| The GST Council (Council), in its 34th meeting on 19th March 2019 discussed operational details for implementation of recommendations made in 33rdmeeting in respect of new rate of tax for under construction and new residential projects. Key Highlights of 34th GST Council Meet
- GST Council has approved the transition plan for the implementation of the new tax structure for housing units.
- GST rates for new projects will be mandatory from April 1.
- Builders of existing housing projects that are completing construction by 31st March 2019 get to choose either of the two alternatives:
- Alternative 1: Choose the old rate of 12% (8% for affordable housing) and charge this GST Rate in the invoices raised. Further, input tax credit benefit is available and can be passed on to the buyer.
- Alternative 2: Choose to bear GST tax at the rate of 5% (1% for affordable housing as defined by GST law). The benefit of the input tax credit (ITC) is not available to the builder for procurements used in construction.
- Those who choose the 2nd alternative must reverse the accumulated ITC on their closing stock of under-construction properties in a proportion laid down in rules (to be notified) within six months.
- The new rate of 5% (1% for affordable housing) will apply to those residential properties whose construction is going on even after 31st March 2019 or any new projects launched after 1st April 2019. Here, the benefit of ITC on procurements will not be available to the builders.
New GST Rates for Affordable Housing Project- Rate of tax is 1% without input tax credit (ITC) on construction of affordable houses-
(a) All houses which meet the definition of affordable houses as decided by GST Council (area 60 sqm in non- metros / 90 sqm in metros and value upto Rs.45lakhs),and
(b) Affordable houses being constructed in on going projects under the existing central and state housing schemes presently eligible for concessional rate of 8% GST (after1/3rdlandabatement) which have opted for new scheme.
New GST Rates for Non-Affordable Housing Project – Rate of tax is 5% without input tax credit on construction of-
(a) all houses other than affordable houses in new projects.
(b) commercial apartments such as shops,offices etc. in a residential real estate project (RREP) in which the carpet area of commercial apartments is not more than15% of total carpet area of all apartments.
(c) all houses other than affordable houses in on going projects whether booked prior to or after 01.04.2019 where developer has opted for new scheme .In case of houses booked prior to 01.04.2019 ,new rate shall be available on instalments payable on or after 01.04.2019.
Conditions for new tax rates - ITC shall not be available.
- 80% input & input services [other than capital goods, TDR/JDA,FSI, long term lease(premiums) shall be purchased from registered persons. If purchases from such persons is below 80%, tax shall be paid by the builder @18% on reverse charge basis (other than capital goods and cement).
- Tax on cement purchased from unregistered person shall be paid @28% under RCM. Tax on capital goods purchased from unregistered person shall be paid at applicable rates under RCM.
Open Issues - Whether financing costs will be covered within the meaning of input services for 80% slab?
- Whether RCM applicable on purchase of cement from unregistered person in case where more than 80% input and input services are purchased from registered dealer?
- Whether capital goods are under the RCM condition or not?
Exemption on TDR/ FSI and long term lease for residential projects commencing after 01.04.2019 – Open Issues - Whether exemption available in respect of ongoing projects where developer has opted for new rate scheme?
- Whether exemption available in respect of projects with mixed use i.e. both residential and commercial units?
Applicability of GST on TCS – Corrigendum issued
Corrigendum dated March 7, 2019 issued to Circular No. 76/50/2018-GST dated December 31, 2018 ('Circular'). The Corrigendum clarifies that collection of tax at source (TCS) is an interim levy under Income Tax laws and not a tax per se. Therefore, TCS shall not be added to the taxable value for the purpose of charging GST. This clarification comes as quite a relief for businesses specifically for automotive sector to avoid apprehensive of litigation on this aspect. Relevant abstract of clarification is given below
"In the light of the representations received from the stakeholders, the matter has been re-examined in consultation with the Central Board of Direct Taxes (CBDT). The CBDT has clarified that Tax collection at source (TCS) is not a tax on goods but an interim levy on the possible "income" arising from the sale of goods by the buyer and to be adjusted against the final income- tax liability of the buyer.
GST Compliance calendar – April 2019 Return
| Due Date of filing | | GSTR-1 | Outward supply for the month of March 2019 | 11th April 2019 | | GSTR-5 | Non-resident foreign taxpayers return for the month of March 2019 | 20th April 2019 | | GSTR-6 | Input service distributor for the month of March 2019 | 13th April 2019 | | GSTR-7 | Tax Deducted at Source for March 2019 | 10th April 2019 | | GSTR-8 | Tax Collected at Source by e-commerce operator for March2019 | 10th April 2019 | | GSTR-3B | Summary return tax payment for the month of March 2019 | 20th April 2019 | | Important alert :- In order to remove the difficulties faced by Taxpayers, the Central Government, on recommendations of the Council, has informed that input tax credit in respect of any invoice or invoice relating to such debit note for supply of goods or services or both made during the financial year 2017-18 can be availed till March 2019. So all assesse ensure to avail benefit of ITC while filing returns of March 2019 returns. | Instructions regarding Amnesty:
Office of the Commissioner State Goods and Service Tax Department Government of Kerala, Thiruvananthapuram File
No.CT/ 1588 /2018 Dtd 08 /02/2019
1. The Government has announced Amnesty scheme for tax dealers under VAT and other legacy statutes subsumed under GST. Assessments are mandatory before applying for amnesty. Hence the scrutiny module shall be used to complete assessments efficiently.
2. Along with the pre-assessment notice, the print of Amnesty calculation also may be given to encourage the dealers to opt for amnesty immediately as there is a specified time period 30th September, 2019 to submit applications for amnesty.
3. It is the responsibility of Deputy Commissioners to ensure that along with the Assessment orders, the amnesty calculations are informed to the dealer so as to enable the dealer to understand their actual tax liability and the amnesty amount as per the amnesty scheme declared by the Government.
E.S.I CONTRIBUTION RATE LOWERED
The Government of India, through Gazette Notification No: GSR 121( E) dated 15-02-2019 reduced the Employer share of ESI contribution from 4.75% of wages to 4% and the employees share of ESI Contribution from 1.75% of wages to 1%, with effect from 01-04-2019.
|
CASE LAWS: - EMPLOYEES' PROVIDENT FUNDS AND MISCELLANEOUS PROVISIONS ACT, 1952:
- No recovery for EPF contributions tenable in absence of identification of beneficiaries (Bombay High Court 333).
- Security Personnel are to be deemed employees of the principal employer when their wages are reflected in the books of Accounts (Delhi High Court, 325)
- Show cause Notice for participation in enquiry cannot be challenged. (Madras High Court 311)
- Pre deposit of 50% of the determined amount is reasonable for admission of appeal (Karnataka High Court 322)
- A branch of an establishment exempted cannot be disturbed for coverage (Patna High Court, 320)
- Emoluments paid to employees universally, ordinarily and necessarily will attract EPF Contribution (Supreme Court 339)
- Pension can be calculated for opting Scheme under clause 11(3) of the Employees Pension Scheme, 1995 (Rajasthan High Court, 323)
- An order contrary to rules as framed isnot sustainable (Madras High Court 337)
- Coverage of an establishment based on documents by third party not sustainable (Jharkhant High Court 336)
- Restriction on operation of Bank Account during pendency of appealis not justified (Karnata High Court 334)
- Damages for late depositdiscretionary and not mandatory (Madras High Court 353)
- IMPORTANT DECISIONS UNDER
- FACTORIES ACT,1948,(b) EMPLOYEES COMPENSATION ACT, 1923(c) INDUSTRIAL DISPUTES ACT,1947(d) MINIMUM WAGES ACT, 1948(e )EMLOYEES' STATE INSURANCEACT,1948(f)PAYMENT OF GRATUITY ACT, 1972 (g)PAYMENT OF BONUS ACT, 1965 ( h) CONTRACT LABOR (REGULATION AND ABOLITION ) ACT,1970. (i)PAYMENT OF WAGES ACT, 1936. (i)MATERNITY BENEFIT ACT,1961. (k) SEXUAL HARASSMENT OF WOMEN AT WORK PLACE (PFREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013.
- Company Directors who receive remuneration are also employees under the ESI Act (Supreme Court 237)
- Gratuity cannot be deniedfor non-vacation of company land. (Kerala High Court 263)
- Bonus Act is not applicable to hospitals without profit motive (Madras High Court 264)
- Maternity benefitalso available to female employee engaged through contractor(Kerala High Court 262)
- ESI Act not applicable when survey reportand list of employees are not proved by the employer (Delhi High Court 271)
- Section 9A of the Industrial Disputes Act,1947protects interest of workmen against change of service conditions without notice (Madhya Pradesh High Court 288)
- Employer liable for compensation on accident even where employer has an access for work (Supreme Court 241)
- Payment of ex-gratia cannot necessarily be termed as Bonus (Madras High Court 264)
- Delay in filing application for gratuity is condonable being a beneficial legislation (Kerala High Court 296)
For More Details Please Contact us. Rajendra Law office
Advocates & Labour Law Consultants
|
|
