Category: Sector Wise GST

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Construction Service Present and Proposed Rates after GST Council Meeting on 06-10-2017

Notification 11/2017-CTR  as amended by Notification 20/2017- CTR dated 22-08-2017, NN 24/2017-CTR dated 21-09-2017 and further proposed to be amended by GST Council meeting recommendations dated 06-10-2017 and  is covered by heading 9954

Sl. No.3

(i) Construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration has been received after issuance of completion certificate, where required, by the competent authority or after its first occupation, whichever is earlier.  (Provisions of paragraph 2 of this notification shall apply for valuation of this service) is taxable @ 18%

 

In case of supply of service specified in column (3) of the entry at item (i) against serial no. 3  of the Table above, involving transfer of property in land or undivided share of land, as the case may be,

Ø the value of supply of service and goods portion in such supply shall be equivalent to the total amount charged for such supply less the value of land or undivided share of land, as the case may be,

Ø and the value of land or undivided share of land, as the case may be, in such supply shall be deemed to be one third of the total amount charged for such supply.

 

Explanation .– For the purposes of paragraph 2, “total amount” means the sum total of,-

(a) consideration charged for aforesaid service; and

(b) amount charged for transfer of land or undivided share of land, as the case may be

 

Hence effective tax rate shall be 12% in case of construction of complex service.
(ii) composite supply of works contract as defined in clause 119 of section 2 of Central Goods and Services Tax Act, 2017.is taxable @ 18%

 
(iii) Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017, supplied  to the Government, a local authority or a Governmental authority by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of, – [Note: Building,fabrication , Modification, Improvement is not covered]

 

(a) a historical monument, archaeological site or remains of national importance, archaeological excavation, or antiquity specified under the Ancient Monuments and Archaeological Sites and Remains Act, 1958 (24 of 1958);

 

(b) canal, dam or other irrigation works;

 

(c) pipeline, conduit or plant for

(i) water supply

(ii) water treatment, or

(iii) sewerage treatment or disposal.

 

Is taxable @ 12% w.e.f. 22/08/2017. (From 01/07/2017 to 21/08/2017 It is taxable @ 18%)

 

 
(iv) Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017, supplied by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of,-

 

(a) a road, bridge, tunnel, or terminal for road transportation for use by general public;

 

(a)  a civil structure or any other original works pertaining to a scheme under Jawaharlal Nehru National Urban Renewal Mission or Rajiv Awaas Yojana;

 

(c) a civil structure or any other original works pertaining to the “In-situ rehabilitation of existing slum dwellers using land as a resource through private participation” under the Housing for All (Urban) Mission/Pradhan Mantri Awas Yojana, only for existing slum dwellers;

 

(d) a civil structure or any other original works pertaining to the “Beneficiary led individual house construction / enhancement” under the Housing for All (Urban) Mission/Pradhan Mantri Awas Yojana;

 

(e) a pollution control or effluent treatment plant, except located as a part of a factory; or

 

 (f) a structure meant for funeral, burial or cremation of deceased.

 

Is taxable @ 12% w.e.f. 22/08/2017 (from 01-07-2017 to 21/08/2017. It is taxable @ 18%).

 

Note:

1.     It is similar to Sl No, 13 of 25/2012

2.     However Sl No, 13 of 25/2012 provided exemption for services  by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of a building owned by an entity registered under section 12 AA of the Income tax Act, 1961(43 of 1961) and meant predominantly for religious use by general public

For which concessional tax is not available and hence shall be taxed at 18%.
 
(v) Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017, supplied  by way of construction, erection, commissioning, or installation of original works pertaining to,- [Note : Repair, Alteration. Modification, Renovation, Completion, fitting out not covered by Concessional taxation]

 

(a) railways, excluding monorail and metro; [Note : Cosntruction service for Air port, port, monorail and metro shall be @ 18%]

 

(b)  a single residential unit otherwise than as a part of a residential complex;

 

[Para 2 (zzb) “residential complex” means any complex comprising of a building or buildings, having more than one single residential unit;

 

[Note:

1.      Construction for Residential Complex is taxable @ 18%.

2.     Services by way of pure labour contracts of construction, erection, commissioning, or installation of original works pertaining to a single residential unit otherwise than as a part of a residential complex is exempt as per Sl. No. No. 11 of Exemption Notification 12/2017]

 

(c) low-cost houses up to a carpet area of 60 square metres per house in a housing project approved by competent authority empowered under the ‘Scheme of Affordable Housing in Partnership’ framed by the Ministry of Housing and Urban Poverty Alleviation, Government of India;

 

(d) low cost houses up to a carpet area of 60 square metres per house in a housing project approved by the competent authority under-

 

(1) the “Affordable Housing in Partnership” component of the Housing for All (Urban) Mission/Pradhan Mantri Awas Yojana;

 

(2) any housing scheme of a State Government

 

(e) post-harvest storage infrastructure for agricultural produce including a cold storage for such purposes; or

 

(f) mechanised food grain handling system, machinery or equipment for units processing agricultural produce as food stuff excluding alcoholic beverages.

 

Is taxable @ 12% w.e.f. 22/08/2017 (from 01-07-2017 to 21/08/2017. It is taxable @ 18%)

 

Note: As per item no. 10 of Exemption Notification 12/2017 , Services provided by way of pure labour contracts of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of a civil structure or any other original works pertaining to the beneficiary-led individual house construction or enhancement under the Housing for All (Urban) Mission or Pradhan Mantri Awas Yojana is exempt

 

 

Note :

1.     Para 2(zs) of 12/2017

“original works” means- all new constructions;

(i)                all types of additions and alterations to abandoned or damaged structures on land that are required to make them workable;

 

(ii)              erection, commissioning or installation of plant, machinery or equipment or structures, whether pre-fabricated or otherwise;

 

2.     Hence Pure labor contracts of following nature for erection, commission or installation  in single residential unit should be exempt:

a)     Air Conditioning

b)    Security Systems

c)     Electrical Installations

d)    Sanitary Installation
(vi)  

 Services provided to the Central Government, State Government, Union Territory, a local authority or a governmental 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 Central Goods and Services Tax Act, 2017.

 

[Notification 24/2017-CTR dated 21-09-2017]
(vii) Construction services other than (i), (ii), (iii), (iv), (v) and (vi) above is taxable @ 18%

 

Note : Construction Services shall cover pure labor service also

 

Further as per GST Council decision dated 06-10-2017

1  Works contract services involving predominantly earth works (that is, constituting more than 75% of the value of the works contract) supplied to Central Government, State Governments, Local Authority, Governmental Authority or Government Entity shall be taxed at 5%.
2 Present definition of “governmental authority”  has the same meaning as  assigned to it in the Explanation to clause (16) of section 2 of the Integrated Goods and Services Tax Act, 2017 (13 of 2017

As per Explanation to Section 2(16) of IGST Act:

Explanation.––For the purposes of this clause, the expression “governmental authority” means an authority or a board or any other body,–

(i) set up by an Act of Parliament or a State Legislature; or

(ii) established by any Government

 

Definition of Governmental Authority expanded also to include any authority set up to carry out any functions entrusted to a Panchayat under Article 243G of the Constitution.
3 Supply of service or goods by a Government Entity to Central Government, State Government, Union Territory, Local Authority or any person specified by them against consideration received from them in the form of grants, shall be exempted.

 

“Government Entity” shall be defined as an authority or a board or any other body including a society, trust, corporation which is, –

(i) set up by an Act of Parliament or State Legislature, or

(ii) established by any government,

 

with 90% or more participation by way of equity or control, to carry out a function entrusted by the Central Government, State Government or a local authority
4 The reduced rate of 12% on specified works contract services supplied to the Central Government, State Government, Union Territory, Local Authority and Governmental Authority shall be extended to a Government Entity, where such specified works contract services have been procured by the government entity in relation to the work entrusted to it by the Central Government, State Government, Union Territory or Local Authority
5 GST shall be levied @ 12% on works contract services in respect of offshore works contract relating to oil and gas exploration and production (E&P) in the offshore area beyond 12 nautical miles
6 Exemption to annuity paid by NHAI (and State authorities or State owned development corporations for construction of roads) to concessionaires for construction of public roads.

 

 

 

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Job Work present and proposed rates after GST Council 22nd Meeting on 06-10-2017

 

W.e.f. 01-07-2017 Changes W.e.f. 22-08-2017 As per 22nd GST Council meeting on 06-10-2017 (not yet effective)
Job Work for Printing of Newspaper and books, journals and newspapers

(Newspaper, journals, periodcals, printed books are exempt)

 5% Job work for printing of Newspapers and books , Journals and newspapers only was retained at 5% but where only content is provided by publisher and printer has obligation to provide paper also along with performing printing rate was pegged at 12% No Change
Printing of Brochures,

leaflets and similar

printed matter, whether

or not in single sheets, Maps, atlas, charts and globe, Judicial, Non judicial stamp

papers, Court fee stamps

when sold by the

Government Treasuries or

Vendors authorized by

The Government,

Postal items, like envelope, Post card etc.,

sold by Government, rupee notes when sold to

the Reserve Bank of India

& Cheques, lose or in book form

(Supply of these items is exempt or taxable at 5%)

 18% No Change 5% but where only content is provided by publisher and printer has obligation to provide paper also along with performing printing rate pegged at 12%
Printing of :

1.Children’s picture, drawing or colouring books,

 

2.Music, printed or in manuscript, whether or not bound or illustrated,

 

3.Plans and drawings for architectural, engineering, industrial, commercial, topographical or similar purposes, being originals drawn by hand; hand-written texts; photographic reproductions on sensitised paper and carbon copies of the foregoing

 

4. Unused postage, revenue or similar stamps of current or new issue in the country in which they have, or will have, a recognised face value; stamp impressed paper; banknotes; cheque forms; stock, share or bond certificates and similar documents of title

 

5. Transfers (decalcomanias) [The art or process of transferring pictures and designs from specially prepared paper (as to glass)]

 

6. Printed or illustrated postcards; printed cards bearing personal greetings, messages or announcements, whether or not illustrated, with or without envelopes or trimmings

 

6. Calendars of any kind, printed, including calendar blocks

 

7. Other printed matter, including printed pictures and photographs; such as Trade advertising material, Commercial catalogues and the like, printed Posters, Commercial catalogues, Printed inlay cards, Pictures, designs and photographs, Plan and drawings for architectural engineering, industrial, commercial, topographical or similar purposes reproduced with the aid of computer or any other devices.

 

8. Uncoated paper and

paperboard, uncoated

kraft paper,

greaseproof paper,

glassine paper,

composite paper etc.

 

9. Aseptic packaging

Paper

 

10. Boxes, pouches,

wallets and writing

compendiums, of

paper or paperboard,

containing an

assortment of paper

stationery including

writing blocks

 

11. Cartons, boxes and

cases of corrugated

paper or paper board

 

12. Exercise book, graph

book, & laboratory

note book

 

13. Kites

 

14. Paper pulp moulded

Trays

 

15. Braille paper

 

16. Paper splints for

matches, whether or

not waxed, Asphaltic

roofing sheets

 

[ These items are taxable @ 12%]

 18% 18% 12%, whether or not paper is also provided by the printer.
Other Printing Job Work on material taxable @ 18% including printing on Cartons, boxes and

cases of non -corrugated

paper or paper board

 

 18% 18% 18%
Textile Job Work 5% for Textile yarns (other than of man-made fibres) and textile fabrics

 

 Tax rate for Job work on all textile products falling under chapter 50 to 63 was reduced to 5% including job work on man made fibres and job work on garments or made ups
Jewellery Sector Job Work 5% for

Cut and polished diamonds; precious and semi-precious stones; or plain and studded jewellery of gold and other precious metals, falling under Chapter 71 in the First Schedule to the Customs Tariff Act, 1975

 

But Job work for imitation jewellery, gold smith, silver smith wares was not specified in 5% category. Hence it was taxable at 18%

 

 No Change Job Work for all Natural or cultured pearls, precious or semi-precious stones, precious metals, metals clad with precious metal, and articles thereof; imitation jewellery; coin has been pegged at 5%
Processing of Hides skins and leathers 5% for

Processing of hides, skins and leather falling under Chapter 41 in the First Schedule to the Customs Tariff Act,

 

 No Change
Job Work in relation to food products 18% subject to exemption under Notification 12/2017  for

1 Slaughtering of Animals

 
2 pre-conditioning, pre-cooling, ripening, waxing, retail packing, labelling of fruits and vegetables

 
3 Services provided by the National Centre for Cold Chain Development under the Ministry of Agriculture, Cooperation and Farmer’s Welfare by way of cold chain knowledge dissemination

 
4 processes carried out at an agricultural farm including tending, pruning, cutting, harvesting, drying, cleaning, trimming, sun drying, fumigating, curing, sorting, grading, cooling or bulk packaging and such like operations which do not alter the essential characteristics of agricultural produce but make it only marketable for the primary market;
5 loading, unloading, packing, storage or warehousing of agricultural produce
6 loading, unloading, packing, storage or warehousing of rice.

 

 

 No Change 5%. However packaging of milk processed milk into packets is not in 5% category.
Job Work in relation to residue and waste of food industry and animal fodder 18% 18% 5% except job work for

 dog and cat food put up for retail sale
 

 Job work in relation to manufacture of umbrella
18% 18% 12%
Manufacture of clay bricks 18% 18% 5%
Other Job Work 18% No Change 18%

 

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What will be exemptions available for various authorizations/scrips which have been issued prior to 1.7.2017 and remain unutilized on 1.7.2017

No exemption under GST Law is provided. The EXIM scrips under the export incentive schemes of chapter 3 of FTP (for example MEIS and SEIS) can be utilised only for payment of Customs duties or additional duties of Customs, on items not covered by GST, at the time of import. The scrips cannot be utilized for payment of Integrated Tax and Compensation Cess. Similarly, scrips cannot be used for payment of CGST, SGST or IGST for domestic procurements.

(FAQ 11: TRANSITION OF EXPORT PROMOTION SCHEME ON IMPLEMENTATION OF GST)

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Under the GST regime, will benefit of exemption from all duties available under Advance authorization scheme, EPCG scheme and duty credit scrips such as Merchandise Exports from India Scheme (MEIS) & Service Exports from India Scheme (SEIS) will continue

After 1st July 2017, the benefits under all the said schemes shall be restricted only to Basic Customs Duty, Safeguard Duty, Transitional Product Specific Safeguard Duty and Anti-dumping Duty in respect of goods leviable to IGST. For items specified in the Fourth Schedule to the Central Excise Act, 1944 (specified petroleum products, tobacco etc.) exemption from Additional Duty leviable under Sections 3(1), 3(3) and 3(5) of the Customs Tariff Act, 1975 shall be available.

(FAQ 8: TRANSITION OF EXPORT PROMOTION SCHEME ON IMPLEMENTATION OF GST)

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On re-export of imported goods, drawback of all duties paid at the time of importation was admissible earlier, as per the rates prescribed in this regard. What will be the position in respect of re-export made after 1st July 2017, of the goods imported prior to 1st July 2017? After 1st July 2017, IGST and Compensation Cess will also be payable on the imported goods. If such imported goods on which IGST and Compensation Cess were paid, are re-exported, whether Drawback of IGST and Compensation Cess will also be granted

Drawback under Section 74 of the Customs Act, 1962 is available for duties paid at the time of importation. Therefore, whatever duties / taxes are paid at the time of importation of goods, Drawback of the same will be granted. Drawback of Basic Customs Duty plus Additional Duty of Customs (CVD) plus Special Additional Duty (SAD) paid on the goods imported prior to 1st July 2017 will be paid even if the re-export is made after 1st July 2017. Similarly,
in respect of the goods imported after 1st July 2017, Basic Customs Duty plus IGST plus Compensation Cess will be paid and Drawback of all of these would be paid on re-export of such imported goods.

(FAQ 7: TRANSITION OF EXPORT PROMOTION SCHEME ON IMPLEMENTATION OF GST)

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Is there also a change under the GST regime in respect of filing of application for fixation of brand rate of Drawback for supplies to SEZ units and SEZ Developers

Prior to 1st July 2017, applications for fixation of brand rate for supplies to SEZ units and SEZ Developers used to be filed with the jurisdictional Commissioner of Central Excise. With effect from 1st July 2017, applications for fixation of brand rate will be required to be filed with the Commissioner of Customs having jurisdiction over the principal place of business of the DTA supplier. This shall be applicable even for exports made prior to 1st July 2017 for which application for fixation of brand rate is yet to be filed.

(FAQ 6: TRANSITION OF EXPORT PROMOTION SCHEME ON IMPLEMENTATION OF GST)

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Applications for fixation of brand rate used to be filed with jurisdictional Commissioner of Central Excise having jurisdiction over the factory where export goods were manufactured. Under GST regime, will there be any change regarding filing of application for fixation of brand rate

With effect from 1st July 2017, applications for fixation of brand rate shall be filed with the Commissioner of Customs having jurisdiction over place of export of goods i.e the port/Airport/ICD etc. where Shipping Bill was filed. This
shall be applicable even for exports made prior to 1st July 2017 for which application is yet to be filed. In case exports are from multiple places, application shall be filed with the Commissioner of Customs having jurisdiction over any one of the places of export of goods.

(FAQ 5: TRANSITION OF EXPORT PROMOTION SCHEME ON IMPLEMENTATION OF GST)