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47th GST Council Meeting

Article 279A of the Constitution of India establishes the GST Council. The purpose of the GST Council is to make recommendations to the Union and State on matters pertaining to GST. To fulfil this purpose, the GST Council conducts periodic meetings. The 47^th GST Council meeting was convened on 28^th and 29^th June 2022, in Chandigarh. After a detailed discussion, several recommendations were made by the Council relating to inverted duty structures, change in GST rate, and withdrawal of certain exemptions, trade facilitation and GST Compliances. In this blog, we will discuss the recommendations of the 47^th GST Council.

Inverted Duty Structure

Inverted Duty Structure means when the tax rate on purchase is more than the tax rate on outward supplies. This leaves the registered person with unutilized Input Tax Credit. To curtail the use of an Inverted Duty Structure, the GST Council has suggested changes in the rate of certain items. It is as follows:

Goods or Services	Previous rate	Recommended Rate
GOODS
Printing, writing, or drawing ink	12%	18%
Knives with cutting blades, pencil sharpeners, paper knives, blades, spoons, forms, ladles, cake servers, skimmers, etc.	12%	18%
Power-driven pumps are used for handling water like centrifugal pumps, deep tube wells, turbine pumps, submersible pumps and bicycle pumps.	12%	18%
Machines for cleaning, grading, or sorting seeds, grain pulses; Machine used in the milling industry or for processing cereals, etc.; Air-based PawanChakki, Atta Chakki; Wet grinders	5%	18%
Machines used for cleaning, grading or sorting eggs, fruits or other agricultural product and their parts; Milking Machines and dairy machines	12%	18%
Lights and fixtures, LED Lamps and their metal printed circuit boards;	12%	18%
Drawing and marking out instruments	12%	18%
Solar Water Heater and its system	5%	12%
Finished Leather, chamois Leather or composition leather	5%	12%
On the following goods, the refund of accumulated ITC is not allowed: Edible oilsCoal
SERVICES
By foreman to chit fund	12%	18%
Job work relating to the processing of hides, skins and Leather	5%	12%
Job word relating to the manufacture of leather goods and footwear	5%	12%
Job work relating to the manufacture of clay bricks	5%	12%
Works contract for roads, bridges, railways, effluent treatment plant, metro, crematorium, etc	12%	18%
Works contract supplied to central and state governments or local authorities for historical monuments, canals, pipelines, dams, educational institutions, plants for water supply, hospitals, etc., and any sub-contract thereof	12%	18%
Works contracts involving predominantly earthwork and sub-contracts thereof supplied to the central and state governments, union territories, and local authorities	5%	12%

Other Key GST Rate Changes by GST Council

Goods or Services	Previous Rates	Recommended Rates
GOODS
Ostomy Appliances	12%	5%
Artificial parts of the body, other appliances carried or implanted within the body, used to compensate for a defect or disability; intraocular lenses.	12%	5%
Aseptic Packaging Paper or Tetra Pack	12%	18%
Tar from coal, coal gasification plants, producer Gas plants and coke oven plants	5%/18%	18%
IGST on import of Diethylcarbamazine (DEC) tablets supplied free of cost for the National Filariasis Eliminations Programme	5%	Nil
Cut and Polished diamonds	0.25%	1.5%
IGST Applicable on Designated Defence Items Imported by Private entities or vendors for End Users in the defence Forces	Application rate	NIL
SERVICES
Transport of goods and passengers by ropeways	18%	5% (with ITC of services)
Truck/goods carriage rental that includes fuel costs	18%	12%

Pre-Packaged Goods

One of the most significant changes brought by the 47^th meeting of the GST Council is the withdrawal of exemption on non-branded pre-packaged commodities. Under the GST law¹, food items, grains, etc., that are not branded or right on the brand have been foregone is exempt from GST. The GST Council has recommended a revision in the scope of the exemption to exclude pre-packaged and pre-labelled retail packs such as pre-packed, pre-labelled curd, lassi, and buttermilk.

Withdrawal of exemption from GST

GOODS	Previous Rate	Recommended Rate
Cheques, lose or in book form	NIL	18%
Maps, hydrographic or similar charts of various types, encompassing atlases, topographical plans, wall maps, and globes, in printed form	NIL	12%
Parts of goods of heading 8801	NIL	18%

Rationalization of exemption in the form of a concessional rate of GST

GOODS	Previous Rate	Recommended Rate
Petroleum/ Coal bed methane	5%	12%
Scientific and technical instruments are provided to publicly funded research institutes.	5%	Applicable rate
E-waste	5%	18%

Rationalisation of GST Exemption on Services

1. Passengers travelling to and from the North-Eastern states and Bagdogra are exclusively limited to economy class for air transportation.
2. Withdrawal of exemptions from the following services:
   • Transportation of railway equipment and material by rail or a vessel.
   • Storage and warehousing of commodities that attract tax, such as nuts, spices, copra, jaggery, cotton, etc.
   • Fumigation in a warehouse of agricultural produce.
   • Services by RBI, IRDA, SEBI and FSSAI, and GSTN.
   • Renting Residential Dwellings to Businesses or Registered Individuals
   • Leasing residential properties to business entities or registered
   • Individuals for their accommodation needs. Cord Blood Banks and Stem Cell Preservation Services. The services offered by cord blood banks involve storing and preserving valuable stem cells.
3.  
4. To allow ITC, common biomedical waste treatment facilities for treating or disposing biomedical waste shall be taxed at 12%.
5. Room rent except ICU charged by the hospital exceeding the amount of INR 5000 per day per patient shall be taxed to the extent of the amount charged for the room at 5% without ITC.
6. 12% tax shall be levied on hotel accommodation priced up to INR 1000 daily.
7. Tax exemption has been proposed for training or coaching in recreational activities involving arts, culture or sports services when an individual supplies.

Major Clarification relating to GST Rate on goods and services

1. Electric vehicles are eligible for a concessional GST rate of 5% whether or not it is fitted with a battery pack.
2. The same concessional rate will be applicable on all fly ash bricks, irrespective of the fly ash content.
3. GST at 12% shall apply to all forms of mango under CTH 0804, including mango pulp.
4. Sewage-treated water qualifies for GST exemption, but it should not be confused with purified water mentioned in S. No. 99 of the notification 2/2017-CT (Rate).
5. Nicotine Polarilex Gum attracts a GST rate of 18%.
6. To avoid unnecessary litigation arising due to the ambiguity in GST rates on the supply of ice cream by ice cream parlours, the GST charged at the rate of 5% without ITC from 01.07.20017 to 05.10.2021 has been regularized.
7. Universities have been granted an exemption from GST for application fees charged for entrance exams or the issuance of eligibility certificates for admission or migration certificates.
8. Services related to cargo transit to and from Nepal and Bhutan will be covered under the relevant entry of exemption notification.
9. The sale of land following activities, such as levelling, laying down of drainage lines, etc., will be classified as the sale of land and will not be subject to GST.
10. The exemption has been provided to services related to assisted reproductive technology or in vitro fertilization covered under the definition of health care services.
11. Renting motor vehicles for the transport of passengers to body corporate for a period shall be taxable in the hands of the body corporate under the reverse charge mechanism.
12. GST will be applicable on the services rendered by guest anchors to TV channels in exchange for an honorarium

Measures for Trade Facilitation

Trade Facilitation measures recommended by the GST Council are as follows:

1. Suppliers operating through E-commerce operators (ECOs) have been provided relaxation in the provisions such as:
   • Waiver of mandatory registration requirement u/s 24(ix) of the CGST Act for persons supplying goods through ECOs. However, this is subject to the following conditions:
     • The aggregate turnover on an all-India basis should not exceed the turnover specified under sub-section (1) of section 22 of the CGST Act and the notification issued thereunder.
     • If the person is not making any inter-state taxable supply
   • Composition taxpayers will be allowed to make intra-state supply through e-commerce operator subject to the condition that the Law Committee of the Council works out the details of the scheme. Tentatively, the scheme would be implemented from 01.01.2023 onwards, subject to the preparedness on the portal and the ECOs.
2. Amendment of the formula prescribed for calculation of refund of unutilized ITC under sub-rule (5) of rule 89 of the CGST Rules, 2017 on account of inverted rated structure.
3. Handling pending IGST refund claims by amending the CGST Rules.
4. Re-credit of Amount in the Electronic Credit Ledger in Case of Erroneous Refund amount was allowed to individuals who paid tax on account of accumulated ITC or on account of IGST paid on zero-rated supply of goods or services.
5. The GST Council recommended the notification by the Central Government at the earliest.
6. The GST Council recommended waiving late fees in filing FORM GSTR-4 for the Fiscal year 2021-22 and extending the filling date for FORM GST CMP-08 for Q1 of FY 2022-23.
7. The present exemption of ICGST on the import of goods under the AA/EPCG/EOU scheme shall continue, but the E-wallet scheme will not be pursued further.
8. Removal of ambiguities and legal disputes on various issues, a few circulars were issued for the benefit of taxpayers at large.
9. The GST Council has recommended exemption from filing annual returns in FORM GSTR-9/9A for the FY 21-22 to taxpayers having AATO up to INR 2 crores. 
10. Explanation 1 to rule 43 of the CGST Rules has been amended to provide no requirement for reversal of input tax credit for an exempt supply of duty credit scrip by the exporter.
11. An additional GST payment mode is to be provided to UPI and IMPS under Rule 87 (3) of the CGST Rules.
12. For refunds relating to supplies to the SEZ Developer or Unit. An Explanation has been inserted in sub-rule (1) of rule 89 of CGST Rules to clarify ‘specified officer’ under the said sub-rule shall mean “specified officer” or “authorised officer” as defined under the SEZ Rules, 2006.
13. CGST rules to be amended to refund unutilized ITC on account of Export of Electricity.
14. Supplies from Duty-Free Shops at international terminals of airports to outgoing international passengers shall be treated as exports by the Duty-Free Shops, and the refund benefit should be available to them on such supplies.

Conclusion

All-in-all, it can be said that the 47^th GST Council Meeting was mixed as several recommendations were welcomed, especially those relating to compliances and trade facilitation, while on the other hand, some recommendations were considered redundant or required more clarity.

FAQs

1. https://cbic-gst.gov.in/gst-acts.html