Which services have been exempted from GST after the 28th GST meeting?
The newsworthy 28th GST council meeting that was held on 21st July 2018 and headed by the Union Minister of Finance Sh. Piyush Goyal has indeed proved to be a trendsetter as it has revealed several groundbreaking economic and fiscal reform measures that are indubitably in the interest of the small traders and the consumers.
Besides the noteworthy reforms as regards GST registration and the simplification of the GST Return Filing procedure, GST council has brought forward notable measures as regards applicability of GST on services. What has made the GST regime all the more consumer-friendly are the massive exemptions that the council has extended on several services, in addition to the slump in the GST rates in some services.
#1. Why has the GST council excluded so many services from GST ambit?
As a matter of fact, the GST authorities have been able to attain fiscal consolidation up to a significant extent. According to the tax officials, the steady increase in the compliance rate and regularity in GST Return Filing have thus far maintained the tax buoyancy and has substantially hiked the government revenue.
In a bid to provide relief to the consumers, the council has thus exempted several services from GST.
#2. Which are the key areas where the government has provided the exemption from GST?
It would be noted that multiple reliefs from GST taxation have been provided to following categories of services –
- Agriculture, farming and food processing industry,
- Education, training & skill development,
- Pension, social security benefits and old age support.
#3. What are those services that have been exempted from GST?
Given below are the key services that have been excluded from the GST purview:
- Warehousing services are given for the minor forest produce.
- Installation & commissioning works that are undertaken by the power DISCOMS
- FSSAI services given to various food business operators
- Services of the Coal Mines Provident Fund Organization to PF Holders
- Artiï¬cial insemination of the cattle/ livestock
- Old age home services to its members (which is against consideration up to â‚¹ 25,000/- per month per member)
- The administrative fee collected by National Pension System Trust
- Services provided by an unincorporated body/ Non-Profit Organisation (NPO) to its members
- Reinsurance Services to government-run Insurance Schemes such as Ayushman Bharat
- Premium paid by Government to run Ayushman Bharat Yojna
- Guarantees provided by the Government to various departmental undertakings
- Import of services by global bodies and agencies like UN and the foreign diplomatic agencies
- Services by educational boards to students for purpose of conducting of examination
- Courses run by private ITIs
- Overseas transportation of all goods by air & sea
#4. Which are the services that have witnessed GST rate-cuts?
Apart from the exemptions, the GST council in its 28th meeting has also considerably slumped GST rates on certain services, as mentioned below:-
- In case of multimodal transportation of goods, the council has prescribed GST @ 12% with full input credit under a forward charge for composite supply.
- The GST rate has been reduced on a composite supply of works contract from the Government or any local administrative body during the course of their autonomous functions.
- The GST rates are to be rationalized on the entry of the composite supply of food products from a restaurant, or food business to the institutions viz. educational, oï¬ƒces, factory and hospitals on the contractual basis. The GST rate imposed henceforth will be 5%. However, the new GST rate won’t be applicable in case of event-based and occasional outdoor catering.
#5. What relief measure has been introduced in the case of hospitality business?
A lucrative measure has been introduced in Hotel business by the way of imposing GST on lodge or accommodation services on the basis of the total transaction value of the services availed rather than the earlier system of declared tariff of 18%, regardless of the transaction value.
#6. What reform has been made in the banking and IT sectors?
If services of the banking and IT sectors are given by any establishment of an individual in India to another establishment of that person abroad (i.e. related party), will be exempted from GST.
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