12 Oct 2019

Law and Procedure Related Changes


The GST Council, in its 37th meeting, recommended the following in relation to law and procedure:


Relaxation in Filing of Annual Returns (GSTR-9A and GSTR-9) for MSMEs for FY 2017-18 and FY 2018-19


  • It is recommended to waive of the requirement of filing FORM GSTR-9A for Composition Taxpayers for the said tax periods; and
  • Filing of FORM GSTR-9 for those taxpayers who are required to file the said return but have aggregate turnover up to INR 2 crores to be made optional for the said tax periods.
  • Further, a Committee of Officers to be constituted to examine the simplification of Forms for Annual Return and reconciliation statement.


Restriction on Availment of Input Tax Credit (ITC)


  • In order to nudge taxpayers to timely file their statement of outward supplies, recommendations have been made to impose restrictions on availment of ITC by the recipients in cases where details of outward supplies are not furnished by the suppliers.
  • In order to tackle the menace of fake invoices and fraudulent refunds, it is recommended to prescribe reasonable restrictions on passing of credit by risky taxpayers including risky new taxpayers.


Extension of Due Date for Introduction of New Return System


  • New return system which was earlier proposed to be made operation from October, 2019 has been recommended to be introduced from April, 2020. Accordingly, the due dates for furnishing FORM GSTR-3B and FORM GSTR-1 for period October, 2019 – March, 2020 will be specified.


Issuance of Circulars i.r.o. Certain Issues


Recommendations have been made to issue circulars in respect of following issues:

  • Procedure to claim refund in FORM GST RFD-01A subsequent to favorable order in appeal or any other forum;
  • Eligibility to file a refund application in FORM GST RFD-01A for a period and category under which a NIL refund application has already been filed;
  • clarification regarding supply of Information Technology enabled Services (ITeS services) (in supersession of Circular No. 107/26/2019-GST dated 18.07.2019) being made on own account or as intermediary.

Other Recommendations

  • Rescinding of Circular No.105/24/2019-GST dated 28.06.2019, ab-initio, which was issued in respect of post-sales discount.
  • Suitable amendments in CGST Act, UTGST Act, and the corresponding SGST Acts in view of creation of UTs of Jammu & Kashmir and Ladakh.
  • Introduction of an integrated refund system with disbursal by single authority from 24th September, 2019.
  • Linking of Aadhar with registration of taxpayers under GST and examine the possibility of making Aadhar mandatory for claiming refunds.
  • Extension of last date for filing of appeals against orders of Appellate Authority before the GST Appellate Tribunal as the Appellate Tribunals are yet not functional.

Rates Related Changes

It is proposed to issue notifications giving effect to rate related recommendations of the Council on 1st October, 2019.

Recommendations for Change in Rate of Services


Reduction in GST rates on services


Type of Service Transaction Value per Unit per Day Present GST Rate New GST Rate
Hotel accommodation service INR 1,000 and less Nil
INR 1,001 to INR 7,500 12%
INR 7,501 and more 18%
Outdoor catering services Other than in premises having daily tariff of unit of accommodation of INR 7,501 18% with ITC 5% without ITC
Job work services in relation to diamonds 5% 1.5%
Supply of machine job work such as in engineering industry 18% 12%

Exemption on Certain Services


  • Validity of conditional exemption of GST on export freight by air or sea has been recommended to be extended till 30th September, 2020.
  • Recommendations have been made to exempt services provided by an intermediary to a supplier of goods or recipient of goods when both the supplier and recipient are located outside the taxable territory.
  • Services by way of storage or warehousing of cereals, pulses, fruits, nuts and vegetables, spices, copra, sugarcane, jaggery, raw vegetable fibres such as cotton, flax, jute etc., indigo, unmanufactured tobacco, betel leaves, tendu leaves, rice, coffee and tea to be exempted prospectively.
  • It is recommended to exempt services related to FIFA Under-17 Women’s World Cup 2020 similar to existing exemption given to FIFA U17 World Cup 2017.
  • “BANGLA SHASYA BIMA” (BSB) crop insurance scheme of West Bengal Government to be exempted from levy of GST.
  • Services of life insurance business provided or agreed to be provided by the Central Armed Paramilitary Forces (under Ministry of Home Affairs) Group Insurance Funds to their members under the respective Group Insurance Schemes of these Central Armed Paramilitary forces to be exempted from levy of GST.


Place of Supply of Specified R&D Services


In this regard, following recommendations have been made:


  • It is recommended to notify place of supply (POS) of specified R&D services (illustrated below) provided by Indian pharma companies to foreign service recipients as the place of effective use and enjoyment of a service i.e. location of the service recipient:
    • Integrated discovery and development,
    • Evaluation of the efficacy of new chemical/ biological entities in animal models of disease,
    • Evaluation of biological activity of novel chemical/ biological entities in in-vitro assays,
    • Drug metabolism and pharmacokinetics of new chemical entities,
    • Safety Assessment/ Toxicology,
    • Stability Studies,
    • Bio Equivalence and Bio Availability Studies,
    • Clinical trials,
    • Bio analytical studies.
  • It is recommended to clarify that the place of supply of chip design software R&D services provided by Indian companies to foreign clients by using sample test kits in India is the location of the service recipient.


Applicability of Reverse Charge Mechanism (RCM) on Certain Services

In this regard, recommendations have been made to allow:

  • Payment of GST on securities lending service under RCM @ of 18% and to clarify that GST on such service for period prior to RCM applicability shall be paid on forward charge basis. Further, IGST shall be payable on supply of these services and in cases where CGST/SGST/UTGST have been paid, such taxpayers will not be required to pay tax again.
  • RCM to suppliers paying GST @ 5% on renting of vehicles, from registered person other than body corporate (LLP, proprietorship) when services provided to body corporate entities.

Clarifications i.r.t. Services

It is recommended to clarify the following:

  • To clarify the scope of the entry ‘services of exploration, mining or drilling of petroleum crude or natural gas or both’.
  • To clarify taxability of Passenger Service Fee (PSF) and User Development Fee (UDF) levied by airport operators.

Other Recommendations i.r.t. Services

  • It is recommended to allow the registered authors an option to pay GST on royalty charged from publishers under forward charge and observe regular GST compliance.
  • It is recommended to notify grant of liquor licence by State Governments against payment of license fee as a “no supply” to remove implementational ambiguity on the subject.