Changes in Goods & Service Tax applicable from 1st October’ 2019

Goods and Service Tax law in India has yet again seen slew of changes in the mid of financial year 2019-20. The most imperative change made by the Government of India is reduction in rates of various goods and services.

In the service sector relief has been provided to hotel industry, restaurant, outdoor catering, job worker wherein GST rates has been reduced by three to ten percent.

As far as supply of goods is concerned, the Government of India has provided relief to industries engaged in supply of marine fuel, silver and platinum, precious/ semi-precious stones, etc. by reduction in GST rates. Further, in order to promote green India and to discourage the use of plastic plates/ cups, initiative has been taken to promote the use of plates and cups made up of leaves, flowers or bark by exempting supply of same.

However, at the same time few goods have been made expensive by way of increase in GST rates on same namely railway locomotives, coaches, wagons, track fixtures & fittings, caffeinated beverages.

The table below will show the comparative analysis of old rate on goods and services and rates with effect from 01st October 2019.

1. Hotel Industry

Hotel Accommodation Rate upto 30th Sept 2019 Rate w.e.f. 01st Oct 2019  
Upto INR 1000 0% 0% No change
INR 1001- INR 5000 12% 12% No change
INR 5001- INR 7500 18% 12% 6% tax rate reduced
INR 7501 & above 28% 18% INR 7501 & above

2. Restaurant Industry

Restaurant service Rate upto 30th Sept 2019 Rate w.e.f. 01st Oct 2019  
Supply of restaurant service other than those located in a premise having accommodation unit whose declared tariff is above Rs. 7500 per unit per day 5%/12%/18% 5% (subject to condition of non availment of ITC) Uniformity in rate by way of 13% tax rate reduction

However, GST rate will be 18% for the supply of restaurant service in premises having hotel accommodation with declared tariff of Rs. 7500 & above per unit per day.

3. Outdoor caterer Industry

Outdoor catering service Rate upto 30th Sept 2019 Rate w.e.f. 01st Oct 2019  
Supply of outdoor catering services other than in premises having daily tariff of unit of accommodation of Rs 7501 & above 18% (with ITC) 5% (without ITC) 13% tax rate reduced subject to ITC non availment condition
Composite supply of ‘outdoor catering’ together with renting of premises (including hotel, convention center, club, pandal, shamiana or any other place, specially arranged for organising a function) other than in premises having daily tariff of unit of accommodation of Rs 7501 & above 18% (with ITC) 5% with the condition for non availment of ITC) 13% tax rate reduced subject to ITC non availment condition
Catering in premises with daily tariff of unit of accommodation is Rs 7501 18% (with ITC) 18% (with ITC) No change
Supply of goods, being food or any other article for human consumption or any drink, by the Indian Railways or IRCTC or their licensees, whether in trains or at platforms. 5% (without ITC) 5% (without ITC) No change

4. Professional service relating to exploration/ mining/ drilling of crude oil/ natural gas

Restaurant service Rate upto 30th Sept 2019 Rate w.e.f. 01st Oct 2019  
Other professional, technical and business services relating to exploration, mining or drilling of petroleum crude or natural gas or both 18% 12% 6% tax rate reduced

5. Job worker

Job worker Rate upto 30th Sept 2019 Rate w.e.f. 01st Oct 2019  
Job work [(Supply of machine job work services related to engineering industry (except bus body building)] 18% 12% 6% tax rate reduced
Job work in relation to diamond 5% 1.5% 3.5% tax rate reduced

However, Job work related to bus body building will be subject to 18% GST rate.

6. Services by way of grant of alcoholic liquor license:

Service provided by the state government by way of granting the liquor licence against consideration in the form of licence fee or application fee shall be treated neither as a supply of goods nor a supply of service (Notification No. 25/2019-CT(Rate).

Therefore, any register person obtains liquor licence from the state government is not liable to levy GST.

7. Goods

S. No. Goods Rate upto 30th Sept 2019 Rate w.e.f. 01st Oct 2019  
1. Dry Tamarind 5% Exempted No tax
2. Plates and cups made up of leaves, flowers or bark 5% Exempted No tax
3. Marine Fuel (0.5%) FO 18% 5% 13% tax rate reduced
4. Wet grinders consisting of stone as grinder 12% 5% 7% tax rate reduced
5. Polyethylene/polypropylene 
Woven and Non- Woven Bags and sacks, whether or not laminated, of a kind used for packing of goods.
5%/12%/18% 12% Uniformity in rate by reducing 5% tax rate
6. Parts of Slide Fasteners 18% 12% 6% tax reduced
7. Goods, falling under chapter 86 (8601 to 8608) like railway locomotives, coaches, wagons, track fixtures & fittings, etc. 5% 12% Increase in tax rate by 7%
8. Caffeinated Beverages. 18% 28% + 12% Compensation cess Increase in tax rate by 10% with imposition of cess
9. Precious/semi-precious stones, natural or synthetic 3% 0.25% 2.75% tax reduced
10. Small motor vehicle for persons with orthopaedic physical disability subject to condition of obtaining relevant certificate from authorities Earlier cars for physically handicapped persons were covered 18% Earlier cars for physically handicapped persons were covered
11. Specified goods for petroleum operations undertaken under Hydrocarbon Exploration Licensing Policy (HELP) or Open Acreage Licensing Policy (OALP). Applicable rates 5%  
12. Import on Silver/Platinum by specified nominated agencies. Applicable rates Exempt No tax
13. Supply of Silver/Platinum by specified nominated agency to exporters for exports of Jewellery. Applicable rates Exempt No tax
14. Supply of goods and services to Food and Agriculture Organization (FAO) for specified projects in India. Applicable rates Exempt No tax
15. Aerated Water Benefit of Composition scheme No benefit of composition scheme Increase in tax rate by withdrawal of composition scheme

Reduction in GST rate may impact the cost of specified products and services. It is important for business houses to examine the transitional impact and make required changes in their systems accordingly. It is equally imperative to review the current agreements which are agreed inclusive of taxes.

Contact India Law Offices