On September 17, 2021, Finance Minister Nirmala Sitharaman chaired the first in-person GST Council meeting since the coronavirus pandemic began. The 45th meeting of the GST Council was conducted in Lucknow. The council members discussed a number of GST topics, including state compensation and revisions to GST rates on Covid essentials, whether or not the GST should be applied to petroleum products, and whether or not food delivery apps should be under GST Regime. In this article, we will read in detail all the key changes that have been made in the 45th GST Council Meeting.
Brief Synopsis of 45th GST Council Meeting
- Life-saving drugs Zolgensma and Viltepso used in the 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 up to 31st December 2021
- GST rates on 7 other medicines recommended by the Department of Pharmaceuticals reduced from 12% to 5% till 31st December 2021
- GST rate on Keytruda medicine for the treatment of cancer reduced from 12% to 5%
- Rate of GST 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 the issue of correction of inverted duty structure for major sectors and for using technology to further improve compliance, including monitoring
Reduced GST Rates on COVID-19 Medicines
Extension of current concessional GST rates for Covid-19 Medicines (currently valid through 30 September 2021) till 31 December 2021:
- Amphotericin B -nil
- Remdesivir – 5%
- Tocilizumab -nil
- Anti-coagulants like Heparin – 5%
Reduction of GST rate to 5% on more Covid-19 treatment drugs, up to 31st December 2021, namely:
- Itolizumab
- Posaconazole
- Infliximab
- Favipiravir
- Casirivimab & Imdevimab
- 2-Deoxy-D-Glucose
- Bamlanivimab & Etesevimab
To Learn about GST on Medicines, Visit – GST on Medicines and Medical Supplies in India and Revised GST Tax Rates on COVID-19 Medicines as per 44th GST Council Meeting, Visit – GST Tax Rate reduced on COVID-related Medicines and Equipments
GST rate changes in relation to Goods w.e.f 1st October 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 is 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
|
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) |
|
Other changes relating to GST rates on goods
- Supply of mentha oil from unregistered persons 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 an input tax credit.
- Brick kilns would be brought under a special composition scheme with a 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. The GST rate of 12% with ITC would otherwise apply to bricks.
Earlier GST Rate changes were also implemented in the 43rd GST Council Meeting. To read about GST Rate Changes in 43rd Council Meeting, find the link – GST Rates Reduced in 43rd GST Council Meeting
Correction in Inverted Duty structure in Footwear and Textiles sector
As stated at the 44th GST Council meeting and postponed for a suitable period of time, GST Rate Changes would be applied with effect from 01 January 2022 to correct the inverted duty structure, in the footwear and textiles industry.
GST on Petrol and Diesel
As far as the Honorable High Court of Kerala’s recent ruling is concerned, it has been put before the Council to examine whether specific petroleum goods should be included under GST. After the full consideration, The Council was of the opinion that at this moment it was inappropriate to do so. Thus, there will be no GST on Petrol and Diesel as of now.
Read the news of Kerala’s High Court to Consider Petrol and Diesel under GST at –Petrol, Diesel under GST Regime: HC Asks Centre to Decide
Change in GST Rate on Services
| No. | Description | From | To |
| 1. | Validity of GST exemption on the transport of goods by vessel and air from India to outside India is extended up to 30.9.2022. | – | Nil |
| 2. | Services by way of grant of National Permit to goods carriages on payment of a 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 licensing 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
|
||
| 9. | Certain relaxations have been made in conditions relating to IGST exemption relating to the import of goods on a 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 regarding GST rate on Goods
- Pure henna powder and paste, having no additives, attract a 5% GST rate under Chapter 14.
- 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%.
- All laboratory reagents and other goods falling under heading 3822 attract GST at the rate of 12%.
- Scented sweet supari and flavored and coated elaichi falling under heading 2106 attract GST at the rate of 18%
- Carbonated Fruit Beverages of Fruit Drink” and “Carbonated Beverages with Fruit Juice” attract a GST rate of 28% and Cess of 12%. This is being prescribed specifically in the GST rate schedule.
- Tamarind seeds fall under heading 1209, and hitherto attracted nil rate irrespective of use. However, henceforth they would attract a 5% GST rate (w.e.f. 1.10.2021) for use other than sowing. Seeds for sowing will continue at a nil rate.
- External batteries sold along with UPS Systems/ Inverter attract a GST rate applicable to batteries [ 28% for batteries other than lithium-ion battery] while UPS/inverter would attract 18%.
- 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.
- 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.
- The 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%].
- 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.
- Clarification regarding GST rate on services
- 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 ITC].
- Ice cream parlor sells already manufactured ice- cream. 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.
- The renting of vehicles by State Transport Undertakings and Local Authorities is covered by the expression ‘giving on hire’ for the purposes of GST exemption
- The services by way of grant of mineral exploration and mining rights attracted a GST rate of 18% w.e.f. 01.07.2017.
- Admission to amusement parks having rides etc. attracts a 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 products.
To understand more about GST Rates and GST Registration for your business, you can contact us at –E-StartupIndia – We shape your Ideas into business
Setup of GoM for Improvising the GST Regime
The Council has decided to form a Group of Ministers (GoM) to look into the problem of correcting the inverted duty structure for important industries, rationalizing rates, and reviewing exemptions from GST in terms of revenue augmentation. It was also decided to establish a GoM to discuss alternative ways of using technology to improve GST Return Filing, such as monitoring through improved e-way bill systems, e-invoices, FASTag data, and strengthening the institutional framework for information sharing and organized punitive measures by the Centre and the States.
Updates and Relaxation in GST Return Filing by 45th GST Council Meeting
The government has also introduced new relaxations for GST Return Filing in GST Council 45th Meeting. These relaxations are mentioned below.
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 the preceding financial year is above Rs. 5 crores shall furnish ITC-04 once in six months;
- Taxpayers whose annual aggregate turnover in the preceding financial year is up to Rs. 5 crores shall furnish ITC-04 annually.
- 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.
- Unutilized balance in CGST and IGST cash ledger may be allowed to be transferred between distinct persons (entities having the same PAN but registered in different states), without going through the refund procedure, subject to certain safeguards.
- Issuance of the following circulars in order to remove ambiguity and legal disputes on various issues, thus benefiting taxpayers at large:
Clarification on the scope of “intermediary services”;
- Clarification relating to the interpretation of the term “merely establishment of distinct person” in condition (v) of 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 section 2 of the IGST Act 2017 for considering a supply of service as export of services;
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;
- There is no need to carry the physical copy of tax invoice in cases where the 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 availing of refund of accumulated ITC.
- Provision to be incorporated 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.
Another Great relaxation amid COVID-19 is the GST Amnesty Scheme. Under the GST Amnesty Scheme, The late fees are capped at only Rs. 500/- for nil returns and similarly, a maximum of Rs 1,000 per return for those having tax liability. The Finance Minister extended the last Date for Availing of the GST Amnesty scheme, thus taxpayers can avail the benefit of it before it gets too late.
GST Compliance Streamlining Measures – in 45th GST Council Meeting
- Aadhaar authentication of registration to be made mandatory for being eligible for filing refund claim and application for revocation of cancellation of registration.
- Late fee for delayed filing of FORM GSTR-1 to be auto-populated and collected in the next open return in FORM GSTR-3B.
- Refund to be disbursed in the bank account, which is linked with the 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.
- 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.
Lastly, the GST Council has also recommended amendments in certain provisions of the Act and Rules. The official press release is available at –Recommendations of 45th GST Council Meeting
GST Audit To Be Discontinued With The Effect Of 1st August 2021
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