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Input Tax Credit under GST

GST Council Meet Decisions on 10-Nov-2017

Detail analysis of decisions taken on the GST (Goods and Services Tax) Council meeting held on 6-Oct-17. GST tax rate reduced. GST Return quarterly.

Did you know? GST implemented from July 1, 2017 to replace 17 Central and State taxes with one tax head called GST. The Goods and Services Tax (GST) Council hold its 23rd meeting at Guwahati, Assam on Friday, November 10, 2017. In this meeting, various decisions taken in the favour of GST taxpayers. As per discussions held in the 22nd GST Council Meeting held under Chairmanship of Union Finance Minister Shri Arun Jaitley on 6th October, 2017, the following changes have been recommended.

Decisions relating to Services in 23rd GST Council meeting at Guwahati

In the 23rd meeting of GST Council held at Guwahati, Assam on 10.11.2017, the following decisions relating to exemptions / changes in GST rates / ITC eligibility criteria, rationalization of rates / exemptions and clarification on levy of GST on services were taken. The information is being uploaded immediately after the GST Council’s decision and it will be subject to further vetting during which the list may undergo some changes. The decisions of the GST Council are being communicated for general information and will be given effect to through Gazette notifications / circulars which shall have force of law.


  1. All stand-alone restaurants irrespective of air conditioned or otherwise, will attract 5% GST without ITC. Food parcels (or takeaways) will also attract 5% GST without ITC.
  2. Restaurants in hotel premises having room tariff of less than Rs 7500 per unit per day will attract GST of 5% without ITC.
  3. Restaurants in hotel premises having room tariff of Rs 7500 and above per unit per day (even for a single room) will attract GST of 18% with full ITC.
  4. Outdoor catering will continue to be at 18% with full ITC.
  5. GST on Services by way of admission to “protected monuments” will be exempted.
  6. The rate of GST on job work services in relation to manufacture of those handicraft goods in respect of which the casual taxable person has been exempted from obtaining registration, shall be reduced to 5% with full ITC.


  7. The existing exemption entries with respect to services provided by Fair Price Shops to Central Government, State Governments or Union territories by way of sale of food grains, kerosene, sugar, edible oil, etc. under Public Distribution System (PDS) against consideration in the form of commission or margin, is being rationalized so as to remove ambiguity regarding list of items and the category of recipients to whom the exemption is available.
  8. In order to maintain consistency, entry at item (vi) of Sr. No.3 of notification No. 11/2017-CT(R) will be aligned with the entries at items (ii), (iii), (iv) and (v) of SI.No.3. [The word “services” in entry (vi) will be replaced with “Composite supply of Works contract as defined in clause 119 of Section 2 of CGST Act, 2017”].
  9. In order to obviate disputes and litigation, it is proposed to place-
    (i) permanent transfer of Intellectual Property other than Information Technology software in the goods rate of 12%; and
    (ii) permanent transfer of Intellectual Property in respect of Information Technology software in the goods rate list of 18%.


  10. It is proposed to clarify that credit of GST paid on aircraft engines, parts & accessories will be available for discharging GST on inter–State supply of such aircraft engines, parts & accessories by way of inter-state stock transfers between distinct persons as specified in section 25 of the CGST Act, notwithstanding that credit of input tax charged on consumption of such goods is not allowed for supply of service of transport of passengers by air in economy class at GST rate of 5%.
  11. A suitable clarification will be issued by way of a Circular that processed products such as tea (i.e. black tea, white tea etc.), processed coffee beans or powder, pulses (de-husked or split), jiggery, processed spices, processed dry fruits, processed cashew nuts etc. fall outside the definition of agricultural produce given in notification No. 11/2017-CT(R) and 12/2017-CT(R) and therefore the exemption from GST is not available to their loading, packing, warehousing etc.
  12. A suitable clarification is being issued that (i) services provided to the Central Government, State Government, Union territory under any insurance scheme for which total premium is paid by the Central Government, State Government, Union territory are exempt from GST under Sl. No. 40 of notification No. 12/2017-Central Tax (Rate); (ii) services provided by State Government by way of general insurance (managed by government) to employees of the State government/ Police personnel, employees of Electricity Department or students are exempt vide entry 6 of notification No. 12/2017-CT(R) which exempts Services by Central Government, State Government, Union territory or local authority to individuals.

These changes will come into force with effect from 14/15th November, 2017, to be effective from 00:00 hrs on 15th November, 2017.

Analysis of Decisions taken by GST Council on 6-Oct-2017

GST for Exporters:

Exporters of India are not required to pay GST tax. They have to compete with other traders in the world market and therefore, Indian Govt. has exempted export from the GST tax regime. Further, an exporter cannot export taxes because it make product non-competitive in the export market.

Electronic refund mechanism for exporters will take some time. Therefore, GST council has now decided that exporters shall get refund through cheque for from 10th October for the month of July 2017 and from 18th October for the month of August 2017.

Every exporter will now get an e-wallet from the month of April 2018. In this e-wallet, there would be a notional amount as advance refund for credit. The refund they will eventually get will be offset from that amount. Note that there will be a nominal 0.1 percent GST applicable on exports.

Turnover Limit for Composition Scheme:

Composition scheme limit has been increased from ₹75 lakh to ₹1 crore. This turnover threshold for Jammu & Kashmir and Uttarakhand shall be ₹1 crore. However, the threshold of turnover for other special category States shall be ₹75 lacs instead of current threshold of ₹50 lacs.

The facility of availing composition under the increased threshold shall be available to both migrated and new taxpayers up to 31st March, 2018.

If a person otherwise eligible for availing the composition scheme but is providing any exempt service, shall be eligible for the composition scheme.

In this GST Council meeting, a big relief have been provided to Small and Medium Enterprises (SMEs) for making inter-state taxable supplies.

Turnover Limit for GST Registration:

Those service providers whose annual aggregate turnover is less than ₹20 lacs from obtaining GST Registration even if they are making inter-State taxable supplies of services. However, if you are service provider from special category states except Jammu and Kashmir then the annual aggregate turnover limit would be ₹10 lacs.

Turnover Limit for GST Return:

Taxpayers having aggregate turnover up to ₹1.5 crores shall be required to file quarterly returns in FORM GSTR-1, GSTR-2 and GSTR-3 and pay GST taxes only on a quarterly basis. This facility has been provided for small and medium businesses from Third Quarter of this Financial Year i.e. October-December, 2017. Note that taxpayers with turnover above ₹1.5 crore shall continue to file their GST return on monthly basis.

However, the registered buyers from such small taxpayers would be eligible to avail Input Tax Credit (ITC) on a monthly basis. Meanwhile, all taxpayers are required to file electronically FORM GSTR-1, GSTR-2 and GSTR-3 for the months of July 2017, August and September 2017. In other words, small businesses will also have to file monthly returns for three months – July, August and September – and the switchover to quarterly filing will happen from the cycle starting October 1.

Reverse Charge Mechnism:

The reverse charge mechanism u/s 9(4) of the CGST Act, 2017 and under section 5(4) of the IGST Act 2017 shall be suspended till 31st March, 2018 and will be reviewed by a committee of experts.

GST on Advance Received:

Taxpayers having annual aggregate turnover up to ₹1.5 crores shall not be required to pay GST at the time of receipt of advances on account of supply of goods. The GST on such supplies shall be payable only when the supply of goods is made.

In other words, if your annual turnover exceeds ₹1.5 crores then you have to pay GST on advance received for supply of Goods.

Services to Unregistered Person:

The services provided by a Goods Transport Agency (GTA) to an unregistered person shall be exempted from GST tax regime. Currently, GTA are not willing to provide services to unregistered persons and thefore this decision has been taken by the GST Council.

Other decisions made at GST Council Meet are as follows:

  • Registration and operationalization of TDS/TCS provisions shall be postponed till 31.03.2018
  • The e-way bill system shall be introduced in a staggered manner with effect from 01.01.2018 and shall be rolled out nationwide with effect from 01.04.2018.
  • The last date for filing GST return in FORM GSTR-4 by a taxpayer under composition scheme for the quarter July-September, 2017 shall be extended to 15.11.2017.
  • The last date for filing the GST return in FORM GSTR-6 by an Input Service Distributor(ISD) for the months of July, August and September, 2017 shall be extended to 15.11.2017.

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