GST Council Decisions

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Context:

In its 37th Meeting, the GST Council has announced a number of changes in the GST regime. In this regard,  the important highlights of the announcement have been listed below.

Relevance: 

GS- 3 Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment. 

About GST Council

  • It is a constitutional body for making recommendations to the Union and State Government on issues related to Goods and Service Tax. The GST Council is chaired by the Union Finance Minister and other members are the Union State Minister of Revenue or Finance and Ministers in-charge of Finance or Taxation of all the States.
  • Every decision of the Goods and Services Tax Council shall be taken by a majority of not less than three-fourths of the weighted votes of the members present and voting, in accordance with the following principles, namely: —
    • The vote of the Central Government shall have a weightage of one-third of the total votes cast,
    • The votes of all the State Governments taken together shall have a weightage of two-thirds of the total votes cast.

Reduction in GST Rates

Some of the industries such as Automobile and Biscuit Manufacturing were demanding cuts in the GST tax rates so as to boost the consumption expenditure. However, the GST Council decided to keep the GST rates for these industries unchanged. Some important changes in the GST rates are as highlighted below:

Hospitality and Tourism

Hospitality and Tourism

To reduce the rate of GST on hotel accommodation service as below: –

Transaction Value per day

GST Rate

Rs 1000 and less

Nil

Rs 1001 to Rs 7500

12%

More than Rs 7500

18%

 

The GST on the outside catering has been reduced from 18% to 5% without the Input Tax Credit.

Job work service:

  • Reduce rate of GST from 5% to 1.5% on the supply of job work services in relation to diamonds. 
  • Reduce rate of GST from 18% to 12% on the supply of machine job work such as in the engineering industry.

Warehousing

The payment of the GST on storage and warehousing of certain agricultural products has been exempted.

Important Policy Measures Announced:

  • The GST Council has done away with the requirement of filing annual GST returns for the taxpayers up to Rs 2 crore turnover in order to reduce the compliance burden.
  • The GST Council has given “In principle” approval to link Aadhaar with registration of taxpayers under GST and examine the possibility of making Aadhaar mandatory for claiming refunds.
  • Suitable amendments in the CGST Act, UTGST Act, and the corresponding SGST Acts in view of the creation of UTs of Jammu & Kashmir and Ladakh.
  • New GST return system to be introduced from April 2020 (earlier proposed from October 2019) in order to give ample opportunity to taxpayers as well as the system to adapt to the new system.



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