RECOMMENDATIONS OF 45TH GST COUNCIL MEETING HELD AT LUCKNOW ON 17.9.2021
The Goods and Services Tax Act, 2021 came into force in
India with effect from 1.7.2017.
The GST Council’s 45th meeting held on 17.9.2021 aLucknw
chaired by Finance
Minister Nirmala Sitharaman and the recommendations of the GST Council
and decisions taken at the time of GST Council meeting is given below for
information purpose. Detailed Notifications will be issued by the Government
and the same will be given after issue of Notifications.
Recommendations of 45th GST Council
Meeting
Several people centric decisions taken by GST Council
Posted
On: 17 SEP 2021 9:16PM by PIB Delhi
·
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%
Council also recommends major changes in GST rates and scope of exemption
on Services
Recommends
several clarifications in relation to GST rates on Goods and Services
Council recommends several measures relating to GST law and procedure
Council decides to set up 2 GoMs to examine issue of correction of
inverted duty structure for major sectors and for using technology to further
improve compliance, including monitoring
The GST Council’s 45th meeting
was held today 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
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. |
||
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:
a.
Taxpayers whose annual aggregate turnover in
preceding financial year is above Rs. 5 crores shall furnish ITC-04 once in six
months;
b.
Taxpayers whose annual aggregate turnover in
preceding financial year is upto Rs. 5 crores shall furnish ITC-04 annually.
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:
a.
Clarification on scope of
“intermediary services”;
b.
Clarification relating to
interpretation of the term “merely 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;
c.
Clarification in respect of certain
GST related issues:
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.
RM/KMN
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