GST rate for job work on readymade garments reduced

GST rate for job work on readymade garments reduced

GST

Ritul Patwa

Ritul Patwa

18 Aug 2017, 12:46 — 5 min read

The GST was rolled out amid much expectations on July 1, 2017.  GST is one of the most radical tax reforms in the history of India and implementation of such a massive reform in a country with 1/5th of the total world’s population is itself exemplary. The government is making efforts to make this tax reform process as business-friendly as possible.

 

The GST Council, the body tasked with deciding the tax slabs for various goods and services, met again on August 5, 2017 to review the rollout and some of its decisions in the wake of implementation.

 

In a major relief to the readymade garment sector, the GST Council has reduced the rate of GST on job work of readymade garments and made-ups from 18% to 5%. Several landmark decisions have been taken in the 20th meeting of the GST Council relating to reduction in the rate of tax on specific Works Contract Services, allowing optional 12% GST rate for Rent a Cab and GTA Service with full ITC Credit.

 

Here is the summary of major decisions taken by the GST Council in its 20th meeting held on 5th of August, 2017:

 

1. Job work services in respect of textiles and textile products (including MMF yarn, garments, made-ups, etc. falling in Chapters 50 to 63) reduced from 5-18% to 5%.


2. Services by way of printing of newspapers, books (including Braille books), journals and periodicals where only content is supplied by the publisher and the physical inputs including paper used for printing belongs to the printer reduced from 18% with full ITC to 12% with full ITC.


3. Services by way of printing of newspapers, books (including Braille books), journals and periodicals using physical inputs owned by others (including an unregistered publisher/supplier) reduced from 18% with full ITC to 5% with full ITC.


4. Works contract services provided to Government, local authority or governmental authority and in respect of post-harvest storage infrastructure for agricultural produce, mechanised food grain handling system reduced from 18% with full ITC to 12% with full ITC.


5. Margin/commission payable to Fair Price Shop dealers by Central/State Governments reduced from 18% with full ITC to Nil.

 

6. Admission to planetarium reduced from 28% with full ITC to 18% with full ITC.

 

7. Rent-a-cab service is now allowed the option of 12% GST with full ITC. 5% GST with no ITC will also continue.

 

8. Goods Transport Agency Service (GTA) will be allowed the option of 12% GST with full ITC under forward charge. 5% GST with no ITC will also continue. (However, the GTA has to give an option at the beginning of the financial year)

 

9. In case of small house-keeping service providers (plumbers/carpenters) providing services through Electronic Commerce Operators (ECO), liability to pay GST placed on ECO.

 

10. To clarify that legal services (including representational services) provided by an individual advocate or a senior advocate or a firm of advocates (including LLP) provided to a business entity in taxable territory are covered under reverse charge mechanism

 

11. Goods required by FIFA and Services provided by and to FIFA and its subsidiaries in connection with FIFA U-17 World Cup to be hosted in India in 2017 shall be exempted from GST


12. New crop insurance schemes Pradhan Mantri Fasal Bima Yojana (PMFBY) introduced from Kharif 2016-17
 in place of National Agricultural Insurance Scheme (NAIS) and Modified National Agricultural Insurance Scheme (MNAIS), and Restructured Weather Based Crop Insurance Scheme (RWCIS) introduced in place of Weather Based Crop Insurance Schemes, shall be extended exemption from GST.

 

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