GST on mobile phones hiked to 18%

GST rate on mobile phones will be hiked to 18 per cent while that on maintenance repair overhaul (MRO) services for aircraft will be lowered to 5 per cent with effect on April 1, Finance Minister Nirmala Sitharaman said on Saturday.

Briefing reporters afterthe 39th GST Council meeting, she said Infosys Chairman Nandan Nilekani made adetailed presentation for the transition into a better GST Network system andthe requirement of hardware to enhance capacity for addressing the systemrelated issues that are being faced by taxpayers in the IT system.

   

Demandfor more skilled manpower, better hardware to enhance capacity has been agreedto by the Council, she said.

The GSTCouncil has decided that a completely enhanced capacity, a leaner system of GSTNetwork with capacity enhance, staff response, better solutions, which wereenvisaged and proposed by Nilekani by January 2021, should be completed by July2020, Sitharaman said.

With regard to GST rates,the minister said there are four sectors — footwear, textiles, fertiliser andmobile phones– which face inverted duty structure wherein inputs are taxed ata higher rate than finished products.

“It was decided by theCouncil to raise the GST rate on mobile phones and specified parts whichpresently attract 12 per cent to be taxed at 18 per cent.

“For all other itemswhere there is duty inversion, if there is a need to calibrate the rates forremoving inversion, it was decided in one of the future meetings we will takeup the issue,” she said.

Counterpoint ResearchAssociate Director Tarun Pathak said, “This will impact the pricing andespecially at a time when we are staring at uncertainty in the largerelectronics supply chain due to coronavirus. An increase in price means asection of users will either go for second hand or even turn to greymarket”.

The GST rate on handmadeand machine-made matchsticks has been rationalised to 12 per cent from 5 percent and 18 per cent respectively.

The GST rate onMaintenance, Repair and Overhaul (MRO) services in respect of aircraft would bereduced from 18 per cent to 5 per cent with full Input Tax Credit and changethe place of supply for B2B MRO services to the location of recipient.

“This change is likelyto assist in setting up of MRO services in India,” Sitharaman said. TheCouncil, chaired by Finance Minister, also deferred implementation of e-invoiceand QR Code to October 1, 2020, from an earlier timeline of April 1.

Also, the rollout of thee-wallet scheme for exporters too has been extended to March 31, 2021.

The Council also decidedthat the interest for delay in payment of GST would be charged on the net cashtax liability with effect from July 1, 2017, and the law would be amendedretrospectively.

For GST registrations whichhave been cancelled till March 14, 2020, application for revocation ofcancellation of registration can be filled up to June 30, 2020, as a one-timemeasure to facilitate those who want to conduct business.

The Council also relaxedthe requirement of MSMEs from the furnishing of Reconciliation Statement inForm GSTR-9C, for 2018-19, for taxpayers having aggregate turnover of below Rs5 crore.

It also decided to extendthe due date for filing the annual return and the reconciliation statement for2018-19 to June 30, 2020. For businesses with aggregate turnover of less thanRs 2 crore, late fees would not be levied for delayed filing of the AnnualReturn and the Reconciliation Statement for 2017-18 and 2018-19.

The Council also approved a new facility called ‘Know Your Supplier’ to be introduced so as to enable every registered person to have some basic information about the suppliers with whom they conduct or propose to conduct business. 

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