Recommendations of 45th GST Council Meeting
·
No Transfer of Petro Products to GST Regime
·
Inverted
Duty Structure in Footwear and Textiles Sector Deferred
·
Clarifications in
relation to GST Rates on Goods and Services
·
Relaxation
in the Requirement of Filing Form GST ITC-04
·
Interest
is to be charged only in respect of net cash liability
·
Interest
should be charged on ineligible ITC availed and utilized
·
CGST
and IGST cash ledger may be allowed to be transferred between distinct persons
·
Clarification
on scope of “intermediary services
·
A
person incorporated under the laws of any other country are to be treated as
separate legal entities
·
Date
of issuance of debit note shall determine the relevant financial year
·
Need
to carry the physical copy of tax invoice
·
Goods
which are actually subjected to export duty will be covered under the
restriction imposed under section 54(3) of CGST Act, 2017
·
Procedure
and time limit for filing refund of tax wrongfully
·
Aadhaar authentication of registration to filing
refund claim
·
Late
fee for delayed filing of FORM GSTR-1
·
Refund
to be disbursed in the bank account
·
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.
·
Council
Recommends Major Changes in GST Rates and Scope of Exemption on Services
·
Measures relating
to GST Law and Procedure
·
Two GoMs to examine issue of correction of Inverted Duty
Structure for Major Sectors and for Using Technology to further Improve
compliance, including Monitoring
·
Life-saving
drugs Zolgensma and Viltepso
used in treatment of Spinal-Muscular Atrophy exempted from GST when imported
for personal use
·
Extension
of existing concessional GST rates on certain COVID-19 treatment drugs upto 31st December 2021
·
GST rates
on 7 other medicines recommended by Department of Pharmaceuticals reduced from
12% to 5% till 31st December 2021
·
GST rate
on Keytruda medicine for treatment of cancer reduced
from 12% to 5%
·
GST rates
on Retro fitment kits for vehicles used by persons with special abilities
reduced to 5%
·
GST rates
on Fortified Rice kernels for schemes like ICDS reduced from 18% to 5%
The GST Council’s 45th meeting
was held on 17 September, 2021 in Lucknow under the
chairmanship of the Union Finance & Corporate Affairs Minister Smt. Nirmala
Sitharaman. The GST Council has inter-alia
made the following recommendations relating to changes in GST rates on
supply of goods and services and changes related to GST law and procedure:
I. Recommendations relating to
GST Rates on Goods and Services
A. COVID-19 relief measure in
form of GST rate concessions
1. Extension of existing concessional GST rates
(currently valid till 30th September, 2021) on following Covid-19
treatment drugs, up to 31st December, 2021, namely-
i.
Amphotericin B -nil
ii.
Remdesivir – 5%
iii.
Tocilizumab -nil
iv.
Anti-coagulants like
Heparin – 5%
2. Reduction of GST rate to 5% on more Covid-19
treatment drugs, up to 31st December, 2021, namely-
i.
Itolizumab
ii.
Posaconazole
iii.
Infliximab
iv.
Favipiravir
v.
Casirivimab & Imdevimab
vi.
2-Deoxy-D-Glucose
vii. Bamlanivimab & Etesevimab
B. Major recommendations on GST
rate changes in relation to Goods [w.e.f 1.10.2021
unless otherwise stated]
|
S. No. |
Description |
From |
To |
|
|
GST Rate Changes |
|
|
|
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%/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 (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 |
Appl. 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) |
|
C. Other changes relating to
GST rates on goods
1.
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 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.
D. Correction in Inverted Duty
structure in Footwear and Textiles sector
GST rate changes in order to
correct inverted duty structure, in footwear and textiles sector, as was
discussed in earlier GST Council Meeting and was deferred for an appropriate
time, will be implemented with effect from 01.01.2022.
E. In terms of the recent
directions of the Hon’ble High Court of Kerala, 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.
F. Major GST changes in
relation to rates and scope of exemption on Services [w.e.f
1.10.2021 unless otherwise stated]
|
No. |
Description |
From |
To |
|
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 licencing 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 transport of passengers,
by any type of motor vehicles through it [w.e.f. 1st
January, 2022] 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. |
|
|
G. Clarification in relation to
GST rate on Goods
1.
Pure henna
powder and paste, having no additives, attract 5% GST rate under Chapter 14.
2.
Brewers'
Spent Grain (BSG), Dried Distillers’ Grains with Soluble [DDGS] and other such
residues, falling under HS code 2303 attract GST at the rate of 5%.
3.
All
laboratory reagents and other goods falling under heading 3822 attract GST at
the rate of 12%.
4.
Scented
sweet supari and flavored and coated illachi falling
under heading 2106 attract GST at the rate of 18%
5.
Carbonated
Fruit Beverages of Fruit Drink" and "Carbonated Beverages with Fruit
Juice" attract GST rate of 28% and Cess of 12%.
This is being prescribed specifically in the GST rate schedule.
6.
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.
7.
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%.
8.
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.
9.
Due to
ambiguity in the applicable rate of GST on Fibre
Drums, the supplies made at 12% GST in the past have been regularised.
Henceforth, a uniform GST rate of 18% would apply to all paper and paper board
containers, whether corrugated or non-corrugated.
10. Distinction between fresh and dried fruits and
nuts is being clarified for application of GST rate of “nil” and 5%/12%
respectively;
11. It is being clarified that all pharmaceutical
goods falling under heading 3006 attract GST at the rate of 12% [ not 18%].
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.
H. Clarification in relation to
GST rate on services
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 parlor sells
already manufactured ice- cream. Such supply of ice cream by parlors would attract
GST at the rate of 18%.
4.
Overloading charges at
toll plaza are exempt from GST being akin to toll.
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.
The services by way of
grant of mineral exploration and mining rights attracted GST rate of 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.
II. 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. In this context various options, as
have been recommended by various committees/ forums were presented. The Council
deliberated at length on the issue. The Council decided to set up a GoM to examine the issue of correction of inverted duty
structure for major sectors; rationalize the rates and review exemptions from
the point of view of revenue augmentation, from GST. It was also decided to set
up a GoM to discuss ways and means of using
technology to further improve compliance including monitoring through improved
e-way bill systems, e-invoices, FASTag data and
strengthening the institutional mechanism for sharing of intelligence and
coordinated enforcement actions by the Centre and the States.
III. Recommendations relating
to GST law and procedure
I. Measures for Trade facilitation:
1.
Relaxation in the
requirement of filing FORM GST ITC-04:
Requirement of filing FORM GST ITC-04
under rule 45 (3) of the CGST Rules has been relaxed as under:
2.
In the spirit of earlier
Council decision that 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, to provide that interest is to be paid
by a taxpayer on “ineligible ITC availed and utilized” and not on
“ineligible ITC availed”. It has also been decided that interest in such cases
should be charged on ineligible ITC availed and utilized at 18% w.e.f. 01.07.2017.
3.
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), without
going through the refund procedure, subject to certain safeguards.
4.
Issuance of the following
circulars in order to remove ambiguity and legal disputes on various issues,
thus benefiting taxpayers at large:
i.
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;
ii.
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;
iii.
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.
5.
Provision to be
incorporated in in CGST Rules, 2017 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.
J. Measures for streamlining compliances in
GST
1.
Aadhaar authentication of registration to be made mandatory for being
eligible for filing refund claim and application for revocation of
cancellation of registration.
2.
Late fee for delayed
filing of FORM GSTR-1 to be auto-populated and collected in next open
return in FORM GSTR-3B.
3.
Refund to be disbursed in
the bank account, which is linked with same PAN on which registration has been
obtained under GST.
4.
Rule 59(6) of the CGST
Rules to be amended with effect from 01.01.2022 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.
5.
Rule 36(4) of CGST Rules,
2017 to be amended, 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.
K. GST Council has also recommended amendments
in certain provisions of the Act and Rules.
Note: 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.