common input services on account of high sea sale and sale of goods wherein goods do not enter in India.

40.    Allow refund of input taxes in railway projects accumulated on account of inverted duty structure.

41.    Allow inter-state movement of construction equipment other than on the wheels without payment of IGST from one branch to another.

42.    Allow ITC on goods imported by a non-resident taxable person.

43.    Provision of Penalty for wrong availment of credit to include only those cases where credit is wrongly utilised and not for wrong availment.

44.    Extend Deemed export benefits to supplies to mega power projects.

45.    Rationalise time for re-credit of input tax credit when payment is made to vendor after 180 days under contract.

46.    Allow ITC on motor vehicle and other conveyances used for research and development activities by manufacturer of motor vehicles.

47.    Allow refund or ITC of excise duty/CVD paid after finalisation of provisional assessment.

48.    Levy interest only in situations where undue or excess credit is availed and utilised thereof.

49.    Permit centralised registration and audit procedure for telcos, and other PAN-India service providers such as banking, insurance, civil aviation, etc.

50.    Allow ITC on telecommunication tower and shelters.

51.    Simplify reversal of credit on removal of capital goods after being used.

52.    Place of supply for lease circuit and internet lease circuit be put under the general rule i.e., basis the location of service recipient.

Also Read: Small B2C entities, restaurants under scanner for GST evasion

GST Rates:

1.      Rationalise GST rate on hybrid vehicles and put under 28 per cent only by removing GST compensation cess.

2.      Rationalise GST rates on work contract services related to construction, installation and commissioning of Biogas Plant to be put at the rate of 5 per cent instead of 18 per cent.

3.      Reduce GST rates on unitary (window) and split Air Conditioners to 18 per cent.

4.      Reduce GST rates on infrastructure related works contract for airports and ports to 12 per cent.

5.      Reduce GST rates on subcontractors for supply of service to non-government infrastructure works contract to 12 per cent.

6.      Review exemption of GST on pre-dominant input services for the healthcare sector to put under zero rating for healthcare services or 5 per cent GST.

7.      Reduce GST rates on Optical Fibre (OF) and Optical Fibre Cable (OFC) to 5 per cent.

8.      Water with added sugar and flavours- (re-hydrating energy drinks) be put to standard rate of 18 per cent and exempted from compensation cess.

9.      GST rate on all processed cereal products like breakfast cereal be put at 12 per cent.

10.    Reduce GST rates on ghee/ butter and be put under 5 per cent.

11.    Fruit-based confectionery containing fruit pulp be taxed at 5 per cent.

12.    Preparations of vegetables, fruits, nuts or other parts of plants/ all products under chapter 20 be put at 5 per cent.

13.    All convenience instant food mixes be put under 5 per cent.

14.    Fruit-based sauces and fruit syrups be put under 5 per cent.

15.    Fruit beverages be put at 5 per cent and a clarification be issued whether fruit beverages containing fruit juice with aeration should stay in this entry.

16.    GST rates on coconut water be put at 5 per cent.

17.    Classify phospho-gypsum (both granulated and powdered form) supplied in 50 kg bags and clearly marked "for agricultural purposes only" as fertiliser with 5 per cent GST.

18.    GST rate for all garments be put at 5 per cent.

19.    Reduce GST rates on crop nutrition from 18 per cent to 5 per cent on raw materials such as ammonia and naphtha.

20.    GST on crop protection products be brought down from existing 18 per cent to 5 per cent.

21.    Reduce GST rates on advanced agricultural equipment from existing 12 per cent to 5 per cent.

22.    Reduce GST rates on parts supplied for use in harvesting or threshing machinery or other advanced equipment to 5 per cent.

23.    Reduce GST on milking equipment, milking parlour, dairy farm equipment, milk production related equipment, cow comfort and feeding equipment, calf feed and management equipment and all original parts thereof to 5 per cent.

24.    Provide specific entry in GST rate schedule for drip and sprinkler irrigation system (HSN 8424 8200 and 8424 9000), and green/shade/net house (9406 0011 and 9406 0019 (parts) and be put under 5 per cent tax rate.

25.    Rationalise GST rate for albumen egg products at par with yolk and whole egg products and put under 5 per cent.

26.    Services related to agriculture, irrigation, and related projects (micro irrigation/ green / poly net house/ storages or any other agriculture/horticulture/ infrastructure projects) be put at 5 per cent.

27.    Rationalise GST Rate on two-wheeler mainly up to 125 cc.

28.    Rationalise tax rate slabs with the stabilisation of revenue and only two or three GST tax slabs be introduced.

29.    Put products manufactured from stem cells under NIL GST rate.

30.    HSN Chapter 10 & 11- Staple Foods whether branded or not including rice, wheat, millets and their flours be put at nil rate.

31.    Exempt GST on movement/transportation services of fertiliser.

32.    Exempt charitable and social welfare activities from GST.

33.    Exempt GST on PDA Charges.

34.    Exempt GST on all types of kajal.

35.    Exempt GST on job work contracts received from Government agencies for example ISRO/ DRDO/ Brahmos.

36.    Reduce GST rate for infrastructure-related EPC contracts.

37.    Reduce GST rate for Green Blocks i.e. concrete blocks made from waste material.

38.    Clarification be issued that IGST is not payable twice on ocean freight for import of goods.

39.    Review GST on deemed value of land-city wise land abatement.

40.    GST Exemption be granted to lease premium for mega food parks.

41.    Rationalize rates for the cold chain infrastructure- same GST rates be put for all the channels of purchase, involving truck refrigeration.

42.    Exempt payment of GST under reverse charge mechanism for ocean freight.

43.    Exclude regulatory payment of LF, SUC, Spectrum payment, license fees, spectrum usage charge for spectrum assigned under auction from payment under reverse charge.

44.    Exempt GST on capital goods supplied to EPCG or other export-oriented exemption schemes.

45.    GST on passenger transportation services to North East and international locations be made "zero- rated".

46.    Exempt GST on handling and transportation of MSW, and all concessionaires working in partnership with ULBs be treated in a similar manner.

47.    Clarification be issued that services provided under ICT projects fall within the scope of Entry No. 72 of Notification no. 12/2017 - Central Tax (Rate) dated June 28, 2017.

48.    Clarify GST Rate for setting up of solar power plants.

49.    Allow JVs formed by construction companies to treat advances received from project authorities as "transaction in money" and not liable to GST.

50.    Exempt IGST on silos and cold chain equipment for installation of mechanised handling system a pallet racking systems in mandis and warehouses for food grains.

51.    Include Micronutrients in Classification of Micronutrients Mixtures as given under Sl. No.1(g) of Schedule 1 Part (A) of the Fertiliser Control Order 1985 AND "Micronutrient and Mixtures thereof".

52.    Classify organic inputs for crop nutrition and protection under HSN 3101 subheading 3101 0099, and put under nil GST as against the present 18 per cent.

53.    Align GST tariff product description for Tobacco leaves in line with Customs Tariff Act "Tobacco Leaves" (HSN 2401).

54.    Exempt GST on services supplied by Central Agricultural Board.

55.    Ease filing of GST returns for banks who have opted for reversal of 50 per cent of input tax credit, and not be required to report exempt and non-GST supplies in the GSTR returns.

56.    Simplify annual accounts and Return-GSTR-9, only summery be required and repetition of details already furnished be dispensed with.

57.    Allow Digitisation of invoices, accounts and records.

58.    Clarification be issued on bodybuilding activity as supply of goods or services.

59.    Clarification be issued on applicability of GST on liquidated damages.

60.    Dispense with Bond or LUT for Export of services.

61.    Clarify whether servicing of motor vehicles is a "composite Supply".

62.    Clarification be issued on 'place of supply' in case of goods provided under warranty by OEM to dealers on behalf of customers.

63.    Clarification be issued that GST on Rail Haulage be calculated on the basis of bundled services, and not segregated separately for haulage and maintenance.

64.    Settlement mechanism or attractive amnesty schemes may be introduced to expedite closure of pending litigation.

65.    Clarification be issued that e-signature and digital signature are one and the same for the purpose of GST invoice/challan under Section 31 of CGST Act read with Rule 46 & 50 to 55.

66.    ITC be allowed on the basis of unique payment challan numbers generated for payment to supplier.

67.    Clarification be issued regarding various benefits/ facilities provided by employer to employee in the course of employment.

68.    Clarification be issued for non-levy of GST on collection of airport charge by the aviation industry on behalf of airport authority.

69.    Clear guidelines be laid out as to the constitution of intra-entity service, components of costs to be included, mechanism to determine the value of such services etc.

70.    Suitable clarification be issued on services by an employee to the employer in the course of or in relation to his employment.

71.    Clarification be issued on the eligibility of existing units for Refund Scheme under GST to the units located in states with tax benefits areas such as the North-East States, including Sikkim.

72.    Petroleum products be brought under GST ambit.

73.    Bring at least supply of industrial HSD and LNG under the ambit of GST.

Also Read: Collateral-free loan up to Rs 50 lakh, credit card, pension for traders if NDA comes to power: PM Modi