The GST Council met for the 47th time on 28th& 29th June 2022 at Chandigarh.
The Council discussed and approved:
(i) Recommendations relating to GST rates on Goods and Services;
(ii) withdrawal of exemptions on certain goods and Services;
(iii) Clarification on GST Rate on certain goods/services;
(iv) Measures for trade facilitation; and
(v) Measures to streamline GST Compliance.
The changes in rates shall come into effect from 18th July 2022.
(i) Recommendation related to GST rates on Goods and Services
A. Changes in GST Rates on Goods (With effect from 18th July 2022) |
|||
|
S. No |
Item |
Current Rate |
New Rate |
|
1 |
Printing, writing or drawing ink |
12% |
18% |
|
2 |
Knives with cutting blades, Paper knives, Pencil sharpeners and blades therefor, Spoons, forks, ladles, skimmers, cake-servers etc |
12% |
18% |
|
3 |
Power driven pumps primarily designed for handling water such as centrifugal pumps, deep tube-well turbine pumps, submersible pumps; Bicycle pumps |
12% |
18% |
|
4 |
Machines for cleaning, sorting or grading, seed, grain pulses; Machinery used in milling industry or for the working of cereals etc; Pawan Chakki that is Air Based Atta Chakki; Wet grinder; |
5% |
18% |
|
5 |
Machines for cleaning, sorting or grading eggs, fruit or other agricultural produce and its parts, Milking machines and dairy machinery |
12% |
18% |
|
6 |
LED Lamps, lights and fixture, their metal printed circuits board; |
12% |
18% |
|
7 |
Drawing and marking out instruments |
12% |
18% |
|
8 |
Solar Water Heater and system; |
5% |
12% |
|
9 |
Prepared/finished leather/chamois leather /composition leathers; |
5% |
12% |
|
10 |
Ostomy Appliances |
12% |
5% |
|
11 |
Orthopedic appliance- Splints and other fracture appliances; artificial parts of the body; other appliances which are worn or carried, or implanted in the body, to compensate for a defect or disability; intraocular lens |
12% |
5% |
|
12 |
Tetra Pak (Aseptic Packaging Paper) |
12% |
18% |
|
13 |
Tar (whether from coal, coal gasification plants, producer Gas plants and Coke Oven Plants. |
5%/18% |
18% |
|
14 |
Cut and Polished diamonds |
0.25% |
1.5% |
|
15 |
IGST on specified defence items imported byprivate entities/vendors, when end-user is the Defence forces. |
Applicable Rate |
NIL |
B. Changes in GST Rates on Services (With effect from 18th July 2022) |
|||
|
S. No |
Item |
Current Rate |
New Rate |
|
1 |
Services supplied by foreman to chit fund |
12% |
18% |
|
2 |
Job work in relation to processing of hides, skins and leather |
5% |
12% |
|
3 |
Job work in relation to manufacture of leather goods and footwear |
5% |
12% |
|
4 |
Job work in relation to manufacture of clay bricks |
5% |
12% |
|
5 |
Works contract for roads, bridges, railways, metro, effluent treatment plant, crematorium etc |
12% |
18% |
|
6 |
Works contract supplied to central and state governments, local authorities for historical monuments, canals, dams, pipelines, plants for water supply, educational institutions, hospitals etc. & subcontractor thereof |
12% |
18% |
|
7 |
Works contract supplied to central and state governments, union territories & local authorities involving predominantly earthwork and sub-contracts thereof |
5% |
12% |
|
8 |
Transport of goods and passengers by ropeways |
18% |
5% (with ITC of Services) |
|
9 |
Renting of truck/goods carriage where cost of fuel is included |
18% |
12% |
(ii) withdrawal/Rationalisation of exemptions on certain goods and Services
Earlier GST was exempted on specified food items, grains etc when not branded, or right on the brand has been foregone. It has been recommended to revise the scope of exemption to exclude from it pre-packaged and pre-labelled retail pack in terms of Legal Metrology Act, including pre-packed, pre-labelled curd, lassi and butter milk.
A. Withdrawal/Rationalisation of exemptions on certain goods (with effect from 18th July 2022) |
|||
|
Item |
Current Rate |
New Rate |
|
|
Cheques, lose or in book form |
NIL |
18% |
|
|
Maps and hydrographic or similar charts of all kinds, including atlases, wall maps, topographical plans and globes, printed |
NIL |
12% |
|
|
Parts of goods of heading 8801 |
NIL |
18% |
|
|
Petroleum/ Coal bed methane |
5% |
12% |
|
|
Scientific and technical instruments supplied to public funded research institutes |
5% |
Applicable Rate |
|
|
E-Waste |
5% |
18% |
|
B. Withdrawal of exemptions on certain Services (with effect from 18th July 2022) |
|
(i) Exemption on transport of passengers by air to and from NE states & Bagdogra is being restricted to economy class |
|
(ii) Transportation by rail or a vessel of railway equipment and material |
|
(iii) storage or warehousing of commodities which attract tax (nuts, spices, copra, jaggery, cotton etc.) |
|
(iv) Fumigation in a warehouse of agricultural produce |
|
(v) Services by RBI, IRDA, SEBI, FSSAI, GSTN |
|
(vi) Renting of residential dwelling to business entities (registered persons) |
|
(vii) Services provided by the cord blood banks by way of preservation of stem cells |
|
(viii) CETPs, common bio-medical waste treatment facilities for treatment or disposal of biomedical waste – 12% (allowed to avail ITC) |
|
(ix) Hotel accommodation priced upto Rs. 1000/day - 12% |
|
(x) Room rent (excluding ICU) exceeding Rs 5000 per day per patient charged by a hospital – 5% (no ITC) |
|
(xi) Tax exemption on training or coaching in recreational activities relating to arts or culture, or sports is being restricted to such services when supplied by an individual |
(iii) Clarification on GST Rate on certain goods/services
A. Clarification on GST Rate on certain Goods |
|
(i) Electric vehicles whether or not fitted with a battery pack, are eligible for the concessional GST rate of 5%. |
|
(ii) All fly ash bricks attract same concessional rate irrespective of fly ash content |
|
(iii) Sewage treated water is exempted from GST and is not the same as purified water provided in S. No. 99 of notification 2/2017-CT(Rate). The word 'purified' is being omitted to make this amply clear |
|
(iv) Nicotine Polarilex Gum attracts a GST rate of 18% |
B. Clarification on GST Rate on certain Services |
|
(i) Due to ambiguity in GST rates on supply of ice-cream by ice-cream parlours, GST charged @ 5% without ITC on the same during the period 1.07.2017 to 5.10.2021 shall be regularized to avoid unnecessary litigation |
|
(ii) Application fee charged for entrance or for issuance of eligibility certificate for admission or issuance of migration certificate by universities is exempt from GST |
|
(iii) Services associated with transit cargo both to and from Nepal and Bhutan are covered by exemption under entry 9B of notification No. 12/2017-CT(R) dated 28.06.2017 |
|
(iv) Activity of selling of space for advertisement in souvenirs published in the form of books is eligible for concessional GST at 5% |
|
(v) Renting of vehicle with operator for transportation of goods on time basis is classifiable under Heading 9966 (rental services of transport vehicles with operators) and attracts GST at 18%. GST on such renting where cost of fuel is included in the consideration charged is being prescribed at 12%. |
|
(vi) Allowing choice of location of a plot is part of supply of long term lease of plot of land. Therefore, location charge or preferential location charges (PLC) are part of consideration charged for long term lease of land and shall get the same treatment under GST |
|
(vii) Sale of land after leveling, laying down of drainage lines etc. is sale of land and does not attract GST |
|
(viii) Renting of motor vehicles for transport of passengers to a body corporate for a period (time) is taxable in the hands of body corporate under RCM. |
C. Other Miscellaneous Changes |
|
(i) All taxable service of Department of Posts would be subject to forward charge. Hitherto certain taxable services of Department of post were taxed on reverse charge basis. (now Postal Dept will Charge GST on their services) |
|
(ii) Goods transport agency (GTA) is being given option to pay GST at 5% or 12% under forward charge; option to be exercised at the beginning of Financial Year. RCM option to continue |
(iv) Measures for trade facilitation
1. Supplies through E-Commerce Operators
(i) relaxation in the provisions for suppliers making supplies through E-Commerce Operators (ECOs)
(ii) Waiver of requirement of mandatory registration for person supplying goods through ECOs, subject to - (a) All India turnover does not exceed the turnover specified (b) the person is not making any inter-State taxable supply
(iii) Composition taxpayers would be allowed to make intra-State supply through e-commerce operators subject to certain conditions.
2. Amendment Related to GST Refunds
a. Inverted Duty Structure –
Change in formula for calculation of refund under rule 89(5) to take into account utilization of ITC on account of inputs and input services for payment of output tax on inverted rated supplies in the same ratio in which ITC has been availed on inputs and input services during the said tax period. This would help those taxpayers who are availing ITC on input services also.
b. IGST Refund claims –
In some cases where the exporter is identified as risky exporter requiring verification by GST officers, or where there is a violation of provisions of Customs Act, the refund claims in respect of export of goods are suspended/withheld.
Amendment in Rule 96 of the CGST Rules has been recommended to provide for transmission of such IGST refund claims on the portal in a system generated FORM GST RFD-01 to the jurisdictional GST authorities for processing. This would result in expeditious disposal of such IGST refund claims, after due verification by GST officers, thus benefitting such exporters.
c. Exclusion of time period for filing refund claim -
Time period from 01.03.2020 to 28.02.2022 to be excluded from calculation of the limitation period for filing refund claim by an applicant under section 54 and 55 of CGST Act, as well as for issuance of demand/ order (by proper officer) in respect of erroneous refunds under section 73 of CGST Act.
d. Giving back refund granted erroneous –
Re-credit of amount in electronic credit ledger to be provided in those cases where erroneous refund amount sanctioned to a taxpayer on account of accumulated ITC or on account of IGST paid on zero rated supply of goods or services, in contravention of rule 96(10) of the CGST Rules, is deposited by him along with interest and penalty, wherever applicable. A new FORM GST PMT- 03A is introduced for the same.
This will enable the taxpayers to get re-credit of the amount of erroneous refund, paid back by them, in their electronic credit ledger.
e. Refund of ITC of Export of Electricity -
Amendment in CGST Rules to provide for refund of unutilized Input Tax Credit on account of Export of Electricity. This would facilitate the exporters of electricity in claiming refund of utilized ITC on zero rated supplies
f. Withdrawal of Refund of accumulated ITC on following goods –
(i) Edible Oils
(ii) Coal
3. Other Measures
a. Waiver of late fee for delay in filing FORM GSTR-4 for FY 2021-22 and extension of due date for filing FORM GST CMP-08 for Q1 of FY 2022-23 -
(i) To extend the waiver of late fee for delay in filing FORM GSTR-4 for FY 2021-22 by approximately four more weeks, i.e. till 28.07.2022 (The existing waiver is for the period from 01.05.2022 till 30.06.2022)
(ii) To extend the due date of filing of FORM GST CMP-08 for the 1 quarter of FY 2022-23 from 18.07.2022 to 31.07.2022.
(iii) GSTN has also been asked to expeditiously resolve the issue of negative balance in Electronic Cash Ledger being faced by some of the composition taxpayers.
b. Present exemption of IGST on import of goods under AA/EPCG/EOU scheme to be continued and E-wallet scheme not to be pursued further
c. Issuance of the circulars to remove ambiguity and legal disputes on various issues for the benefit of taxpayers:
(i) Clarification on issue of claiming refund under inverted duty structure where the supplier is supplying goods under some concessional notification.
(ii) Clarification on various issues relating to applicability of demand and penalty provisions under the CGST Act in respect of transactions involving fake invoices.
(ii) Clarification on mandatory furnishing of correct and proper information of inter-State supplies and amount of ineligible/blocked Input Tax Credit and reversal thereof in return in FORM GSTR-3B.
(iv) Clarification on the issues pertaining to refund claimed by the recipients of supplies regarded as deemed export
(v) Clarification on various issues relating to interpretation of section 17(5) of the CGST Act -Blocked/Ineligible ITC
(vi) Clarification on the issue of perquisites provided by employer to the employees as per contractual agreement
(vii) Clarification on utilization of the amounts available in the electronic credit ledger and the electronic cash ledger for payment of tax and other liabilities
d. Exemption from filing annual return in FORM GSTR-9/9A for FY 2021-22 to be provided to taxpayers having AATO upto Rs. 2 crores.
e. Explanation 1 after rule 43 of CGST Rules to be amended to provide that there is no requirement of reversal of input tax credit for exempted supply of Duty Credit Scrips by the exporters
f. UPI & IMPS to be provided as an additional mode for payment of Goods and Services Tax to taxpayers under Rule 87(3) of CGST Rules
g. In respect of refunds pertaining to supplies to SEZ Developer/Unit, an Explanation to be inserted in sub-rule (1) of rule 89 of CGST Rules to clarify that "specified officer" under the said sub-rule shall mean the "specified officer" or "authorized officer", as defined under SEZ Rules, 2006
h. Supplies from Duty Free Shops (DFS) at international terminal to outgoing international passengers to be treated as exports by DFS and consequential refund benefit to be available to them on such supplies. Rule 95A of the CGST Rules, Circular No. 106/25/2019-GST dated 29.06.2019 and related notifications to be rescinded accordingly.
(v) Measures to streamline GST Compliance
a. Provision for automatic revocation of suspension of registration in cases where suspension of registration was done by the system, for continuous non-filing of specified number of returns, once all the pending returns are filed on the portal by the taxpayer. (Amendment in rule 21A)
b. Proposal for comprehensive changes in FORM GSTR-3B to be placed in public domain for seeking inputs/suggestions of the stakeholders.
c. Limitation under section 73 for FY 2017-18 for issuance of order in respect of other demands linked with due date of annual return, to be extended till 30 September, 2023.
Note -Use of AL/ML based mechanism for risk profiling -
The GoM on IT Reforms, inter alia, recommended that the GSTN should put in place the AI/ML based mechanism to verify the antecedents of the registration applicants and an improved risk-based monitoring of their behavior post registration so that non-compliant tax payers could be identified in their infancy and appropriate action be taken so as to minimize risk to exchequer.
Please note that the recommendations of the GST Council have been presented in this release containing major item of decisions in simple language for information of all stakeholders. The same would be given effect through relevant Circulars/ Notifications/ Law amendments which alone shall have the force of law.
CAclubindia
