Major recommendation of 45th GST council meeting held on 17-09-2021 with author comments
|1.||Extension of existing concessional GST rates on certain items of Covid-19 treatment –||For item wise detail refer press release/circulars|
|2.||Reduction of GST rate to 5% on more Covid-19 treatment drugs, up to 31st December, 2021.||For item wise detail refer press release/circulars|
|3.||GST rate changes in relation to Goods w.e.f 1.10.2021||For item wise detail refer press release/circulars|
|4.||Changes in reverse charge- Supply of mentha oil from unregistered person has been brought under reverse charge.||Now wide coverage under section 9 of CGST/SGST or 5 of IGST|
|5.||Export and refund : exports of Mentha oil should be allowed only against LUT||No export on IGST payment and refund of full IGST. Loss of ITC of capital goods. Huge loss to exporter of menthe oil.|
|6.||Changes in taxation of bricks: expected to cover in composition scheme from 01-4-2-2022||GST at the rate of 6% without ITC under the scheme and GST rate of 12% with ITC|
|7.||Petroleum product will continue outside GST||Both centre and states are enjoying because of huge revenue on such item and no effective protest of citizen so GST council has simply ignored the court. No one in GST council to raise voice of pubic.|
Correction in Inverted Duty structure in Footwear and Textiles sector, Welcome step, this will be tax neutral for government .
Major GST changes in relation to rate of tax and scope of exemption on Services [w.e.f 1.10.2021 unless otherwise stated, details as under:
|1.||Validity of GST exemption on transport of goods by vessel and air
from India to outside India is extended upto 30.9.2022.
note: export shall remain cheaper because no GST on outbound shipment /air cargo.
|2.||Services by way of grant of National Permit to goods carriages on
payment of fee
|3.||Skill Training for which Government bears 75% or more of the
expenditure [ presently exemption applies only if Govt funds 100%].
|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]
|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)
note: printed books become more costly .
|7.||Exemption on leasing of rolling stock by IRFC to Indian Railways withdrawn.|
Proposed changes in taxation of E Commerce Operators:
|10.||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]
Note: liability of E-commerce operator will be increased and actual service provider will be relaxed.
Import of goods:
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.
Clarification in relation to GST rate on Goods: major clarification are as under ,
- 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%.
- Distinction between fresh and dried fruits and nuts is being clarified for application of GST rate of “nil” and 5%/12% respectively;
- It is being clarified that all pharmaceutical goods falling under heading 3006 attract GST at the rate of 12% [ not 18%].
- For other item for details refer press release
Clarification in relation to GST rate on services or exemptions
- 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
- Services by cloud kitchens/central kitchens are covered under ‘restaurant service’, and attract 5% GST without
- Ice cream parlor sells already manufactured ice- Such supply of ice cream by parlors would attract GST at the rate of 18%.
- Overloading charges at toll plaza are exempt from GST being akin to toll charges.
- The renting of vehicle by State Transport Undertakings and Local Authorities is covered by expression ‘giving on hire’ for the purposes of GST exemption
- The services by way of grant of mineral exploration and mining rights attracted GST rate of 18% w. e. f. 01.07.2017.
- Admission to amusement parks having rides attracts GST rate of 18%. The GST rate of 28% applies only to admission to such facilities that have casinos etc.
- 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
Recommendation for changes in GST law and procedure
Filing of ITC -04 (return of sending goods to job worker) periodicity increased and relaxed: Requirement of filing FORM GST ITC-04 under rule 45 (3) of the CGST Rules has been relaxed as under:
- Taxpayers whose annual aggregate turnover in preceding financial year is above 5 crores shall furnish ITC-04 once in 6 months;
- Taxpayers whose annual aggregate turnover in preceding financial year is upto 5 crores shall furnish ITC-04 annually.
Note: welcome move for the principal and job worker.
No Interest liabilities if, ITC wrongly availed but not utilized and later on reversed: 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, 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.
Note: this is in line with judicial precedent of Patna HC and it is welcome move because in this case no loss to the government and since interest is compensatory in nature so collecting interest on just availing wrongful ITC and reversing the same by taxpayer when detected is unjustified.
Transfer of unutilised ITC from one branch to another branch: 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.
Note: earlier government was empower to adjust the demand of one branch against refund of other branch but now ITC transfer is possible make taxpayer life easy otherwise blockage of fund. This result into ease of business.
Clarification in respect of certain GST related issues:
- 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;
Note: more time limit shall be available for availing ITC in case of debit note. For example invoice issued on 31-05-2020, debit note issued 23-09-2021, now ITC could be availed upto due date of GSTR 3B of September 2022.
- 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;
- 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
GST refund in the case of wrong payment of tax : 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.
Note: earlier rule has been changed for transferring tax paid under wrong Type to correct type of tax by PMT -09. i.e IGST to CGST/SGST and vice versa.
Hard measures for streamlining compliances in GST
Aadhaar authentication of registration to be made mandatory for being eligible for filing refund claim and application for revocation of cancellation of
- Late fee for delayed filing of FORM GSTR-1 to be auto-populated and collected in next open return in FORM GSTR-3B.
- Refund to be disbursed in the bank account, which is linked with same PAN on which registration has been obtained under GST.
- 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.
Note: at present no GSTR-1 if return GSTR-3B pending for 2 months, so more stringent provisions for GSTR-3B filing but at the same time benefit for those availing ITC.
- 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.
Note: Finance Act 2021 has made amendment in section 16(2) but yet to be notified . Once new section 16(2)(aa) notified credit of ITC shall be equal to ITC in 2A/2B , No chance of more credit. At present 5 % variation in ITC claim permissible.
GST Council has also recommended amendments in certain provisions of the Act and Rules.
Please also refer to relevant Circulars/ Notifications/ Law amendments which alone shall have the force of law.
Conclusion: we welcome certain changes but no resolution of refund in the case of inverted tax structure where recently Hon’ble supreme court has pointed anomaly in GST law, where refund only if tax on input is higher than the rate of tax on outward supply. Several tax payers are worstly affected. Hope matters shall be taken in next meeting.