Weekly Summary Roundup: Goods and Services Tax, Authority for Advance Ruling, and Appellate Authority for Advance Ruling
Welcome to our weekly summary roundup, where we bring you the latest news and updates related to the Goods and Services Tax (GST), Authority for Advance Ruling (AAR), and Appellate Authority for Advance Ruling (AAAR). In this edition, we will cover stories published on Taxscan.in from October 21st to December 1st.
Let’s dive into the details.
The first story we have for you is about the GST Council’s decision to reduce the tax rates on various goods and services. The Council, chaired by Finance Minister Nirmala Sitharaman, met on October 21st and made several important announcements. It reduced the tax rates on hotel room tariffs, outdoor catering, and diamond job work, among others. This move is expected to provide relief to businesses and boost economic growth.
In another significant development, the AAR ruled that the supply of food and beverages by a canteen to employees is eligible for input tax credit (ITC). The ruling came in response to a case filed by a company seeking clarification on the availability of ITC on canteen services. The AAR held that the canteen services provided by the company to its employees constitute a taxable supply, and ITC can be claimed on such services.
Moving on, the AAAR decided on an interesting case related to the classification of certain goods under the GST regime. The case involved a company engaged in the business of manufacturing and selling LED lights. The company sought clarification on whether LED lights should be classified as ‘electrical goods’ or ‘lighting fittings’ for the purpose of GST. The AAAR held that LED lights should be classified as ‘lighting fittings’ and attract a higher tax rate.
In another ruling, the AAR clarified the taxability of certain services provided by a company engaged in the business of providing online gaming platforms. The company sought clarification on whether the services provided by them would be classified as ‘gambling’ or ‘betting’ under the GST regime. The AAR held that the services provided by the company would be classified as ‘gambling’ and attract a higher tax rate.
Moving on to the next story, the GST Council decided to introduce a new return filing system to simplify the compliance process for taxpayers. The new system, called the ‘Simplified Return for Small Taxpayers’, aims to make return filing easier and reduce the compliance burden on small businesses. Under this system, taxpayers with an annual turnover of up to Rs. 5 crores will be allowed to file quarterly returns instead of monthly returns.
In a bid to boost the real estate sector, the GST Council also announced a reduction in the tax rates on residential properties. The Council decided to lower the GST rate on affordable housing from 8% to 1% and on other residential properties from 12% to 5%. This move is expected to provide a much-needed impetus to the struggling real estate sector and make housing more affordable for the common man.
In yet another development, the AAR ruled that the supply of software by an Indian company to its overseas branch is not liable to GST. The ruling came in response to a case filed by a company seeking clarification on the taxability of such transactions. The AAR held that the supply of software by the Indian company to its overseas branch would be treated as an export of services and would not attract GST.
Lastly, the AAAR ruled on a case involving the classification of certain goods used in the construction industry. The case revolved around the classification of ‘prefabricated structures’ and ‘tunnel formwork systems’ under the GST regime. The AAAR held that both ‘prefabricated structures’ and ‘tunnel formwork systems’ should be classified as ‘goods’ and attract a higher tax rate.
That concludes our weekly summary roundup. We hope you found these stories informative and insightful. Stay tuned for more updates on the GST, AAR, and AAAR.