REVISION IN RATES OF GST

Rate of GST reduced on large number of goods and services

As decided by the GST Council in its 23rd meeting held on 10thNovember, the rates of GST on number of products and services have been reduced.

• List of 28% GST rated goods has been pruned substantially, from 224 tariff headings to 50 tariff headings,
• Rates have also been reduced on several goods from 18% to 12% (Condensed milk; Pasta; Curry paste, mayonnaise and salad dressings; Medicinal grade oxygen, etc.),
• from 18% to 5% (fly ash; puffed rice chikki, peanut chikki, sesame chikki, revdi, tilrevdi, khaza, kazuali, groundnut sweets gatta, kuliya, etc.) and
• from 12% to 5% (finished leather, chamois and composition leather; fly ash brick, etc.).
• Similarly, rate of GST on guar meal, khandsari sugar, bangles of lac / shellac, uranium ore concentrate and specified dried vegetables has come down to nil.
• In respect of services, stand-alone restaurants irrespective of being air conditioned or otherwise, would be liable to GST at the rate of 5%, without the facility of input tax credit (ITC).
• Restaurants in hotel premises having room tariff of less than Rs. 7500 per unit per day are also covered under this rate of tax, without ITC.

Notification Nos. 41, 42 and 46/2017-Central Tax (Rate), all dated 14-11-2017 and effective from 15-11-2017.

• Exemption to tax payment at time of receipt of advance – Notification No. 66/2017-Central Tax, dated 15-11-2017to exempt all registered persons [except taxpayers who opted for composition levy under Section 10 of CGST Act] from payment of tax on advances received in case of supply of goods
• Registration exemption to specified service provider providing service through electronic commerce operator– This exemption is available to service providers having an aggregate turnover of less than Rs. 20 lakh (Rs. 10 lakh in case of special category States) in a financial year. Notification No. 65/2017-Central Tax, dated 15-11-2017.
• Reduced rate of GST for specified supplies to research institutions, etc. (Effective form 15-11-2017)– Notification No. 45/2017-Central Tax (Rate), dated 14-11-2017 has been issued to provide for 2.5% CGST on specified goods supplied to public funded research institutions, universities, IITs, NITs, IISC (Bangalore), research institutions, departments and laboratories of Central / State Governments and Regional Cancer Centre (Cancer Institute). This list excludes hospitals.

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• IGST exemption to inter-State movement of rigs, tools and spares– Inter-State movement of such goods between distinct persons shall be treated neither supply of goods nor supply of services and no IGST will be levied. Circular No. 21/21/2017-GST, dated 22-11-2017 issued, however notes that such exemption will not be available if movement is for further supply of such goods, and that GST will be payable on repairs and maintenance of such goods.
• EOUs –Procedure for procurement from DTA– CBEC has prescribed procedure and safeguards in respect of supply of goods to EOU, in order to ensure smooth processing of refund claims in respect of such deemed exports. EOU in this regard is required to intimate, in a prescribed form, to the registered supplier and to jurisdictional officers of the supplier and that of EOU. As per Circular No. 14/14 /2017-GST, dated 06-11-2017, tax invoice as endorsed by EOU will be considered as proof of deemed export supplies made by the registered supplier to the EOU.
• Refund of unutilised ITC in case of export of fabrics, available– Manufacturer of fabrics is eligible for refund of unutilized ITC of GST paid on inputs (other than ITC of GST paid on capital goods) in respect of fabrics manufactured and exported by him. Circular No. 18/18/2017-GST, dated 16-11-2017 clarifying this, observes that restriction on refund of unutilised ITC under Notification No.5/2017-Central Tax (Rate) would not apply to zero rated supplies.
• Terracotta idols eligible for nil GST rate–Tax Research Unit of the Ministry of Finance has clarified that as terracotta is clay based, terracotta idols will be eligible for Nil rate under Sl. No.135A of Notification No. 2/2017-Central Tax (Rate), dated 28-6-2017, which prescribes nil rate for clay idols. Circular No. 20/20/2017-IGST, dated 22-11-2017.
• Milling of paddy into rice liable to GST -Circular No. 19/19/2017-GST, issued by Ministry of Finance clarifying that milling of paddy into rice on job work basis is liable to GST at the rate of 5%, on the processing charges (and not on the entire value of rice) under Sl. No. 26 -of Notification No. 11/2017-Central Tax (Rate).  According to this circular milling of paddy is not an intermediate production process in relation to cultivation of plants.

Central Board of Indirect Taxes and Customs(CBIC) issued Three New GST Circular on 20-09-2021.

CBIC issued Three New GST Circular on Intermediary, Certain GST related issues, export of services- condition section 2(6)(v). The details of the circulars are as under:

• 159/15/2021-GST – Clarification on doubts related to scope of “Intermediary”
• 160/16/2021-GST – Clarification in respect of certain GST related issues
• 161/17/2021-GST – Clarification relating to export of services- condition (v) of section 2(6) of the IGST Act 2017

45th GST Council Meeting key Recommendation

Goods and Services Tax (GST) on sale of electric vehicles

GST on sale of electric vehicles has been reduced from 12% to 5%. Road Transport & Highways Ministry has advised state govts to waive road tax on purchase of electric vehicles.

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