News & Updates

 

21st GST Council Meeting

*Works Contract to become cheaper* *GST rate slashed to 12% from 18% on construction services provided to Govt or other authorities*
 
AT the 21st meeting the GST Council recommended, to reduce tax rate from 18% to 12% on several services provided to the Governments, a local authority or a government authority by way of *construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of* –
 
(a) A civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession;
 
(b) A structure meant predominantly for use as (i) an educational, (ii) a clinical, or(iii) an art or cultural establishment; or 
 
(c) a residential complex predominantly meant for self-use or the use of their employees or other persons specified in paragraph 3 of the Schedule III of the CGST Act, 2017 (namely, MPs/Members of State Legislatures, Panchayats, Municipalities, other local authorities, persons holding constitutional posts, chairperson/member/director in a body established by Central Government, State Government or local authorities etc.). 
 
- to exempt services by way of admission to FIFA U-17 Football World Cup- 2017 events from GST.
 

Key takeaways from 21st GST Council Meeting

- The due date for filing GSTR-1, GSTR-2 and GSTR-3 has been extended to *10th October, 2017, 31st October, 2017 & 10th November, 2017 respectively;*
 
- GSTR-3B to be filed for the months of *August, 2017 to December, 2017;*
 
- Composition scheme can be opted till *30th September, 2017;*
 
- No registration required, where the interstate supply (upto 20 lakhs turnover) of *handicraft goods* made under the cover of e-way bill;
 
- No registration required, where the inter supply (upto 20 lakhs) of *Job work services* made to registered persons and goods moves under the cover of e-way bill;
 
- Due date of filing Form *TRAN-1* has been *extended till 31st October, 2017* and it can be revised once;
 
- Registration for TDS and TCS deductor, would be start from *18th September, 2017,* however the date for deduction/collection of TDS/TCS would be notified later;
 
- GST council set up a committee to examine *issues related to exports* and also constitute a group of ministers to monitor and resolve the *IT challenges* faced during GST implementation.
 

On tax payment, filing of GSTR-3B Return & Transitional Credit for July, 2017

  • 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:-
    1. Calculate the tax payable as per the following formula:
      Tax payable = (Output tax liability + Tax payable under reserve charge) – input tax credit availed for the month of July, 2017
    2. Tax payable as per (I) above to be deposited on or before 20.08.2017 which will get credited to the electronic cash ledger.
    3. 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.
  • Registered persons planning to avail transitional credit for discharging the tax liability for the month of July, 2017 need to be follow the steps as detailed below:-
    1. Calculate the tax payable as per the following formula:
      Tax payable = (Output tax liability + Tax payable under reserve charge) – (transitional credit + input credit availed for the month of July, 2017)
    2. Tax payable as per (I) above to be deposited on or before 20.08.2017 which will get credited to the electronic cash ledger.
    3. File FORM GST TRAN-I (which will be available on the Common Portal from 21.08.2017) before filing the return in FORM GSTR-3B.
    4. 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 20.08.2017 till the date of such deposit. This amount will also get credited to the electronic cash ledger.
    5. 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.
    Please note
  1. FORM GSTR-3B once filed cannot be revised.
  2. Transitional credit shall be available on filing of FORM GSTR GST TRAN – I only, last date of filing FORM GST TRAN – I is 30.09.2017, transitional credit can be availed in subsequent month also.
  3. Deemed credit would be available only after filing FORM GST TRAN – II, which can be filed only after making payment of tax against the supply for which deemed credit, is to be availed. Therefore, credit through FORM GST TRAN – II will be available on tax periods subsequent to the tax period in which payment for such supply has been made.

Easy Steps to Create GSTR1 with Offline Tool and Excel Worksheet

Reduced tax liability on tax homes under GST

The CBEC and State have received many complaints that in view of the work contract service tax rate under GST at 12% in respect of under constriction flats, complex etc, the people who have booked flats and made part payment before 1st July, 2017, are being asked to bear higher tax incidence for payment made after 1st July, 2017. This is against the GST law, as explained below.

  • Constriction of flats, complex, building have a lower incidence of GST as compared to a plethora of Central and State Indirect Taxes suffered by them under the earlier regime.
  • Central Excise duty was earlier payable on most construction material @12.5%. It was higher in case of cement. In addition, VAT was also payable on construction material @12.5%to 14.5% in most of the States. In addition, construction material also earlier suffered Entry Tax levied by the State. Input Tax Credit of the above taxes was not allowed for payment of Service Tax. Credit of these taxes was also not available for payment of VAT on construction of flats etc. under composition scheme. Thus, there was cascading of input taxes on constructed flats etc.
  • As a result, incidence of central Excise duty, VAT, Entry Tax, etc. on construction material was earlier being borne by the builders, which they passed on the customers as part of the price charged from them. This was not visible to the customer as it formed a part of the flat.
  • The earlier headline rate of services tax on construction of flat, residences, office etc. was 4.5%. Over and above this, VAT @1% under composition scheme was also charged. The buyer only looked at the heading rate 5.5%. In other Cites/States, where VAT was being levied under the composition scheme @2% or above, the headline rate visible to the customer was above 6.5%. What the customer did not see is the embedded taxes on account of cascading and sticking of input taxes in the flat etc.
  • The situation has changed under GST. Under GST, full input credit is available for offsetting the headline rate of 12% As a result, the input taxes embedded in the flat will not (& should not) from a part of the cost of the flat. The input credits should take care of the heading rate of 12% and it is for this refund of overflow of input tax credits to the builder has been disallowed.
  • The builders are expected to pass on the benefits of lower tax burden under the GST regime to the buyers of property by way of reduced prices/ installments. It is, therefore, advised to all builders / construction companies that in the flats under construction, they should not ask customers to pay higher amount of installments inclusive of all taxes to be received after imposition of GST.
  • Despite this clarity on law position, if any builder resorts to such practice, the same can be deemed to be profiteering under section 171 of GST law.