GST Council in the 31st meeting held on 22nd December, 2018 at New Delhi took a number of decisions relating to changes in GST rates, ITC eligibility criteria, exemptions and clarifications on connected issues. Only those changes which have direct bearing upon BSFI are mentioned here:
The GST rate on third party insurance premium of goods carrying vehicles shall be reduced from 18% to 12%.
Services supplied by banks to Basic Saving Bank Deposit (BSBD) account holders under PradhanMantri Jan DhanYojana (PMJDY) shall be exempted.
This is to clarify that the incentives paid by RBI to Banks under “Currency Distribution and Exchange Scheme” (CDES) are taxable. This is to clarify that the services provided by IFC and ADB are exempt from GST in terms of provisions of IFC Act, 1958 and ADB Act, 1966. This is to clarify that the banking company is liable to pay GST on the entire value of service charge or fee charged to customers whether or not received via business facilitator or the business correspondent.
Exemption, given on the services provided by Central or State Government or Union Territory Government to their undertakings or PSUs by way of guaranteeing loans taken by them from financial institutions, is being extended to guaranteeing of such loans taken from banks.
Services provided by unregistered Business Facilitator (BF) to a bank and agent of Business correspondent (BC) toa BC shall be put under reverse charge mechanism (RCM).
The GST Council also gave in principle approval to the following amendments in the GST Acts:
Amendment of section 50 of the CGST Act to provide that interest should be charged only on the net tax liability of the taxpayer, after taking into account the admissible input tax credit, i.e. interest would be leviable only on the amount payable through the electronic cash ledger.
The GST Council made the following policy recommendations:
There would be a single cash ledger for each tax head. The modalities for implementation would be finalized in consultation with GSTN and the accounting authorities. Tax rate on lotteries is now referred to Committee of States. Taxation of residential property in real estate sector is now referred to Law Committee and Fitment. The new return filing system shall be introduced on a trial basis from 01.04.2019 and on mandatory basis from 01.07.2019.
The GST Council reduced the rates on 23 items from 18% to 12% and 5%. Many items including television, computers and various auto parts will be cheaper now. Some items in the 5% bracket have been moved to 0%. GST rates on movie tickets have been slashed. The new rates effective January 1, 2019, will offer a huge relief to the common man.
