GST reduced on hotel accommodation, outdoor catering

Sitharaman said notifications giving effect to the recommendations of the Council are proposed to be issued on October 1.

Written by September 21, 2019 11:33

Panaji [Goa]: Finance Minister Nirmala Sitharaman on Friday announced a reduction in GST rates on services relating to several sectors including hotels and outdoor catering services.

The decisions were taken at the GST Council at its 37th meeting held here.

Sitharaman said notifications giving effect to the recommendations of the Council are proposed to be issued on October 1.

Referring to the hospitality and tourism sector, she said that there will be no GST on transaction value per unit per day of Rs 1000, 12 per cent on the transaction from Rs 1001 to Rs 7500 and 18 per cent on transaction of Rs 7501 and more.

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The move is expected to boost tourism in line with the objectives of the government.

GST on outdoor catering services other than in premises having a daily tariff of a unit of accommodation of Rs 7501 has been reduced from present 18 per cent with ITC to 5 per cent without ITC.

“The rate shall be mandatory for all kinds of catering. Catering in premises with a daily tariff of a unit of accommodation of Rs 7501 and above shall remain at 18 per cent with ITC,” she said.

Referring to job service work, she said GST will come down from 5 per cent to 1.5 per cent on the supply of job work services in relation to diamonds.

GST will come down from 18 per cent to 12 per cent on the supply of machine job work such as in engineering industry, except supply of job work in relation to bus bodybuilding which would remain at 18 per cent.

Services by way of storage or warehousing of cereals, pulses, fruits, nuts and vegetables, spices, copra, sugarcane, jaggery, raw vegetable fibres such as cotton, flax, jute, indigo, unmanufactured tobacco, betel leaves, tendu leaves, rice, coffee and tea will be granted exemptions prospectively.

Referring to transportation, she said the validity of conditional exemption of GST on export freight by air or sea will be increased by another year till September 30, 2020.

Referring to insurance, she said it had been decided to exempt Bangla Shasya Bima (BSB) crop insurance scheme of West Bengal Government.

It has also been decided to exempt services of life insurance business provided or agreed to be provided by the Central Armed Paramilitary Forces (under Ministry of Home Affairs) Group Insurance Funds to their members under the respective Group Insurance Schemes of these forces.

On export promotion, she said services provided by an intermediary to a supplier of goods or recipient of goods when both the supplier and recipient are located outside the taxable territory will be provided with an exemption.

She said a notification will be issued notifying the place of supply of specified R&D services (such as integrated discovery and development, evaluation of the efficacy of new chemical/ biological entities in animal models of disease, evaluation of biological activity of novel chemical/ biological entities in in-vitro assays, drug metabolism and pharmacokinetics of new chemical entities, safety assessment/ toxicology, stability studies, bio-equivalence and bio-availability studies, clinical trials, bio analytical studies) provided by Indian pharma companies to foreign service recipients.

It was decided to clarify that the place of supply of chip design software R&D services provided by Indian companies to foreign clients by using sample test kits in India is the location of the service recipient.

It was decided to allow the registered authors an option to pay GST on royalty charged from publishers under forwarding charge and observe regular GST compliance.

The council decided to notify grant of a liquor licence by state governments against payment of license fee as a “no supply” to remove implementational ambiguity on the subject.

It decided to exempt services related to FIFA Under-17 Women’s World Cup 2020 similar to existing exemption given to FIFA U17 World Cup 2017.

On trade rationalisation measures, she said it had been decided to allow payment of GST on securities lending service under reverse charge mechanism (RCM) at the merit rate of 18 per cent and to clarify that GST on securities lending service for the period prior to RCM period shall be paid on forward charge basis.

IGST shall be payable on the supply of these services and in cases where CGST/SGST/UTGST have been paid, such taxpayers will not be required to pay tax again.

The council decided to allow RCM to suppliers paying GST @ 5 per cent on renting of vehicles, from a registered person other than body corporate (LLP, proprietorship) when services provided to body corporate entities.

It was decided to clarify the scope of the entry ‘services of exploration, mining or drilling of petroleum crude or natural gas or both”.

The council also decided to clarify taxability of Passenger Service Fee (PSF) and User Development Fee (UDF) levied by airport operators. (ANI)