GST Update - Outcome of the 45th GST Council Meet

1. Extension of existing concessional GST Rates on Covid-19 treatment drugs

Sl. No.

Proposal Category

Drug Name

Lower Rate benefit Extended Upto

1

Extension of Existing Concessional GST Rates on following Covid-19 treatment drugs

1. Amphotericin B -nil
2. Remdesivir – 5%
3. Tocilizumab -nil
4. Anti-coagulants like Heparin -5%

Extended till 31^st Dec 2021 (presently extended upto 30^th Sep 2021)

2

Reduction of GST rate to 5% on more Covid-19 treatment drugs:

1. Itolizumab
2. Posaconazole
3. Infliximab
4. Favipiravir
5. Casirivimab & Imdevimab
6. 2-Deoxy-D-Glucose
7. Bamlanivimab & Etesevimab

Extended till 31^st Dec 2021 (presently extended upto 30^th Sep 2021)

2. Changes in GST Rates on Goods and Services (With Effect From 1^st Oct,2021)

S. No

Item

Current Rate

New Rate

1

Retro fitment kits for vehicles used by the disabled

Appl. 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% or 18%

18%

8

Waste and scrap of polyurethanes and other plastics

5%

18%

9

All kinds of pens

12% or 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

I. Zolgensma for Spinal Muscular Atrophy

II. Viltepso for Duchenne Muscular Dystrophy

III. 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

App. 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)

3. Other Changes relating to GST rates on Goods

Sl. No

Category

Decision taken by the GST Council

1

Supply of Mentha Oil

Supply of mentha oil from unregistered person has been brought under reverse charge. Further, Council has also recommended that exports of Mentha oil should be allowed only against LUT and consequential refund of input tax credit.

2

Brick Kilns

Brick kilns would be brought under special composition scheme with threshold limit of Rs. 20 lakhs, with effect from 1.4.2022. Bricks would attract GST at the rate of 6% without ITC under the scheme. GST rate of 12% with ITC would otherwise apply to bricks.

4. Correction in Inverted Duty structure in Footwear and Textiles sector

Sl. No

Category

Decision taken by the GST Council

1

Inverted Duty Structure in Footwear and Textiles Sector

GST rate changes in order to correct inverted duty structure, in footwear and textiles sector, as it was discussed in earlier GST Council Meeting will now be implemented with effect from 1^st Jan, 2022

5. Major GST changes in relation to rates and scope of Exemption of Services (With Effect From 1^st Oct,2021)

S. No

Item

Current Rate

New Rate

1

Validity of GST exemption on transport of goods by vessel and air from India to outside India is extended upto 30.9.2022.

_

NIL

2

Services by way of grant of National Permit to goods carriages on payment of fee

18%

NIL

3

Skill Training for which Government bears 75% or more of the expenditure [presently exemption applies only if Govt funds 100%].

18%

NIL

4

Services related to AFC Women's Asia Cup 2022.

18%

NIL

5

Licensing services/ the right to broadcast and show original films, sound recordings, Radio and Television programmes [to bring parity between distribution and licensing services]

12%

18%

6

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%

7

Exemption on leasing of rolling stock by IRFC to Indian Railways withdrawn.

8

E Commerce Operators are being made liable to pay tax on following services provided through them:

(i) transport of passengers, by any type of motor vehicles through it (w.e.f. 1st January, 2022)

(ii) restaurant services provided through it with some exceptions (w.e.f. 1st January, 2022)

9

Certain relaxations have been made in conditions relating to IGST exemption relating to import of goods on lease, where GST is paid on the lease amount, so as to allow this exemption even if (i) such goods are transferred to a new lessee in India upon expiry or termination of lease; and (ii) the lessor located in SEZ pays GST under forward charge.

6. Clarification in relation to GST rate on Goods

Item

HSN Code

GST Rate

Pure henna powder and paste, having no additives

14

5%

Brewers' Spent Grain (BSG), Dried Distillers’ Grains with Soluble [DDGS] and other such residues

2303

5%

All laboratory reagents and other goods

3822

12%

Scented sweet supari and flavored and coated illachi falling under heading 2106 attract GST at the rate of 18%

Carbonated Fruit Beverages of Fruit Drink" and "Carbonated Beverages with Fruit Juice

--

28% plus 12% Cess

Tamarind seeds fall under heading 1209, and hitherto attracted nil rate irrespective of use. However, henceforth they would attract 5% GST rate (w.e.f. 1.10.2021) for use other than sowing. Seeds for sowing will continue at nil rate

1209

5%

External batteries sold along with UPS Systems/ Inverter attract GST rate applicable to batteries [28% for batteries other than lithium-ion battery] while UPS/inverter would attract 18%

28% / 18%

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

Due to ambiguity in the applicable rate of GST on Fibre Drums, the supplies made at 12% GST in the past have been regularized. Henceforth, a uniform GST rate of 18% would apply to all paper and paper board containers, whether corrugated or non-corrugated.

18%

The distinction between fresh and dried fruits and nuts is being clarified for application of GST rate of “nil” and 5%/12% respectively;

All pharmaceutical goods

3006

12%

Essentiality certificate issued by Directorate General of Hydrocarbons on imports would suffice; no need for taking a certificate every time on inter-state stock transfer.

7. Clarification in relation to GST rate on Services

Item

HSN Code

GST Rate

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

Exempt

Services by cloud kitchens/central kitchens are covered under ‘restaurant service’

5% (No ITC)

Ice cream parlor sells already manufactured ice- cream. Such supply of ice cream by parlors

18%

Overloading charges at toll plaza are exempt from GST being akin to toll.

Exempt

The renting of vehicle by State Transport Undertakings and Local Authorities is covered by expression ‘giving on hire’ for the purposes of GST exemption

Exempt

The services by way of grant of mineral exploration and mining rights

18% (w.e.f. 01-07-17)

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.

18%

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

8. Issue of Compensation Cess

On the issue of compensation scenario, a presentation was made to the Council wherein it was brought out that the revenue collections from Compensation Cess in the period beyond June 2022 till April 2026 would be exhausted in repayment of borrowings and debt servicing made to bridge the gap in 2020-21 and 2021-22.

8A. Measures for Trade Facilitation -

Proposal

Measures

Form ITC-04

Aggregate Turnover (ATO) in Preceding Financial Year

1. Above 5 Crs – Half Yearly
2. Below 5 Crs – Annually

Interest is to be charged only in respect of net cash liability.

Section 50 (3) of the CGST Act to be amended retrospectively, w.e.f. 01.07.2017,

Interest in such cases should be charged on ineligible ITC availed and utilized at 18% with effect from 01.07.2017

Unutilized balance in CGST and IGST cash ledger may be allowed to be transferred between distinct persons (entities having Same PAN but registered in different states)

Interest is to be paid on “Ineligible

ITC availed and utilized” and not on “Ineligible ITC availed”

Interest is to be paid on “Ineligible ITC availed and utilized” and not on “Ineligible ITC availed” and Unutilized balance in CGST and IGST cash ledger may be allowed to be transferred

Issuance of the Circulars in order to remove ambiguity and legal disputes on various issues

1. Clarification on scope of “intermediary services”
2. Clarification relating to the interpretation of the term “merely the establishment of distinct person” in condition (v) of the Section 2 (6) of the IGST Act 2017 for export of services :

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 and would not be barred by the condition (v) of the sub-section (6) of the section 2 of the IGST Act 2017 for considering a supply of service as export of services;

Clarification in respect of certain GST related issues:

1. W.e.f. 01.01.2021, the date of issuance of debit note (and not the date of underlying invoice) shall determine the relevant financial year for the purpose of section 16(4) of CGST Act, 2017;

1. There is no need to carry the physical copy of tax invoice in cases where invoice has been generated by the supplier in the manner prescribed under rule 48(4) of the CGST Rules, 2017;

1. Only those goods which are actually subjected to export duty i.e., on which some export duty has to be paid at the time of export, will be covered under the restriction imposed under section 54(3) of CGST Act, 2017 from availment of refund of accumulated ITC

Provision to be incorporated in in CGST Rules, 2017 for Refund

for removing ambiguity regarding procedure and time limit for filing refund of tax wrongfully paid as specified in section 77(1) of the CGST/SGST Act and section 19(1) of the IGST Act.

8B. Measures for Streamlining compliances in GST

Proposal

Measures

Aadhaar authentication of registration to be made mandatory

For being eligible for filing refund claim and application for revocation of cancellation of registration.

Late fee for delayed filing of FORM GSTR-1

To be auto-populated and collected in next open return in FORM GSTR-3B.

Bank Account for payment of Refund

Refund to be disbursed in the bank account, which is linked with same PAN on which registration has been obtained under GST.

Rule 59(6) of the CGST Rules to be amended with effect from 01.01.2022 (Blocking of filing of Form GSTR 1)

To provide that a registered person shall not be allowed to furnish FORM GSTR-1, if he has not furnished the return in FORM GSTR-3B for the preceding month.

Amendment in Rule 36(4) of CGST Rules, 2017 (Eligible Invoices for availment of ITC)

Once the proposed clause (aa) of section 16(2) of CGST Act, 2017 is notified, to restrict 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 FORM GSTR-1/ IFF and are communicated to the registered person in FORM GSTR-2B.