| Recommendations of 45th GST Council Meeting held on 17-09-2021 at Lucknow |
| CLARIFICATIONS RELATED TO GST RATE ON CERTAIN GOODS AND SERVICES |
| CLARIFICATIONS RELATED TO GST RATE ON GOODS AND SERVICES : |
| Sr. | Goods Description | HSN | GST Rate |
| 1 | Henna powder and paste having no additives | 14 | 5% |
| 2 | Brewers’ Spent Grain (BSG), Dried Distillers’ Grains with Soluble [DDGS] and other such residues | 2303 | 5% |
| 3 | All laboratory reagents and other goods | 3822 | 12% |
| 4 | Scented sweet supari and flavored and coated illachi | 2106 | 18% |
| 5 | “Carbonated Fruit Beverages of Fruit Drink” and “Carbonated Beverages with Fruit Juice” | – | 28% + cess 12% |
| 6 | Tamarind seeds for sowing | 1209 | NIL |
| 7 | Tamarind seeds other than for sowing (w.e.f 01.10.2021) | 1209 | 5% |
| 8 | External batteries sold along with UPS Systems/ Inverter | – | 28% |
| 9 | UPS/inverter | – | 18% |
| 10 | All paper and paper board containers, whether corrugated or non-corrugated | – | 18% |
| 11 | Fresh fruits | – | NIL |
| 12 | Dried Fruits | – | 5%/12% |
| 13 | Pharmaceutical goods | 3006 | 12% |
| Renewable Energy Products |
| 14 | GST on specified Renewable Energy Projects can be paid in terms of the 70:30 ratio for goods and services, respectively, during the period from 1-7-2017 to 31-12-2018, in the same manner as has been prescribed for the period on or after 1st January 2019. |
| CLARIFICATIONS – GST RATE ON SERVICES : |
| Sr. | Clarification |
| 1 | Coaching services to students provided by coaching institutions and NGOs under the central sector scheme of ‘Scholarships for students with Disabilities” is exempt from GST. |
| 2 | Services by cloud kitchens/central kitchens are covered under ‘restaurant service’ and attract 5% GST (without ITC). |
| 3 | Ice cream parlour sells already manufactured ice- cream. Such supply of ice cream by parlours would attract GST at the rate of 18%. |
| 4 | Overloading charges at toll plaza are exempt from GST |
| 5 | The renting of vehicle by State Transport Undertakings and Local Authorities is covered by expression ‘giving on hire’ for the purposes of GST exemption. |
| 6 | Services by way of grant of mineral exploration and mining rights attracts GST @ 18% w.e.f. 01-07-2017. |
| 7 | Admission to amusement parks having rides etc. attracts GST rate of 18%. The GST rate of 28% applies only to admission to such facilities that have casinos etc. |
| 8 | Alcoholic liquor for human consumption is not food and food products for the purpose of the entry prescribing 5% GST rate on job work services in relation to food and food products. |
| RELAXATIONS IN COMPLIANCES |
| Relaxation in ITC-04 compliance – Rule 45(3) of CGST Rules, 2017 : |
| Sr. | Annual Aggregate Turnover of P.Y. | 01-07-2017 to notified date | effective from date to be notified |
| FREQUENCY OF FILING ITC-04 |
| 1 | Up to Rs. 5 Cr. | Quarterly | Yearly |
| 2 | More than Rs. 5 Cr. | Quarterly | Half Yearly |
| Transfer of balance of Electronic Cash Ledger (ECL) between distinct person (Entities having same PAN but registered in different states): Consider below example for more understanding on proposed amendment |
| Entity having same PAN registered in Delhi (Incl. Major & Minor Head) |
| Entity having same PAN registered in Gujarat (Incl. Major & Minor Head) | Transfer | Delhi-IGST | Delhi-CGST | Delhi-SGST |
| GJ-IGST | Possible | Not Possible | Not Possible |
| GJ-CGST | Not Possible | Possible | Not Possible |
| GJ-SGST | Not Possible | Not Possible | Not Possible |
| As recommended by the council, balance lying in Electronic Cash Ledger (ECL) under CGST and IGST shall be allowed to be transferred between distinct persons (entities having same PAN but registered in different States). However, there is no mention about transfer of balance under SGST and hence, it is understood that such transfer will not be possible for balance available under SGST head. However, indirectly, the taxpayer can overcome the above-mentioned restriction and transfer the balance in cash ledger under SGST head between distinct persons. E.g. XYZ (Punjab) wants to transfer cash balance of Rs. 100,000/- lying under SGST Tax head to XYZ (Tamilnadu). For transferring the said amount, XYZ needs to follow belomentioned steps: XYZ (Punjab) will transfer amount lying under SGST Tax head into CGST Tax head by way of filing of PMT-09. XYZ (Punjab) by following proposed mechanism will transfer above transferred amount under CGST Tax head into XYZ (Tamilnadu) under CGST Tax head. XYZ (Tamilnadu) will transfer amount under CGST Tax head into SGST Tax head by way of filing of PMT-09. |
| Retrospective amendment in Section 50(3) of CGST Act, 2017 (w.e.f. 01.07.2017): |
| Ineligible ITC |
| Month of availment | Month of reversal | Amount | Utilized or not | Interest applicability |
| Apr’18 | Aug’21 | Rs. 10 Lcs | NO | No Interest applicable |
| YES | Applicable @ 18% for the period Apr’18 to Aug’21 |
| Other Recommendations made in GST Council : |
| 1 | In case of debit note, financial year in which the said debit note is issued shall be considered as the F.Y. for determining the last date to avail ITC as per Section 16(4) of the CGST Act. Hence, for availment of ITC, date of debit note is to be considered and not the date of invoice against which debit note is issued. |
| 2 | It is proposed to clarify that in case where E-invoice has been generated as per Rule 48(4) of the CGST Rules, 2017, corresponding tax invoice is not required to be carried at the time of movement of goods. |
| 3 | It is proposed to clarify that in case of goods which are subjected to export duty meaning there by goods on which actually export duty is to be paid at the time of export shall ONLY be covered under restriction of Section 54(3) for getting refund of accumulated ITC. |
| 4 | Provisions are likely to be prescribed regarding the “procedure” and “time limit” to be followed for filing refund application in case of GST paid under wrong head. |
| 5 | The issue of whether specified petroleum products should be brought within the ambit of GST was placed for consideration before the Council. After due deliberation, the Council was of the view that it is not appropriate to do so at this stage |
| 6 | GST rate in footwear and textiles sector will be changed in order to correct inverted duty structure with effect from 01-01-2022. The Council decided to set up a GoM to examine the issue of correction of inverted duty structure for major sectors. |
| 7 | GST council has proposed to clarify that a person incorporated in India under the Companies Act, 2013 and a person incorporated under the laws of any other country are to be treated as separate legal entities hence in such case if any transaction is being undertaken between such entities, then it will not be barred by the condition (v) as defined under term ‘export of services’.E.g. “ABC Inc.” (Foreign Holding Company) is registered in USA. It is engaged in the information software technology service, and it has 100% subsidiary company in India “XYZ India Ltd.” (Indian Company) which is registered under the Companies Act, 2013. Here, Indian Subsidiary Company is providing services to Foreign Holding Company hence in such case it will not be barred by the condition no. (v). Both companies will be treated as separate entities and these are not merely establishment of distinct person. Accordingly, service will be treated as “Export of service” provided other conditions are satisfied. |
| ANNOUCEMENTS RELATED TO PROCEDURES & RESTRICTIONS ON INPUT TAX CREDIT |
| Requirement of Aadhar Authentication: |
| Till now Aadhar Authentication was optional at the time of application of registration. From now onwards Aadhaar authentication of registration to be made mandatory for following: For being eligible for filing Refund claim; and For filing of Application for revocation of cancellation of registration |
| Changes related to Restriction in Return filing and Auto-Population of Late Fees: |
| Rule 59(6) provides that the registered person shall not be allowed to furnish the details of outward supplies of goods or services or both under section 37 in GSTR-1 if he has not furnished the return in GSTR-3B for preceding two months. With effect from 01-01-2022, the said period of two months will be amended to one month. Till now the Late Fees on account of non-filing of GSTR-1 was not calculated by the portal. Now, Late Fee for delayed filing of GSTR-1 will be auto-populated and collected in next open return in GSTR-3B. |
| ITC Restriction under Rule 36(4) of CGST Rules, 2017: |
| Rule 36(4) of CGST Rules, 2017 will be amended after notification of Section 16(2) (aa) of CGST Act. The said section provides for availment of ITC in respect of invoices/debit notes, to the extent the details of such invoices/ debit notes are furnished by the supplier in GSTR-1/IFF and are communicated to the registered person in GSTR-2B. The same can be understood from below mentioned example: Example: Input Tax Credit (ITC) as per Books Rs. 100,000/- Eligible ITC as per GSTR-2A / GSTR-2B Rs. 80,000/- Time Period Eligible as shown in 2A/2B ITC Eligibility in value (Rs.) Total ITC Available (Rs.) From 01-07-2017 to 09-10-2019 – – 100,000/- From 10-10-2019 to 31-12-2019 120% 16,000/- (20% of 80,000) 96,000/- (80,000 +16,000) From 01-01.2020 to 31-12-2020 110% 8,000/- (10% of 80,000) 88,000/- (80,000 +8,000) From 01-01-2021 to date to be notified 105% 4,000/- (5% of 80,000) 84,000/- (80,000 +4,000) From date to be notified 100% – 80,000/- |
| RECOMMENDATIONS RELATED TO CHANGE IN GST RATES AND EXEMPTIONS |
| Relaxations in GST Rates for Medicines and Other Goods: |
| MEDICINES |
| Sr. | Goods Description | GST Rate upto notified date | GST Rate from notified date upto 31-12-2021 | GST Rates w.e.f. 01-01-2022 |
| 1 | Itolizumab | 12% | 5% | 12% |
| 2 | Posaconazole | 12% | 5% | 12% |
| 3 | Infliximab | 12% | 5% | 12% |
| 4 | Favipiravir | 12% | 5% | 12% |
| 5 | Casirivimab & Imdevimab | 12% | 5% | 12% |
| 6 | 2-Deoxy-D-Glucose | 12% | 5% | 12% |
| 7 | Bamlanivimab & Etesevimab | 12% | 5% | 12% |
| MEDICINES |
| Sr. | Goods Description | GST Rate upto 13-06-2021 | GST Rate from 14-06-2021 till 31-12-2021 | GST Rates w.e.f. 01-01-2022 |
| 1 | Tocilizumab | 5% | NIL | 5% |
| 2 | Amphotericin B | 5% | NIL | 5% |
| 3 | Anti-Coagulants like Heparin | 12% | 5% | 12% |
| 4 | Remdesivir | 12% | 5% | 12% |
| CHANGES IN RATE FOR OTHER GOODS |
| Sr. | Goods Description | GST Rate upto 30-09-2021 | GST Rate w.e.f. 01-10-2021 |
| 1 | Retro fitment kits for vehicles used by the disabled | Applicable rate | 5% |
| 2 | Fortified Rice Kernels for schemes like ICDS etc. | 18% | 5% |
| 3 | Medicine Keytruda for treatment of cancer | 12% | 5% |
| 4 | Biodiesel supplied to OMCs for blending with Diesel | 12% | 5% |
| 5 | Ores and concentrates of metals such as iron, copper,aluminum, zinc and few others | 5% | 18% |
| 6 | Specified Renewable Energy Devices and parts | 5% | 12% |
| 7 | Cartons, boxes, bags, packing containers of paper etc. | 12%/18% | 18% |
| 8 | Waste and scrap of polyurethanes and other plastics | 5% | 18% |
| 9 | All kinds of pens | 12%/18% | 18% |
| 10 | Railway parts, locomotives & other goods in Chapter 86 | 12% | 18% |
| 11 | Miscellaneous goods of paper like cards, catalogue, printed material (Chapter 49 of tariff) | 12% | 18% |
| 12 | IGST on import of medicines for personal use, namely- Zolgensma for Spinal Muscular Atrophy Viltepso for Duchenne Muscular Dystrophy Other medicines used in treatment of muscular atrophy recommended by Ministry of Health and Family Welfare and Department of Pharmaceuticals. | 12% | NIL |
| 13 | IGST exemption on goods supplied at Indo Bangladesh Border haats | Applicable rate | NIL |
| 14 | Unintended waste generated during the production of fish meal except for Fish Oil | Nil (for the period 1-7-2017 to 30-9-2019) |
| Changes related to Supply of Mentha Oil: |
| Government has carried out amendment in Finance Act, 2021, to notify the category of taxpayers and class of goods and services that are compulsorily required to opt for ‘Without Payment of Tax Option’ for Zero Rated Supply (i.e. Export & SEZ supply). In continuation with the same, Government has notified ‘Mentha Oil’ as such class of goods wherein the taxpayer is required to opt for ‘without payment of Tax’ i.e., under LUT route only. |
| Goods | Supply Type | Supplier | Recipient | Taxability RCM/FCM |
| Mentha oil | Domestic supply | Unregistered person | Registered person | Tax payable under RCM |
| Export | Registered person | Any person | Compulsorily under LUT – FCM (Without payment of Tax) |
| Inclusion in Composition Scheme w.e.f. 01.04.2022 i.e. FY 2022-23: |
| Goods | Threshold Limit | GST rate |
| Brick Kilns | Rs. 20 lakhs | 6% without ITC |
| Changes in GST Rates on Supply of Services: |
| Sr. | Service Description | GST Rates upto 30-09-2021 | GST Rates w.e.f. 01-10-2021 |
| CHANGE IN RATE OF TAX |
| 1 | Licensing services or the right to broadcast and show original films, sound recordings, radio and television programmes.[to bring parity between distribution and licensing services] | 12% | 18% |
| 2 | Printing and reproduction services of recorded media where content is supplied by the publisher. [to bring it on parity with Colour printing of images from film or digital media] | 12% | 18% |
| EXEMPTIONS |
| 3 | Exemption on transport of goods by vessel and air from India to outside India. | NIL (Upto 30-9-2021) | NIL (Upto 30-9-2022) |
| 4 | Services by way of grant of National Permit to goods carriages on payment of fee. | 18% | NIL |
| 5 | Skill Training for which Government bears 75% or more of the expenditure. (Presently the exemption applies only if Government funds are 100%). | 18% | NIL |
| 6 | Services related to AFC Women’s Asia Cup 2022. | 18% | NIL |
| 7 | Leasing of rolling stock by IRFC to Indian Railways. | NIL | Applicable Rate |
| E-Commerce Operator – Service Provider |
| 8 | E – Commerce Operators will be liable to pay GST on following services provided through them w.e.f. 01-01-2022: transport of passengers, by any type of motor vehicles through E-commerce operator. restaurant services provided through E-commerce operator with some exceptions. (Ex: Zomato, Swiggy, Food Panda, Uber eats etc.) |
| Applicability of RCM on Services provided through E-Commerce: |
| Sr. | Service Description (through E-COMMERCE) | RCM Applicability |
| 1 | Transportation of passengers by a radio-taxi, motor cab, maxi cab and motorcycle | 01-07-2017 |
| Transport of passengers, by any type of motor vehicles | 01-01-2022 |
| 2 | Providing accommodation in hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes | 01-07-2017 |
| 3 | Services by way of house- keeping, such as plumbing, carpentering etc. | 22-08-2017 |
| 4 | Restaurant services provided through E-commerce operator with some exceptions | 01-01-2022 |
| Disclaimer: The purpose of this blog is for education purpose and should not be construed as professional advice. Views expressed herein are the personal views of the author. Government or judicial authorities may or may not subscribe to the views expressed herein. The author of the blog is not liable for any implications arising out of actions taken based on the views expressed herein. |
