CLARIFICATION ON RATE OF TAX ON IMITATION ZARI THREAD OR YARN
Tjrr Goods amd Servoices Tax Act 2017 came into
force with effect from 1.7.2017 in India.
The Central Government has issued circular Clarification
regarding GST rate on imitation zari thread or yarn based on the recommendation of the GST Council in its 52nd meeting held on 7th October, 2023.
.
The GST Council in its 50th
meeting had recommended reduction of GST rate to 5% on imitation zari thread or yarn known by any name in trade parlance,
following which Sl. No.
218AA had been inserted in Schedule I of notification no. 1/2017- Central Tax
(Rate) dated 28.6.2017.
2.
Doubts have been raised
whether metal coated plastic film converted to metallised yarn and twisted with nylon, cotton,
polyester or any other yarn to make imitation zari thread is covered under Sl No. 218AA of Schedule
I covering imitation zari thread or yarn, and
attracting 5% GST, or under Sl No. 137 of Schedule III covering other
metallised yarn attracting 12% GST. As per HS Explanatory Notes, the heading
5605 covers – (1) yarn consisting of
any textile material (including monofilament , strip and the like and paper
yarn) combined with metal thread or
strip, whether obtained by a process of twisting, cabling or by gimping,
whatever the proportion of the metal present (2) yarn of any textile
material (including
monofilament , strip and the like and paper yarn) covered with metal by any other
process including yarn covered with metal by electro-deposition. The
heading also covers products
consisting of a core of metal foil (generally of aluminum) or of a core of
plastic film coated with metal
dust, sandwiched by means of an adhesive between two layers of plastic film.
3.
In light of the above, the GST
Council has recommended to clarify that imitation zari thread or yarn made from metallised polyester film/ plastic film falling under
HS 5605 are covered by Sl No. 218AA of Schedule I
attracting 5% GST. The GST Council has also recommended
that no refund will be permitted on polyester film (metallised)/plastic film on account
of inversion of tax rate. Requisite changes
have been made in notification no. 5/2017- Central
Tax (Rate) vide Notification no 20/223-Central Tax (Rate) dated 19.10.2023.
4.
The relevant circular is goven
below for ready reference.
Circular No. 205/17/2023-GST
F. No. CBIC-190354/195/2023-TO(TRU-II)
Government of
India Ministry of Finance Department of
Revenue (Tax Research Unit)
*****
North Block, New Delhi Date:
31st October, 2023
To,
Principal Chief Commissioners/ Principal Directors General, Chief Commissioners/ Directors
General,
Principal Commissioners/ Commissioners of Central
Excise & Central Tax
Madam/ Sir,
Subject: Clarification regarding GST rate on imitation zari thread
or yarn based on the recommendation of the GST Council in its 52ndmeeting held on 7th October, 2023 –reg.
The GST Council in its 50th
meeting had recommended reduction of GST rate to 5% on imitation zari thread or yarn known by any name in trade parlance,
following which Sl. No.
218AA had been inserted in Schedule I of notification no. 1/2017- Central Tax
(Rate) dated 28.6.2017.
2.
Doubts have been raised whether
metal coated plastic film converted to metallised yarn and twisted with nylon, cotton, polyester or any other yarn
to make imitation zari thread is
covered under Sl No. 218AA of Schedule I covering imitation zari thread or
yarn, and attracting 5% GST, or under
Sl No. 137 of Schedule III covering other metallised yarn attracting 12% GST. As per HS Explanatory Notes, the heading 5605 covers – (1) yarn consisting of any textile material
(including monofilament , strip and the like and paper yarn) combined with metal thread or strip,
whether obtained by a process of twisting, cabling or by gimping, whatever the proportion of the metal present (2) yarn of any textile
material (including
monofilament , strip and the like and paper yarn) covered with metal by any other
process including yarn covered with metal by electro-deposition. The
heading also covers products
consisting of a core of metal foil (generally of aluminum) or of a core of
plastic film coated with metal
dust, sandwiched by means of an adhesive between two layers of plastic film.
3.
In light of the above, the GST
Council has recommended to clarify that imitation zari thread or yarn made from metallised polyester film/ plastic film falling under
HS 5605 are
covered by Sl No. 218AA of Schedule I attracting 5% GST.
The GST Council has also recommended
that no refund will be permitted on polyester film (metallised)/plastic film on account
of inversion of tax rate. Requisite changes
have been made in notification no. 5/2017- Central
Tax (Rate) vide Notification no 20/223-Central Tax (Rate) dated 19.10.2023.
4 Difficulty if any, in the implementation of this circular
may be brought to the notice of the
Board.
Yours faithfully,
Dibyalok Technical Officer , TRU