TMI BlogMinutes of the 28th GST Council Meeting held on 21 July, 2018X X X X Extracts X X X X X X X X Extracts X X X X ..... e for information of the Council 5. Review of Revenue Position 6. Issues recommended by the Law Committee for consideration of the GST Council i. Proposals for amendments in the CGST Act, 2017, IGST Act, 2017, UTGST Act, 2017 and GST (Compensation to States) Act, 2017 ii. Creation of GST Appellate Tribunal (GSTAT) iii. Simplification of GST Returns 7. Issues recommended by the Fitment Committee for consideration of the GST Council 8. Reports/recommendations of different Committees/Group of Ministers (GoMs) for information/approval of the Council: i. Recommendations of the Committee on Lottery ii. Recommendations of the Committee on IGST iii . Recommendations of the Report of the Task Force to suggest measures for creating an Eco-System for Seamless Road Transport Connectivity iv. Recommendations of the Group of Ministers on Digital Payments v. Interim report of the Group of Ministers on imposition of Sugar Cess vi. Recommendations of the Group of Ministers on Reverse Charge Mechanism 9. Minutes of 9 th Meeting of Group of Ministers (GoM) on IT Challenges in GST Implementation for information of the Council and discussion on GSTN issues ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esolve to thank 125 crore people of India who adopted GST despite some small initial problems. He also stated that tile Council should thank all the States who made GST a success for the benefit of tile people, going beyond political considerations. 3.1. The Hon'ble Chairperson further added that it was a matter of great pride now that there was one nation, one law and one procedure in the indirect taxation system of India. He stated that GST would impart respect for honesty and transparency in the country. e-Way bill system was a big step in improving compliance and all the Hon'ble Members of the Council deserved the highest accolade for introducing this reform in a phased manner and organized fashion. He further appreciated that growth had been maintained in the GST structure. He stated that the tax collection was at a reasonable level and expressed confidence that GST revenue would grow with greater ease of operation and record maintenance, lower tax rates and simplification of processes. He also expressed confidence that the Council would continue its high tradition of taking decisions by consensus. 3.2. Dr. Hasmukh Adhia, Union Finance Secretary and Secretary to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Punjab had many times ignored its own interest for the higher interest of the country. He stated that he as well as the Hon'ble Minister from West Bengal had written to the Hon'ble Chairperson earlier and also highlighted that the detailed agenda notes for this Meeting run into more than 400 pages and covered issues such as amendment to GST laws, rules, rates, returns, GIC, etc. These were very important issues and it was humanly impossible to go through 400 pages in a short time of three days. They needed more time to study the proposals to first convince themselves and then to convince the State Cabinet and then their people in the State. He recalled that in the 25th Meeting of the Council held on 18 January 2018, the Council gave in principle approval to the proposed amendments in GST Laws and asked the Law Committee to get it vetted by the Law Ministry. He stated that many proposals of the Law Review Committee were not being reflected without any mention of reason thereof. He requested to defer the law amendment proposals by two weeks for wider consultation with the stakeholders. 3.6. The Secretary stated that the agenda notes other than that relating to Fitment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Consolidated Fund of India (CFI), and to be devolved as per Article 270 of the Constitution. This proposal was not accepted by Delhi and many other Members and accordingly this Agenda item was deferred. However, now ₹ 1.60 lakh crore of IGST revenue was put in the CFI. He stated that the tax collected from Delhi should go to Delhi but since it had gone to the CFI, Delhi did not get any devolution out of this amount. He questioned whether the Central Government could take unilateral decision to put this amount in the CFI when the Union Territory with legislature also have the status of a State for the purpose of GST revenue. He stated that the Minutes of this Council Meeting should specifically record his opposition to this unilateral decision of the Government of India to put ₹ 1.60 lakh crore of IGST revenue in the Consolidated Fund of India when an Agenda item on this issue was withdrawn during the 26th Meeting of the Council. He added that today's agenda on IGST settlement was a welcome move and after disbursing ₹ 50,000 crore to States, Delhi had received ₹ 1050 crore. Had ₹ 1.68 lakh crore been disbursed as per this formula, Delhi would have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, circulars and orders issued, based on the decisions taken during the 27 th Meeting of the Council, issued after 4 May, 2018 and till 16 July, 2018 were presented during the Officers meeting on 20 July 2018. He suggested that the same may be approved by the Council. He also suggested that the notifications, circulars and orders issued by all the Member States, which are pari materia with the notifications, circulars and orders of the Central Government may also deemed to be ratified. The Council approved the suggestion. 7. For Agenda item 2 , the Council approved the deemed ratification of the following notifications, circulars and orders, which are available at www.cbic.gov.in Act/Rules Type Notification/Circular Nos. CGST Act/CGST Rules Central Tax 22 to 29 of 2018 Central Tax (Rate) 11 and 12 of2018 IGST Act Integrated Tax (Rate) 12 and 13 of2018 UTGST Act Union Territory Tax 07 to 11 of2018 Union Territory ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat a total of 598 cases related to TRAN-1 and TRAN-2 and 1881 cases relating to migration had been received by the GSTN till 15 June, 2018. Out of this, 170 cases relating to TRAN-1/TRAN-2 and 748 cases relating to migration/registration were examined by GSTN and analysis presented before the ITGRC. ITGRC allowed 122 taxpayers to file their TRAN-1/TRAN-2 and 406 taxpayers to complete their migration process. The ITGRC also directed the Law Committee to examine and map the consequential issues that may arise relating to such filing of TRAN-1/TRAN-2 and migration and suggest ways to handle such situations, wherever required, in a time bound manner. He also referred to different categories of TRAN-1/TRAN-2 and migration cases approved by the ITGRC. He added that as on 15 July, 2018, approximately 3500 cases of grievances relating to migration /registration/ TRAN-1/TRAN-2/GSTR-3B/GSTR-1/ITC-01/lTC-04, etc. had been received by the GSTN's Nodal Officer. In the first list, approximately 918 cases were examined and presented to IRGRC. Another lot of around 1200 cases had been examined by GSTN and would be put up before the ITGRC. The remaining cases were under investigation with resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regarding the status for allowing filing of TRAN-1. The Secretary observed that filing of TRAN-1 had financial implication and it needed to be examined further. The Hon'ble Minister from Maharashtra suggested that the date for receiving requests of taxpayers to migrate to GST could be taken as 31 August, 2018 instead of 14 August 201 8. The Council agreed to this proposal. 11. For Agenda item 4 , the Council approved the following: (i) To allow migration of those taxpayers to GST, who have submitted Part A of REG-26 but could not complete the migration process, and whose applications were received by the Principal Nodal officers/ Nodal officers of the Central and State Governments till 31 August, 2018; (ii) In order to give effect to the decision at (i) above, ITGRC's mandate will be to allow migration of even those taxpayers who could not migrate due to reasons other than technical glitches and an order under Rule 24 of CGST/SGST Rules, 2017 will be issued by the Commissioner extending the time limit for furnishing the information as required therein; (iii) To waive the late fee (by way of reversal in electronic ledger and crediting the amount in the relevant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of this, CGST and SGST breakup for April 2018 was ₹ 13, 841 crore for CGST and ₹ 14, 553 crore for SGST; for May 2018, it was ₹ 12,931 crore for CGST and Rs.l2, 330 crore for SGST; and for June 2018, it was ₹ 15, 676 crore for CGST and ₹ 14, 662 crore for SGST. He further informed that there was an ad hoc provisional settlement of ₹ 25, 000 crore each of CGST and SGST in the month of June 2018. He stated that with this ad hoc IGST settlement of ₹ 50, 000 crore, there was negative balance in the IGST account for the period April-June, 2018. 12.1. The Joint Secretary, DoR also presented a chart of the average revenue trends of the States from August 2017 to June 2018 which showed that all India percentage shortfall of revenue was 13%. He also presented a Return filing analysis till due date and on cumulative basis till date. He pointed out that the return filing percentage had shown an increasing trend till December 2017 but it declined thereafter, which was a matter of concern. 12.2. The Hon ble Chairperson observed that those States which had a return filing percentage of less than 60% of the registered taxpayers needed to examine as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. However, now all these industries wanted to move out of the State as there was no area-based exemption. Further, due to IGST, they were getting no revenue as it was all getting passed on to the destination States. Hon ble Chairperson stated that the issue of Uttarakhand would be examined separately. 12.5. The Hon'ble Minister from Tamil Nadu stated that the process of collating the details of unutilized credit of IGST would take time and may not be resolved fully even if more time was taken. He suggested to make an interim arrangement to distribute the accumulated credit. He proposed that 90% of accumulated IGST relating to Financial Year 2017-18 as at the end of March 2018 should be settled immediately on the same basis as the two provisional settlements of ₹ 35,000 crore and ₹ 50,000 crore made so far and treated as 2017-18 revenue. 90% of accumulated IGST for 2018-19 as on 31 July 2018 should also be settled on the same basis. During the Financial Year 2018-19, 90% of the IGST amount accumulated each month may be apportioned to the States with a lag of one month. He also requested that figures of IGST accumulation should be shared transparently with the Sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e gap in their State as well. The Hon'ble Chief Minister of Puducherry observe that in GST, as tax rates in his Union Territory had come at par with the adjoining States, they were losing revenue. The Secretary suggested that he could sit with the Secretaries of States of Punjab, Himachal Pradesh, Uttarakhand, Jammu Kashmir and Puducherry to analyse reasons for low revenue. The Council approved this proposal. Shri Tuhin Kanta Pandey, Additional Chief Secretary (ACS), Odisha stated that the States which derived their revenue from metals and minerals suffered a specific problem. Secretary stated that report of the CEA on Bihar would be reviewed and that could form the basis for study for other States. The Hon'ble Chairperson stated that the work of study of revenue gap of the States of Punjab, Himachal Pradesh, Uttarakhand and Jammu Kashmir as well as that of Puducherry should be completed in 45 days. 12.8. The Secretary stated that States were concerned as to what would happen once the compensation ceased after 4 years. In his assessment, after 3 years, as the compliance under GST improved, no State might need to be compensated. 12.9. The Hon'ble Minister from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icers of the Fitment Committee should be complimented for achieving this while also reducing rates from time to time. He further observed that the success and benefits of e-Way Bill were yet to be fully reaped. He also stated that refinements in e-Way Bill system like distance matching through pin codes would further reduce mis-declaration and misuse of the e-Way Bill. 12.12. The Joint Secretary, DoR informed that during the Officers meeting on 20 July 2018, it was also recommended to put the GST revenue collection data in the public domain at macro level with some lag as also the revenue collected by the States in the Financial Year 2016-17 from the taxes subsumed in GST for analysts, media or for general public with a view to increase transparency. He requested that the Council may approve this proposal. The Council approved the same. 13. For Agenda Item 5 , the Council: - i) Took note of the revenue position under GST for April to June 2018; ii) Decided that the study conducted by CEA for Bihar regarding its revenue gap shall be used as a basis for conducting similar study for the States of Punjab, Himachal Pradesh, Uttarakhand, Jammu Kashmir and Puducherry, for w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etc. He stated that all these suggestions were examined and wherever it was felt that it could be included in the draft proposals as put in the public domain, these were added. These proposals were discussed thoroughly in the Officers Meeting on 20 July 2018 and as a result, further 19 changes were suggested which were also incorporated in the Presentation. 14.2. The Hon'ble Deputy Chief Minister of Delhi asked whether the report of the LRC was shared with the States and tabled before the Council. Shri Shashank Priya, Joint Secretary, GST Council informed that it was shared with the Convenor of the LC and the GST Policy Wing of CBIC. Hon ble Deputy Chief Minister, Delhi stated that as a principle, for any Committee set up by the Council, the report should be first submitted to the Council for taking any decision based on its report. 14.3. The Hon'ble Minister from Punjab stated that the Council during its 25 th Meeting held on 18 January 2018 gave in principle approval to the LRC's recommendations for 69 changes in the Law and only legal vetting was to be done but out of these, only 8 proposals were accepted without any change and 15 were accepted with modificat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me to the Government beyond a period of three months was dropped as the Union Law Ministry had approved the existing language after discussing this very issue and had also noted that the same formulation was part of the Service Tax Law. Another proposal that was dropped related to a proposed amendment providing that eligibility of zero rating for supply to SEZ would only be for 'authorised operations' . He stated that this issue was already addressed in the GST Rules and the SEZ Act also provided for benefit of zero rating only for ' authorised operations'. If Law was changed at this stage, it could be construed that for the past period, supplies made to SEZ for non-authorised operations would also be eligible for zero rating. 14.7. He further stated that a third example related to the problem of reversal of input tax credit in respect of the services provided by way of extending loans and deposits. He explained that services by way of extending deposits, loans or advances in so far as the consideration is represented by way of interest or discount are exempt from GST. In terms of Section 17(2) of the CGST Act, 2017, input tax credit (lTC) is not available in res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question would arise whether an undivided/unascertained share in goods which included alcohol for human consumption, would also become supply of service, though it was not in GST. He pointed out another instance of problem in law 'with regard to definition of IGST. The definition of IGST is that it is a tax charged under Section 5 of the IGST Act, which implies that IGST charged by any section other than Section 5 is not an IGST. He stated that nine months back, they had raised the issue regarding imported goods as to whether IGST on imported goods was being charged under the IGST Act or the Customs Tariff Act. The IGST Act provides that IGST on imported goods will be charged under Section 3 of the Customs Tariff Act 1975; if a tax was charged under the Customs Tariff Act, then no input tax credit would be available under the CGST/SGST Act. This appeared to be a dual taxation and no reply had been received so far. He further stated that the definition of supply in Section 7 of the CGST/SGST Act required many changes. The definition of supply as it stood today was a matter of doubt and it was not understood why the changes suggested by LRC were dropped. He recalled that earlier ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... format and increasing the annual turnover eligibility criteria for Composition taxpayers from of ₹ 1 crore to ₹ 1.5 crore. He suggested that only these changes might be done in the current Parliament session. The Hon'ble Chairperson stated that the Council should do what could be done and review the other changes subsequently. 14.12. After these discussions, Commissioner (GST Policy Wing), CBIC proceeded with the Presentation. The discussion in the Council in respect of the specific proposals is summarised as below: (i) S. No. 6 of Presentation relating to Section 7 of CGST/SGST Act : The Commissioner (GST Policy Wing), CBIC explained that Section 7 (1) was proposed to be amended by creating a new sub-section (1A) clarifying that certain activities or transactions, which constituted a supply in accordance with the provisions of sub-section ( 1) of Section 7, shall be treated either as supply of goods or supply of services as referred to in Schedule II . Advisor (Financial Resources), Punjab stated that the existing provision under Section 7 which made activities under Schedule II as a supply of goods or services was an inadvertent error in law drafting. If i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the proposed formulation was to allow every Composition taxpayer to supply services up to a turnover of ₹ 5 lakh but no one would get this benefit beyond a turnover value of ₹ 15 lakh. Those whose turnover was less than ₹ 1.5 crore would get a lesser entitlement for supply of services, but all would be assured of entitlement of supplying services up to a turnover of ₹ 5 lakh annually. The Commissioner (GST Policy Wing), CBIC stated that once the annual turnover threshold for Composition taxpayers was being increased to ₹ 1.5 crore, 10% of this would become ₹ 15 lakh and therefore the upper limit would now be automatically ₹ 15 lakh as proposed by the Hon'ble Deputy Chief Minister of Bihar. The Hon'ble Chief Minister of Puducherry stated that they had received the agenda only three days in advance of the Meeting and the States that were not part of the Law Committee needed more time to examine this proposal. The Hon'ble Minister from Assam stated that the proposed amendment to Section 10 to increase the annual turnover threshold to ₹ 1.5 crore was already decided in the 23 rd Council meeting held in Guwahati on 10 Novemb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... they felt comfortable with it. Dr. Rajiv Mani, Joint Secretary, Ministry of Law stated that an enabling provision could be made in the GST Law so that the Council could approve the nam.es of the Special Category States as and when they wanted to increase their threshold for registration from annual turnover of ₹ 10 lakh to ₹ 20 lakh. The Council approved this suggestion as well as the proposed amendment to include names of four more States, namely Arunachal Pradesh, Himachal Pradesh, Meghalaya and Uttarakhand in Explanation to Section 22 of the CGST Act, 2017. (vi) S. No. 46 of Presentation relating to new Section 10 (3A) of GST (Compensation to States), Act, 2017: The Hon'ble Chairperson suggested that the proposed formulation should have more flexibility. Instead of providing that the amount remaining unutilised in the Fund shall be distributed between the Centre and the States, the law should provide that such amount may be distributed between the Centre and the States, as the Council may decide. He suggested to change the phrase 'distribute the amount remaining unutilized in the Fund' to 'distribute such amount remaining unutilized in the Fund&# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Report of the Law Review Committee in the Council along with the reasons why its proposals were not considered along with the website link containing the suggestions to the proposed changes in the GST law; 15.4. To keep open for the consideration of the Council the suggestions of the Law Review Committee not accepted till now. l 15.5. To submit before the Council, Report of every Committee set up by it. Agenda Item 6(ii): Creation of Goods and Service Tax Appellate Tribunal (GSTAT) 16. The Secretary invited the Joint Secretary, Department of Revenue, to introduce the agenda item. The Joint Secretary, Department of Revenue, stated that the draft rules of Goods and Service Tax Appellate Tribunal (Appointment and Conditions of Service of President and Members) Rules, 2018 was approved by the GST Implementation Committee (GIC). He informed that during the Officers meeting held on 20 July 2018, Shri Arun Kumar Mishra, Additional Secretary, Commercial Tax Department, Bihar had pointed out that Rule 3 of these Rules would require some modification in view of the fact that the Rule referred to three different Selection Committees, but sub-Rule 4 provided for Convenor for on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ization of return format, wide consultations were held with trade and GST compliance community and their inputs had been duly incorporated in the return design. GSTN and the implementing IT Company i.e. Infosys were also part of the return design process and are fully on board for the proposed design. 18.2. The Joint Secretary (TRU-ll), CBIC, explained the key features of the return. He stated that there would be only one monthly return for all taxpayers excluding small taxpayers with annual turnover below ₹ 1.5 crore and Input Service Distributor (lSD), etc. There would be an optional provision of quarterly return filing for small taxpayers with annual turnover below ₹ 1.5 crore, but they would need to pay tax on monthly basis. The due date for filing return by a large taxpayer shall be 20 th of the next month whereas the due date for smaller taxpayers shall be 25 th of the next month. The taxpayers having no output tax liability and no input tax credit would also have a facility to file return through SMS. Facility for continuous upload of invoices by the supplier and viewing by the recipient along with tax payment status of an invoice shall also be available. On ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the law there would continue to be a provision making the seller and the buyer jointly and severally responsible for recovery of tax, which was not paid by the supplier but credit of which had been taken by the recipient. This would ensure that the security of credit was not diluted completely. 18.4. He also explained that in the present return design, GSTR-3B could not be amended but in the new return design, there would be a facility for amendment of invoice and other details filed in the return. Maximum two amendments of return would be allowed for each tax period till the month of September of the next Financial Year. Along with the amendment of return, payment of tax shall also be allowed to save the interest liability of the taxpayer and the negative tax liability would be taken to next tax period. In order to bring in some discipline in .return filing, it was proposed to charge a late fee (after some time of implementation of new return) if the amendment return involved change in liability of tax by more than 10%. He stated that the table for export of goods in return would also contain details of shipping bills, but this information could be filed even after filing the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ttlement of tax to States but it was proposed to be addressed by providing a facility for filing of quarterly return to small taxpayers with monthly payment of tax and availing input tax credit on self-declaration basis. He stated that even for small taxpayers, settlement of funds to the extent of 90% would be monthly as IGST utilisation for CGST or SGST constituted 90% of the settlement. He pointed out that 85% of the business took place within the sphere of large taxpayers, 12.3% of the business took place between the large taxpayer and the small taxpayer and transaction between two small tax payers was approximately only 2.2%. The credit utilization by the small taxpayers/ businesses was also lower than that for medium and large businesses. 18.7. The Joint Secretary (TRU-ll), CBIC stated that there would be further simpler quarterly return available for small traders who make only Business to Consumer (B2C) supplies or only Business to Business (B2B) plus Business to Consumer (B2C) supplies. The return format for B2C suppliers was proposed to be called SAHAJ and for B2B plus B2C suppliers, it was proposed to be called SUGAM. He also stated that small taxpayers would have the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nthly payment of tax was followed in Bihar during the VAT regime and it would be good to introduce the same under GST. He stated that originally, the stumbling block for this idea was that it would obstruct monthly settlement of funds to the States and it was good that a solution was found for the same. He observed that this new return format would benefit the small taxpayers. He suggested that return format should be placed in public domain so that ideas could be obtained for further simplification. He also stated that adequate time should be given for transition and software development of the new return format. The Hon'ble Chairperson stated that the new return format could be put in public domain for one month. 18.10. On enquiry by the Hon ble Chairperson regarding tin1e taken for development of software, Shri Prakash Kumar, CEO, GSTN informed that they would need about six months' time to develop the software after specifications are frozen. The Secretary stated that GSTN was already working on the software development and the aim would be to introduce the new return format from 11 January 2019 on best effort basis. The CEO, GSTN stated that the return design should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e supplier. He stated that it should be carefully worded and a better formulation would be to provide that the liability would be first on the seller and if he fails to pay, then the liability would be of the recipient. He further stated that some eminent economists had suggested that all taxes could be paid on reverse charge basis. The Hon'ble Chairperson observed that such new scheme could not be considered at this stage. He further observed that even Directors of the Companies were jointly and severally responsible. The Hon'ble Chief Minister of Puducherry supported, in principle, the proposal to extend the benefit of filing quarterly returns to taxpayers having annual turnover up to ₹ 5 crore but suggested that it should be further examined. The Hon'ble Deputy Chief Minister of Delhi stated that earlier too, on many occasions, he had suggested to have a system of filing quarterly return and monthly payment of tax for all taxpayers. 18.13. The Secretary stated that 13% of the Revenue came from taxpayers with annual turnover below ₹ 5 crore and if the benefit of quarterly return was extended for taxpayers with annual turnover up to ₹ 5 crore, it w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance for smaller taxpayers and thresholds could not be increased in a staggered manner as the technology could not be changed periodically. The Hon'ble Chief Minister of Puducherry supported the view of Kerala. He stated that the idea of quarterly return and monthly payment of tax was dangerous as the taxpayers would pay only notional amount in the first two months and bulk of the tax would be paid in the third month. The Hon ble Chairperson stated that one option was that the taxpayer should make an estimate of his ta-x liability for the quarter and pay one third of the tax every month. Shri Tuhin Kanta Pandey, Additional Chief Secretary (ACS), Odisha stated that taxpayers would not be able to estimate their potential turnover in advance. He also stated that ₹ 1.5 crore annual turnover threshold was based on the threshold limit for Composition scheme. After further discussion, the Council agreed that taxpayers up to annual turnover of ₹ 5 crore would file quarterly return and pay tax monthly and that the Law Committee would examine how to ensure that taxpayers did not pay less amount in the first two months of the quarter. 18.15. The Hon ble Chairperson also mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be finalized with any minor amendments due to inputs received from various stakeholders with the approval of the GIC; vi) The final provision in the Law in relation to Returns to be finalized in consultation with the Ministry of Law and on the basis of other inputs received to be finally approved by GIC; vii) The new return format will be implemented from 1 st January 2019 on best effort basis; and viii) The Law Committee to examine to introduce a provision in the GST Law to allow a buyer to pay tax for the supplies received from a new or unknown supplier. , Agenda Item 7: Issues recommended by Fitment Committee for consideration of GST Council 20. The Secretary invited Shri G.D Lohani, Joint Secretary (TRU-I), CBIC to introduce the agenda item. The Joint Secretary (TRU-1), CBIC stated that representations received from various stakeholders including Ministries and Secretaries and other officers of the Centre and the States seeking changes in GST rates and clarification regarding applicability of GST rates on supply of goods/services, were considered by the Fitment Committee in its meeting on 9 and 10 July 2018 and its recommendations is at Annexure I of Agen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Minister of Puducherry supported the proposal to exempt sanitary napkins and stated that in the earlier Council meetings too, he had always argued to exempt sanitary napkins from tax. The Hon'ble Minister from Maharashtra congratulated the Council for coming up with this proposal. The Council approved the proposal to exempt Sanitary Napkins (existing rate 12%). Hand Operated Rubber Roller (SI. No. 26): (iii) The Hon'ble Minister from Kerala stated that hand operated rubber roller was an agricultural implement and most of agricultural implements were exempted from tax. The Joint Secretary (TRU-1) stated that only agricultural implements such as spades, shovels and hoes falling under Chapter 82 were exempt from tax whereas those falling under the category of machine were taxed at the rate of 18%. He added that in the Fitment Committee, there was no proposal to reduce the rate of tax on Hand Operated Rubber Roller and the issue was only to clarify the correct classification of the item. The Hon ble Minister from Kerala suggested that this item should be taxed at the rate of 5%. The Joint Secretary (TRU-1) stated that no goods under Chapter 8420 were taxed at the rat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ials between different types of stones led to classification disputes, the Fitment Committee proposed to levy a uniform rate of tax of 12% on all types of stones. He informed that representations were also received on similar lines, as otherwise the rate differential would lead to misclassification and the risk of goods being cleared at the lower rate. CCCT, Andhra Pradesh stated that in their State, there was a demand to reduce tax on Napa slabs, which was similar to Kota stone and, therefore, rate of tax should not be increased. (v) The Hon'ble Minister from Rajasthan stated that sand stones and lime stones were used by relatively lower class of people and this should be taxed at a lower rate whereas mirror polished tiles which are the replacement for high grade granite tiles, etc. could be taxed at the rate of 18%. He also showed physical samples of rough and polished Kota stones. The Hon'ble Chairperson observed that small stones which are not polished should be taxed at the rate of 5%. He stated that the Fitment Committee, in consultation with the officers of Rajasthan and Andhra Pradesh, should work out a definition and scope of polished stone which could be kept a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n his State like Bhiwandi, Malegaon and Yavatmal, etc. were badly affected. He pointed out that big textile suppliers were getting the benefit of input tax credit due to integrated supply chain, but small units were suffering. Hon'ble Chairperson stated. that this issue was also raised when he visited West Bengal. (viii) Ms. Smaraki Mahapatra, CCT, West Bengal stated that textile issue was an all India based issue and it should be considered a little more. She further stated that the initial suggestion was to keep cotton and other natural textile at 5% and to tax manmade textile at the rate of 12% and 18%. However, decision was to keep the rate of tax on textile at 5%, and to block the refund of the input tax credit accumulated as a result of inverted duty structure. If full input tax credit was allowed, it would lead to a situation of large-scale refund. The Hon'ble Deputy Chief Minister of Gujarat stated that in Surat, textile industry was badly affected and almost 50% of the power loom industry had shut down. There was no tax on textile earlier and refund must be given for inverted duty structure on fabrics. The Hon'ble Minister from Rajasthan stated that the curr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate of the notification implementing the new provision. He suggested that this amendment could be implemented from a prospective date and the purchases made after the issue of notification should only be allowed refund of input tax credit and input tax credit lying in balance should lapse. The Council agreed to this suggestion. Fertilizer grade Micro nutrients and Fertilizer grade Phosphoric Acid: (x) CCT, Tamil Nadu suggested that rate of tax on fertilizer grade micro nutrients and fertilizer grade phosphoric acid be reduced from 12% to 5%. Secretary stated that micro nutrients and fertilizer grade phosphoric acid, etc. were very broad categories of products and tax reduction should not be considered. The Hon'ble Chairperson stated that the suggestion of Tamil Nadu should be considered for reduction of tax on fertilizer grade phosphoric acid from 12% to 5%. The Council agreed to this suggestion. Pickle (xi) The Hon'ble Minister from Tamil Nadu suggested that pickle should be exempted from tax as was also suggested by the Hon'ble Chief Minister of Puducherry in earlier Council meetings. The Hon'ble Deputy Chief Minister of Bihar and the Hon'ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Fasteners: (xiii) The Hon'ble Chairperson stated that he had received a request to bring down the rate of tax on zip and slide fasteners from the current rate of 18%. The Hon ble Deputy Chief Minister of Bihar suggested that the rate of tax could be brought down to 12%. The Hon'ble Minster from Rajasthan supported this proposal. The Council agreed to reduce the rate of tax on zip and slide fasteners from 18% to 12%. Nicotine Gum: (xiv) The Hon ble Deputy Chief Minister of Gujarat stated that to quit smoking habit, Nicotine Polacrilex Gum is used and the present rate of tax on this item was 18% which should be reduced. He added that these products are like medicines and its rate should be reduced to 12%. The Secretary suggested that it may be referred to the Fitment Committee for further discussion. The CCT, Gujarat stated that the Fitment Committee had discussed this proposal and rejected it. The Joint Secretary, TRU-ll stated that this product could not be differentiated from regular chewing gum. The Secretary stated that technical specification could be given for this product based on percentage of nicotine content and then rate reduction could be considere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dy by CCTs of Uttar Pradesh and Haryana. The Hon'ble Deputy Chief Minister of Bihar stated that tax rate of 18% on footwear was leading to a bad perception of GST and the rate should be brought down to 12%. He also suggested that 5% rate of tax should apply to footwear sold for price up to ₹ 1000 per pair. He stated that this would help improve the perception of tax rate under GST in this sector. He further mentioned that people from the Scheduled Caste community worked on leather shoes on job work basis and this should be taxed at the rate of 5%. (xviii) The Hon'ble Minster from Goa suggested that the rate of tax on all shoes should be brought down to 5%. The Hon'ble Chairperson cautioned that this would lead to even big brands like Adidas and Nike getting the benefit of a low tax rate. The Hon ble Minster from Haryana stated that footwear industry was strong in his State and footwear costing less than ₹ 500 per pair was earlier getting imported in large quantities from China but it was now getting exported from his State to China. He stated that shoes costing more than ₹ 500 per pair were normally used by higher income groups and tax on this item ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le misdeclaration. He suggested that there should be one rate of tax for all categories of footwear. He stated that rate of tax of 5% on footwear costing up to ₹ 1000 per pair would lead to greater diversion of footwear to this category. The Hon ble Deputy Chief Minister of Gujarat suggested that tax rate should be kept at 5% for footwear sold up to Rs.lOOO per pair, but for other categories, the present rate should be maintained. The Hon'ble Deputy Chief Minister of Bihar reiterated that 18% tax rate was too high and the loss of revenue would not be substantial if the rate was reduced to 12%. Shri Khalid K. Anwar, Senior Joint Commissioner, West Bengal stated that in the earlier VAT regime, the VAT rate on shoes costing up to ₹ 500 per pair was 5% but for other categories, VAT rate was 14.5%. Now, in GST, tax rate of 18% meant that the State's share was only 9% and if this was reduced to 12%, State's share would further come down to 6%. The Hon'ble Chairperson suggested that tax rate of 5% should be applied for footwear sold for a price upto ₹ 1000 per pair instead of the present R.s.500 per pair while tax rate of 18% should be continued for other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls) and requested that the rate of tax on hand embroidered shawls be reduced from 12% to 5% as it was a labour-intensive product mostly made by women folk. The Hon'ble Chairperson stated that this should be discussed with other MSME related issues. The Principal Secretary (Finance), Jammu and Kashmir further drew attention of the Council to Sl. No.39 of Annexure-IT and requested that the rate of tax for Ladhaki chappals should be 5%. The Hon'ble Chairperson observed that Ladhaki chappals may not costing more than ₹ 1000 per pair and in that case, it would automatically fall under 5% tax bracket. 21. For Agenda item 7 relating to rate of tax on goods, the Council approved the proposals of change in tax rates/clarifications on goods contained in Annexure-I and Annexure-II, along with the changes in the rate of tax on goods as discussed above. 22. The Joint Secretary (TRU-ll), CBIC introduced the changes proposed in the rate of tax on services in Annexure ill to Agenda item 7. He sought the permission of the Council to withdraw the proposal at Sl. No.26 of Annexure III [to exempt from tax skill programmes having certification from Directorate General of Training ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed a similar view. He further pointed out that the Table at page 263 of Vol. I of the Agenda Note (part of Annexure IV of Agenda Note 7) showed a study of comparative overall hotel rates of one chain of hotels which indicated that cost of hotel accommodation in India was less than that in countries like Malaysia, Singapore, Thailand, Sri Lanka, etc. The Hon'ble Minister from Goa stated that at least the cap of room rent of ₹ 7500 and above per night for applying 28% tax rate should be increased to ₹ 10,000 per night. The Hon'ble Minister from Rajasthan stated that they supported the stand of the Hon ble Minister from Goa of applying 28% tax rate on room rent above ₹ 10,000 only. The Hon'ble Chairperson stated that a big relief was already being given in this Council Meeting for accommodation services by applying the tariff rate on transaction value instead of declared value. Further relaxation regarding increasing the cap on minimum room rent from which the rate of 28% would apply could be examined further by the Fitment Committee. (iii) Sl. No. 12 (Proposal to declare services supplied by Central Government, State Government, Union Territory or L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ities under Art. 243W of the Constitution would be treated as no supply of goods or services. It also agreed to the other recommendation of the Fitment Committee to revert Entry 5 of Notification No.12/2017-CT(R) to what it was prior to its amendment vide Notification No.32/2017-CT(R) dated 13.10.2017. Custom Milling of Paddy (iv) The Hon'ble Minster from Chhattisgarh stated that Food Corporation of India (FCI) procured paddy and then gave it for custom milling which was taxed. As the milling was undertaken on behalf of FCI, he suggested that no tax should be charged on custom milling of paddy. The Hon'ble Chairperson stated that this could be examined by the Fitment Committee. The Council agreed to this suggestion. Tax on coaching of various sports (v) The Hon'ble Minister from Assam stated that presently there was a tax on sports activity such as coaching for boxing and badminton and he suggested that sports and cultural activities should be exempted from tax. The Secretary stated that the basic issue related to charging of tax on coaching for sports activities and this could be examined by the Fitment Committee. The Council agreed to this suggestio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1st July to 12 October, 2017, i.e. till the date EPCG exemption was restored on 12.10.2017): The CCT, Gujarat requested that this issue should be considered sympathetically in the interest of export. The Secretary stated that there were a lot of such interim issues for retrospective amendment which would need to be examined. The CCT, Gujarat suggested that this issue could also be addressed through the Removal of Difficulties Provision under the GST Law. The Secretary observed that it would need to be examined further. The Council agreed to this suggestion. 27. In relation to Annexure-VI of Agenda Note 7 (List of services not recommended for change in GST rate), the Principal Secretary (Finance), Jammu Kashmir on behalf of His Excellency the Governor of Jammu Kashmir, brought to the attention of the Council, item at Sl. No.21 (to exempt all kinds of supply of services by Shri Mata Vaishno Devi Shrine Board, Katra from GST) and Sl. No.22 (to exempt all kinds of supply of services by Shri Amarnathji Shrine Board from GST) and requested that the services by both the Shrine Boards should be exempted from tax. The Hon ble Chairperson stated that the Ministry of Culture had come ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from Goa questioned the rationale of reducing the rate of tax from 28% to 18% for items covered under Sl.No.14 of Table Agenda (Video games consoles and machines, article and accessories for billiards, other games operated by coins, banknotes, i.e., casino games and other [other than board games of 9504 90 90]). The Hon'ble Minister from Goa suggested that casino games should be removed from the entry of Sl.No.14. Ms. Renu Sharma, Principal Secretary, (Finance), Delhi suggested that items covered under Sl. No. 14 of the Table Agenda should not be approved. The Hon'ble Chairperson agreed to this suggestion. He stated that it would send a bad signal to reduce tax rate on games etc. which could be potentially used in casinos and suggested to exclude goods covered under Sl. No. 14 of the Table Agenda from the proposal to reduce tax from 28% to 18%. The Council agreed to the proposal. 29.3. The Hon'ble Minister from Assam suggested that the proposal to reduce tax rate on items listed at Sl.No.11 [special purpose motor vehicles, other than those principally designed/ for the transport of persons or goods (for example, breakdown lorries, crane lorries, fire fighting vehicle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e-class women used perfumes and percentage of those using very high value perfumes would be very small. He suggested that this proposal should be accepted. The Council agreed to the suggestion. 29.6. The Hon'ble Minister from Assam raised a question as to why cement was not being considered for rate reduction. The Hon'ble Chairperson stated that at this juncture, motor car parts and cement was being left out of the purview of tax reduction because of high revenue involved. CCT, West Bengal stated that the Hon'ble Finance Minister of her State had written a letter to the Hon ble Union Finance Minister in November 2017 urging reduction in rate of tax on the items covered under 28% rate bracket and he had conveyed his support to the proposed reduction in rates. The Hon ble Chairperson stated that he had also talked to the Hon'ble Chief Minister of West Bengal before this Council Meeting and she also supported the proposal to give relief to the middle-class people. 29.7. The Hon'ble Chairperson stated that washing machine falling under Chapter heading 8450 was left out of the Table Agenda. He proposed that tax should be reduced on this item also from 28% to 18 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imilar stones shall be taxed at the rate of 18%; (iv) The Fitment Committee to work out a definition/scope of polished stone in consultation with officers of Rajasthan and Andhra Pradesh. 30.2. Approved change in tax rate/input tax credit refund in respect of the following goods: (i) To allow refund of input tax credit on account of inverted duty structure in the textile sector which shall be implemented from a prospective date; purchases made after the date of notification implementing this provision shall only be allowed refund of input tax credit and the earlier input tax credit lying in balance on the date of such notification shall stand lapsed; (ii) To reduce tax on fertilizer grade phosphoric acid from 12% to 5%; (iii) To reduce the rate of tax on ethanol for sale to Oil Marketing Companies for blending with motor spirit from 18% to 5% (iv) To reduce the rate of tax on zip and slide fasteners from 18% to 12% (v) To charge tax at the rate of 5% for footwear sold for a price up to ₹ 1000 per pair instead of the present ₹ 500 per pair, while tax rate of 18% to be continued for other categories of footwear (vi) To reduce the rate of tax rate f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reconsideration by the Fitment Committee: Nicotine Polacrilex Gum (Sl.No.71); food products (Sl. No.90); the issue of equal treatment to various semi-precious stones in Gems and Jewellery Sector (Sl. No. 83); and IGST exemption on import of machinery between 1 st July to 12 th October, 2017 (Sl. No. 101). 30.7. For Annexure VI, Council approved the proposals of the Fitment Committee. 30.8. Approved the reduction in the rate of tax from 28% to 18% for goods covered under the Table Agenda ( Annexure 6 of the Minutes) except for the goods covered under Sl. No. 14, 16 and17 and including Washing Machine covered under Chapter Heading 8450. Agenda Item 8: Reports/Recommendations of different Committee/Group of Ministers (GoMs) for information/approval of the Council Agenda Item 8(i): Recommendations of the Committee on Lottery 31. The Secretary invited the Joint Secretary (TRU II), CBIC to brief the Council regarding the recommendations of the Committee on Lottery. The Joint Secretary (TRU II), CBIC stated that the Terms of Reference of the Committee on Lottery was to examine and recommend ways to enable flow of GST to lottery to consuming States, and in this con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8(i), the Council approved the recommendations of the Committee on Lottery. Agenda Item 8(ii): Recommendations of the Committee on IGST 33. The Secretary informed that this Agenda item was discussed in detail in the Officers meeting held on 20 July, 2018. He stated that a lot of concerns were expressed by States as to why IGST amount was accumulating so much. It must be ensured that IGST accumulation did not occur and to examine this issue, earlier a Committee on IGST had been set up with Shri Ritvik Pandey, Joint Secretary, DoR, as its coordinator. He then invited the Joint Secretary, DoR to present the main recommendations of the Committee on IGST. The Joint Secretary, DoR stated that after an analysis of un-apportioned amount of IGST, the Committee on IGST had recommended to make ad hoc settlement of the un-apportioned amount of IGST. In the month of February, 2018, ad hoc settlement of ₹ 35, 000 crore was approved. In March, 2018, the Council constituted a committee on IGST to study and address the problem of IGST accumulation He stated that collection of IGST every month was about ₹ 50,000 crore. Initially, in August, 2017, settlement was of ₹ 11, 0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further stated that IGST model was brought in after a lot of consideration and if it was found to be not working well, one option was to switch to a new system to only charge CGST and SGST. In this model, for the goods going from, say, Maharashtra to Madhya Pradesh, the exporting taxpayer would pay CGST and SGST and when the same reaches Madhya Pradesh and when credit of tax is utilised by the purchaser in Madhya Pradesh, then there would be a mutual settlement between the two States. He observed that cross settlement between States would be very complex and originating State would always have a significant balance. This model would not affect the Central Government as it would get the CGST upfront. 33.3. The Secretary further informed that a paper has been written by Shri V. Bhaskar and Shri Vijay Kelkar of Pune International Centre in which it is proposed to make CGST payment immediately and to pay SGST as IGST for settlement with the States. He stated that this model was also fine with the Central Government. He added that the Central Government would not like to keep IGST balance beyond ₹ 1.6 lakh crore and would give provisional settlement to the States for balance ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ;ble Minister from Assam stated that the system of devolution as per the Finance Commission formula should not be disturbed and everyone should wait till September 2018 to see what was the IGST balance lying at that time. The Hon'ble Deputy Chief Minister of Delhi stated that there were three issues involved: (i) The distribution pattern of IGST; (ii) The relationship between CGST, SGST and IGST; (iii) Whether the decision taken in March 2018 was right or wrong. 33.7. The Secretary stated that for future accumulation of IGST, there were certain solutions proposed by the Committee on IGST. However, if accumulation of IGST continued even after these solutions were implemented, then provisional settlement would be done. 33.8. The Hon'ble Deputy Chief Minister of Delhi stated that devolution for the last year was done including the IGST amount of₹ 1.6 lakh crore up to March 2018. This led to loss of revenue to Delhi as they did not get any revenue. He stated that any decision regarding IGST should be taken with the approval of the Council or the GIC and it could not be unilaterally decided by the Central Government. The Secretary stated that no unilateral decision w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al to change the cross utilisation provision of input tax credit under GST Law which would require the taxpayers to first use IGST credit for payment of CGST / SGST before using CGST / SGST credit. This would increase IGST cross utilisation and would reduce the balance in the IGST credit ledger. The Hon'ble Chairperson stated that the collection in first eleven months of GST implementation revealed that SGST collection was higher than CGST collection which showed that a larger portion of CGST credit was getting exhausted. The Secretary pointed out that if Centre gave more provisional settlement, then State finances would be benefitted but one has to be also mindful of the finances of the Central Government. He pointed out that in 2017-18, the total revenue of States was ₹ 3.39 lakh crore, whereas that of the Central Government was only ₹ 2.05 lakh crore. Similarly, in Financial Year 2018-19, the States total revenue including compensation was ₹ 1.39 lakh crore, whereas that of the Central Government was ₹ 1.17 lakh crore. He stated that the revenue position of the Central Government must also be taken into account and it would need to hold ₹ 1.6 la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e not getting apportioned. He informed that in order to address this problem, it was proposed that in the format for Annual Return under GST law, a Table for reconciliation of lTC available and ITC availed as mentioned in paragraph 18 of the Agenda Note 8(ii) should be inserted. 33.14. The Joint Secretary, DoR stated that the third reason for IGST accumulation was pending refunds of input tax credit of IGST. He stated that an amount claimed as refund was debited in the ITC ledger of the taxpayer but the amount remains in the IGST account till the refund is given. He stated that this was not a big problem and the fund blockage was transitory in nature. 34. For Agenda Item 8(ii) , the GST Council decided the following: (i) To approve the recommendations of the Committee on IGST to change the order of cross utilisation in the GST Law requiring the taxpayer to first use the IGST credit for payment of CGST / SGST before using CGST / SGST credit and to add a table of reconciliation of input tax credit available and input tax credit availed in the format for annual return; (ii) To set up a Committee under Chairman, CBIC consisting of Finance Secretaries of Delhi, Puducherry, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dentification) or GPS (Global Positioning System). He stated that instead of physical proof of delivery, an Electronic Proof of Delivery (e-PoD) could be integrated with e-way bill. He stated that the permit system could also be reviewed. He further stated that the report had suggested to use GPS and its integration with the e-Way Bill System as it was better than RFID technology and its cost was reducing over a period of time. Majority of transport vehicles were already using GPS and use of GPS may be made mandatory in the Motor Vehicles Act. A provision could also be made for mandatory sharing of GPS data with NIC. Another recommendation was to dovetail GST and Transport lntemationaux Routiers -so that ID number of TIR CARNET holder can be treated as a valid e-Way Bill. 35.2. The Joint Secretary DoR further stated that the report also recommended to minimize routine checks and the same should be done only on risk assessment. There should be authorization by a significantly high level of officer for conducting such checks and there should be a system of mandatory reporting of checks. The report also suggested rationalization of check posts and a system to avoid routine road che ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igh as GPS and all States should use RFID technology. 35.5. The Chief Commissioner of Commercial Tax, Andhra Pradesh stated that RFID reader was a better technology and cost effective. He added that the entire country should go for RFID as verification, inspection and physical stopping of vehicles led to problems. The Secretary stated that installation of RFID readers and tags could also be funded by the Government of India. The Hon ble Deputy Chief Minister of Bihar stated that the States could also fund this project as the cost was not very high. The Secretary stated that the GSTN could procure the RFID readers and tags and distribute them to all the States. He suggested that GSTN should work out as to how many RFID readers would be required in the whole country and what would be their positioning. He added that GSTN should work out the cost for installation of RFID readers and RFID tags. The Hon'ble Chairperson stated that the Ministry of Road Transport and Highways had indicated that about 10,000 readers would be needed and it was proposed to be done centrally. CCT, Kerala, stated that one could go for ANPR (Automatic Number Plate Reader), GPS or RFID but it should be do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Agenda Item 8(iv): Recommendations of the Group of Ministers on Digital Payments 37. Introducing this Agenda Item, the Secretary informed that an additional small Agenda item was prepared on this issue and circulated as Table Agenda in the Council (attached as Annexure 7 of the Minutes). He invited the Joint Secretary (TRU-I), CBIC to explain the same. The Hon'ble Chairperson observed that in the earlier meeting of the Council, the main concern expressed was that the scheme of 2% reduction in GST would not benefit the poor and the benefit could be taken away by the rich people - a concern also expressed by the Hon'ble Ministers of Kerala and West Bengal. He observed that the concern was right and that the new proposal was aimed to benefit the poor and the lower middle-class persons. He added that one big benefit would be that people would be encouraged to ask for bills while making purchases in order to get advantage of the monetary incentive. 37.1. The Joint Secretary, TRU-1, CBIC informed that the Group of Ministers on Digital Payments constituted by the Council had recommended that its implementation may be deferred for some time as GST had not stabilised; new r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be done for utility payments and other payments which do not attract GST. The benefit would only accrue on B2C transactions involving GST supplies. Further, the benefit would be restricted to ₹ 100 per transaction. He stated that if 25% of transactions were eligible for concession, then the revenue implication would be about ₹ 1239 crore and if 20% of the transactions got the benefit, then revenue implication would be about ₹ 991 crore. 37.5. He emphasised that the benefit was now proposed to be given on 20% of GST, instead of 2% of taxable supply attracting GST rate of 3% and above (as was proposed initially) and credit cards and debit cards (other than RuPay) would not be eligible for this benefit. He also stated that the benefit would be given as instant cash payment in the bank account of the consumer through NPCI (National Payments Corporation of India). The Hon'ble Chairperson stated that tax would be collected in the formal mode and the money would be paid through NPCI. He observed that RuPay card was used mostly by about 30 crore Jan-Dhan account holders who were comparatively poor people. He stated that the idea was to support such people and that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... into again. The Hon'ble Chairperson observed that the problem was that the Composition taxpayers did not issue an invoice and charge tax. He stated that the scheme would also be advantageous for small taxpayers whose compliance was presently opaque. This would give purchaser an incentive to ask for a bill. The CCT, West Bengal stated that the Hon'ble Finance Minister of West Bengal had raised various points on this issue and as GoM on Digital Payment is already working on the subject, the revised proposal could be sent the GoM who could examine it and then give its recommendation to the Council. The Hon'ble Chairperson agreed to this suggestion and suggested that the revised proposal tabled today could be sent to the GoM on Digital Payments for further examination and refinement and the same could be discussed during the next Council Meeting of 4 August, 2018. The Council agreed to this suggestion. 38. For Agenda Item S(iv) , the Council approved that the revised proposal presented in today's Council meeting (Annexure 7 to the Minutes) shall be sent to GoM on Digital Payments for further examination and refinement and to be taken up in the next Council Meeting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the benefit of Composition scheme. He suggested that the Council may approve the recommendations of GoM. The Council approved the same. The Secretary raised an issue regarding the treatment of the existing Section 9 (4) after period of its current suspension up to 30th September, 2018 expired. The Hon'ble Chairman suggested that Section 9 (4) of CGST/SGST Act could remain suspended for another one year beyond 30 September, 2018, i.e. till 30 September, 2019. The Council agreed to this suggestion. 42. For Agenda item 8(vi ), the Council approved the following: - (i) The existing Section 9(4) of the CGST Act/SGST Acts may be omitted and a new provision may be inserted in line with the formulation proposed by the Law Committee and the Law Review Committee which reads as follows: 9 (4) The Government may, on the recommendations of the Council, by notification, specify a class of registered persons who shall, in respect of taxable goods or services or both received from an unregistered supplier, pay the tax on reverse charge basis as the recipient of such goods or services or both, and all the provisions of this Act shall apply to such recipient as if he is the person l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith the major departments in a staggered manner. The CCT, West Bengal suggested not to start TDS in a staggered manner as they have Integrated Financial Management Systemso, they either change it or not. She added that a lot of other States may have this issue. The Hon'ble Deputy Chief Minister of Bihar stated that staggered manner meant that one could start implementation of IDS with Works departments such as Road, Irrigation, etc. and then other departments could be brought in the TDS framework. The Secretary suggested that Joint Secretary, DoR along with CEO, GSTN, ACS, Odisha and CCT, West Bengal should study the subject of integration of Accounting systems of the State Accounting Authorities and PFMS (Public Financial Management System) with GSTN. He further stated that they should also check the state of preparedness of the States to implement IDS and whether to do in stages or at one go. The Secretary further stated that they would also examine that if TDS was to be introduced in stages, whether it would require change in the GST Law. The Council approved these suggestions. The Council also took note of the minutes and approved to introduce Tax Deduction at Source (TDS) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Council meeting should be devoted to small scale sector and this meeting could be called in two weeks' time, i.e. on 4 August 2018. He further suggested that after the next meeting of the Council, the Council could meet again in Goa in the last week of September. 48.1. The Hon'ble Deputy Chief Minster, Bihar suggested that a few organizations working for MSMEs could also be called to understand and examine their issues of concern. The Hon'ble Chairperson stated that States should also invite views regarding problems being faced by MSMEs and could make a brief presentation. The Hon'ble Minster from Assam stated that they would obtain representations from small industry and also from the Ministry of Industry. The Secretary stated that it was a good idea to get suggestions from grassroots but spadework needed to be done in advance to find out solutions. He stated that suggestions should be sent in advance so that enough time was available to examine them. The Hon'ble Chairperson stated that all suggestions should be obtained by end of next week. Specific State-related issues should be sent along with possible solution to problems being faced. 49. The meetin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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