What Are the Outcomes of India’s 47th GST Council Meeting? Rate Revisions, Withdrawal of Exemptions, Easing Compliance

Posted by Written by Naina Bhardwaj Reading Time: 7 minutes

The 47th GST Council meeting was held on June 28-29, 2022, coinciding with the fifth anniversary of the GST roll-out. Key outcomes based on the council’s recommendations include removing exemptions on certain goods and services as well as GST rate rationalization. The council also proposed various measures to ease compliances and facilitate trade.


The Goods and Services Tax (GST) Council’s 47th meeting was held on June 28-29, 2022 under the chairmanship of the Finance Minister Nirmala Sitharaman and made several recommendations to implement changes to the GST regime.

Key recommendations proposed are:

  • Changes to the GST rates for goods and services
  • Withdrawal of exemptions on certain goods and services
  • Clarification on GST rate for certain goods and services
  • Measures for trade facilitation
  • Measures to streamline GST compliance

When will the changes in the GST rate come into effect?

The changes in GST rates for the concerned goods and services shall come into effect from July 18, 2022.

What are the changes and clarifications made to the GST rates for goods?

Key Changes in the GST Rates for Goods, w.e.f. July 18, 2022

Goods

Existing GST rate

Proposed GST rate

Printing, writing, or drawing ink

12 percent

18 percent

Power-driven pumps primarily designed for handling water. For example, centrifugal pumps, deep tube-well turbine

pumps, submersible pumps, and bicycle pumps

12 percent

18 percent

LED lamps, lights and fixture, and their metal printed circuits board

12 percent

18 percent

Drawing and marking out instruments

12 percent

18 percent

Solar water heater and system

5 percent

12 percent

Prepared/finished leather, chamois leather, composition leather

5 percent

12 percent

Orthopedic appliances − splints and other fracture appliances, artificial parts of the body, or other appliances that

are worn or carried, or implanted in the body to compensate for a defect or disability, intraocular lens

12 percent

5 percent

Ostomy appliances

12 percent

5 percent

Tetra packs (aseptic packaging paper)

12 percent

18 percent

Cut and polished diamonds

0.25 percent

1.5 percent

IGST on specified defense items imported by private entities or vendors, when end-user is the defense forces of India

Applicable rate

NIL

Cheques, lose or in book form

NIL

18 percent

Petroleum/coal bed methane

5 percent

12 percent

E-waste

5 percent

18 percent

Maps and hydrographic or similar charts of all kinds, including atlases, wall maps, topographical plans and globes

NIL

12 percent

 

Clarifications with respect to GST Rates on Goods

Sr. no.

Description

1.       

Refund of accumulated input tax credit (ITC) shall not be allowed on edible oils and coal.

2.       

Electric vehicles, whether or not fitted with a battery pack, are eligible for the concessional GST rate of five percent.

3.       

Sewage treated water is not the same as purified water and hence exempt from GST.

4.       

Nicotine polarilex gum attracts GST at 18 percent.

For which goods has GST exemption been withdrawn?

Earlier GST was exempted on specified food items, grains, etc. when they were either not branded, or right on the brand had been foregone. However, the 47th GST Council recommended to revise the scope of exemption, which will now be withdrawn from pre-packaged and pre-labelled retail packs, including pre-packed, pre-labelled curd, lassi, and butter milk.

For which services has GST exemption been withdrawn?

Withdrawal of GST exemption

Sr. No.

Description

1.       

Transportation by rail or vessel of railway equipment and material.

2.       

Storage or warehousing of commodities which attract tax (nuts, spices, copra, jaggery, cotton etc.)

3.       

Fumigation in a warehouse of agricultural produce.

4.       

Services by Reserve Bank of India (RBI), Insurance Regulatory and Development Authority (IRDA), Securities and Exchange Board of India (SEBI), Food Safety and Standards Authority of India (FSSAI) and Goods and Services Tax Network (GSTN).

5.       

Renting of residential dwelling to registered business entities.

6.       

Services provided by cord blood banks by way of preservation of stem cells.

What are the changes and clarifications made to the GST rates for services?

Key Changes in the GST Rates for Services, w.e.f. July 18, 2022

Services

Existing GST rate

Proposed GST rate

Services supplied by foreman to chit fund

12 percent

18 percent

Job work in relation to processing of hides, skins and leather

5 percent

12 percent

Job work in relation to manufacture of leather goods and footwear

5 percent

12 percent

Job work in relation to manufacture of clay bricks

5 percent

12 percent

Works contract for roads, bridges, railways, metro, effluent treatment plant etc.

12 percent

18 percent

Works contract service supplied to Central and State governments, local authorities for historical monuments, canals, dams, pipelines, plants for water supply, educational institutions, hospitals etc. and its sub-contracting

12 percent

18 percent

Works contract service supplied to Central and State governments and local authorities involving predominantly earthwork and its sub-contracting

5 percent

12 percent

Transport of goods and passengers by ropeways

18 percent

5 percent (with ITC for services)

Renting of truck/ goods carriage where cost of fuel is included

18 percent

12 percent

 

Clarifications with respect to GST Rates on Services

Sr. no.

Description

1.       

GST exemption on transport of passengers by air to and from North-eastern states and Bagdogra is restricted to economy class.

2.       

Common bio-medical waste treatment facilities for treatment or disposal of biomedical waste shall be taxed at 12 percent with ITC benefit.

3.       

Hotel accommodation of value up to INR 1000 per day shall be taxed at 12 percent.

4.       

Room rent (excluding ICU) charged by a hospital, exceeding INR 5,000 per day per patient shall be taxed. The tax shall be levied only on the room rentals at five percent without ITC.

5.       

GST exemption on training or coaching in recreational activities relating to arts, culture or sports is restricted only when supplied by an individual.

6.       

Fee charged by universities for issuance of migration certificate or eligibility certificate for admission is exempt from GST.

7.       

Services associated with transit cargo both to and from Nepal and Bhutan are covered by exemption under entry 9B of notification No. 12/2017-CT(R).

8.       

Activity of selling of space for advertisement in souvenirs published in the form of books is eligible for concessional GST at five percent.

9.       

Renting of vehicle with operator for transportation of goods on time basis attracts GST at 18 percent. GST on such renting, where cost of fuel is included in the consideration charged will be taxable at 12 percent.

10.   

Allowing choice of location of a plot is part of supply of long-term lease of the plot of land. Therefore, location charge or preferential location charges are part of consideration charged for long-term lease of land and shall get the same treatment under GST.

11.   

Services in the form of assisted reproductive technology/in vitro fertilization covered under the definition of health care services for the purpose of exemption under GST.

12.   

Sale of land after levelling, laying down of drainage lines, etc., is sale of land and would not attract GST.

13.   

Renting of motor vehicles for transport of passengers to a body corporate for a period taxable in the hands of body corporate under reverse charge mechanism.

14.   

Services provided by the guest anchors to TV channels in lieu of honorarium attract GST.

Legal and procedural changes in the GST regime

Changes in trade facilitation measures

Supplies through e-commerce operators

The following relaxations are to be provided to suppliers making supplies through e-commerce operators (ECO) from January 1, 2023, subject to preparedness on the portal as well as by the ECOs:

  • Waiver from mandatory registration requirements is to be provided subject to both the following conditions:
    • The aggregate turnover on an all-India basis does not exceed the specified turnover.
    • The ECO is not making any inter-state taxable supply.
  • Composition taxpayers are to be allowed to make intra-state supply through the ECO, subject to certain conditions.

Amendments related to GST refunds

  • Inverted duty structure: Refund under inverted duty structure proposed to be allowed for ITC on input services as well.
  • Integrated GST (IGST) refund claims: For exporters identified as risky and requiring verification of IGST refund by the GST authorities, a facility is to be provided for online transmission of such IGST refund claims to the jurisdictional GST authorities for expeditious processing and disposal.
  • Exclusion of time period for filing refund claim: Time period from March 1, 2020 to February 28, 2022 is proposed to be excluded from calculation of the limitation period for filing refund claim by an applicant and also for issuance of demand/order in respect of erroneous refunds.
  • Re-credit of erroneous refund to electronic credit ledger: In cases where erroneous refund amount sanctioned to a taxpayer is deposited by them along with interest and penalty, re-credit of the amount in electronic credit ledger is proposed, for which a new FORM GST PMT-03A is recommended to be introduced. This will enable the taxpayers to get re-credit of the amount of erroneous refund, paid back by them, in their electronic credit ledger.
  • Refund of ITC of export of electricity: Exporters of electricity will be eligible to claim refund of unutilized ITC on such zero-rated supplies.
  • Withdrawal of refund of accumulated ITC on edible oils and coal.

Compliance related measures

  • The limitation under section 73 of the CGST Act for financial year (FY) 2017-18 for issuance of an order in respect of other demands linked with the due date of annual return is to be extended until September 30, 2023.
  • Proposals for wide-ranging changes in Form GSTR-3B are to be placed in the public domain to seek inputs and suggestions from the stakeholders.
  • Provision is to be made for the automatic revocation of suspension of GST registration once all the pending returns are filed.
  • Requirement for a proportionate ITC reversal on the supply of duty credit scrips is to be scrapped.
  • Exemption from filing annual return in FORM GSTR-9/9A for FY21-22 proposed to be provided to taxpayers with adjusted annual turnover up to INR 20 million.

What are the GST Council’s recommendations for information technology (IT) reforms?

The GSTN will institute artificial intelligence and machine learning-based mechanisms to verify the antecedents of the registration applicants and improved risk-based monitoring of their behavior post registration. This would help improve compliance and minimize risks to the exchequer.

GST on casinos, skill gaming

Although reports of a flat 28 percent GST levy on casinos and skill gaming had been doing rounds, the council has deferred its decision in this regard until the next meet in August, 2022. The GST Council has directed the Group of Ministers (GoM) to re-examine the issue regarding casinos and skill gaming, and submit a report.

To prevent confusion regarding key tax compliances and reporting requirements, businesses are welcome to reach out to our tax advisors at india@dezshira.com.


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