The GST Council, in its 47e Meeting held on 28e and 29e of June 2022, made certain recommendations regarding changes to the GST rate. Some changes were also recommended to GST law and procedure.
It is recommended that the GST be increased from 12% to 18% on the supply of printing, writing or drawing ink, knives and mechanical pumps, including deep tube well turbine pumps and bicycle pumps.
The supply of cleaning machines as well as machines used in the flour milling industry, Air Based Atta Chakki and Wet Grinder, is proposed to see a 13% rise in GST from 5% to 18%. In addition, as recommended, the GST on the supply of milking machines and dairy machines should be increased from 12% to 18%. The GST on water heaters and solar systems should be increased from 5% to 12%. In addition, it is proposed that the GST on LED lamps, fixtures and fixtures be increased from 12% to 18%.
The GST Board also recommended not allowing the refund of input tax credit (ITC) accrued on edible oils and coal.
While the GST on services, including works contracts for roads, bridges, railways, subways, as well as effluent treatment plants and crematoriums, is proposed to rise from 12% to 18 %, the GST on work related to the manufacture of leather goods and footwear is recommended to increase from 5% to 12%. In addition, with respect to services provided to a bond fund by a foreman, the GST should be increased from 12% to 18%.
GST rates on ostomy appliances and orthopedic appliances are proposed to be reduced by 7%, with GST rates reduced from 12% to 5%, while IGST on the importation of diethylcarbamazine (DEC) tablets provided free of charge for the national filariasis elimination program is requested to be reduced from 5% to nil.
The supply of cut and polished diamonds is proposed to attract 1.5% GST, compared to the current rate of 0.25%.
In addition, in accordance with the recommendations, the IGST on specified defense articles imported by private entities or suppliers, in cases where the end user is the defense force, is offered as zero.
It is proposed to reduce the GST on the transport of goods and passengers by ski lift to 5% instead of 18%, while the GST on the rental of trucks or transport of goods, where the cost of fuel is included, is recommended to be reduced to 12% instead of 18%.
The GST Council has recommended excluding pre-packaged and pre-labeled retail packages, including pre-packaged and pre-labeled curds, lassi and buttermilk, from the unbranded specified food exemption.
The GST exemption given to checks and cards is to be revoked, with checks and cards being offered to attract 18% and 12% GST respectively.
It is recommended to rationalize the exemption in the form of a preferential rate of GST for certain products. Petroleum or coal methane, scientific and technical instruments supplied to publicly funded research institutes and electronic waste are slated to see higher GST rates.
The exemption of certain services is also sought to be rationalized. For example, it is proposed that the exemption on passenger air transport to and from the North Eastern States and Bagdogra be limited to economy class.
It is also recommended to remove the GST exemption on the storage or warehousing of taxable goods, including nuts, spices, jaggery and cotton.
GST exemption on services provided by RBI, IRDA, SEBI and FSSAI, Goods and Services Tax Network (GSTN) services and rental of residential accommodation to commercial entities is also sought.
Hotel accommodation, with a rate of up to Rs. 1000 per day, would attract 12% GST, according to the recommendations.
The Council recommended that all taxable services of the Postal Department be subject to the term tax. As recommended, the Freight Transportation Agency (GTA) would have the option of paying GST at 5% or 12% as a term fee, which it would charge at the beginning of the fiscal year.
In addition, services provided by Indian tour operators to a foreign resident for a tour partly within India and partly outside India are offered to attract GST in proportion to the tour conducted within India, subject to certain conditions.
The GST Council also instructed the Group of Ministers on Casinos, Racetracks and Online Gambling to re-examine issues relating to the tax on horse racing, online gambling and casinos, based on further input from states. The said group of ministers was invited to submit its report as soon as possible.
The GST Board has also provided some clarification on GST rates. It is specified that electric vehicles would be eligible for the preferential GST rate of 5%, whether or not they are equipped with a battery pack. The Council added that the rate of GST on all forms of mango under CTH0804, including mango pulp, other than sliced or dried mangoes, would result in a GST of 12%. In addition, raw or fresh mangoes will continue to be exempt from the GST. As per the clarifications, treated wastewater is exempt from GST and all fly ash bricks would enjoy the same preferential rate regardless of fly ash content.
Application fees charged for entry or for issuance of admission eligibility certificate by universities, or for issuance of migration certificate by universities, are exempt from GST, it said. the board.
In addition, the sale of advertising space in memorabilia, which are published as books, is eligible for a preferential GST rate of 5%. The Council clarified that services in the form of assisted reproductive technology (ART) or in vitro fertilization (IVF) fall within the definition of health care services for the purposes of the GST exemption.
The GST Council has also suggested certain trade facilitation measures, including allowing tax compound taxpayers to make intrastate deliveries through e-commerce operators, subject to certain conditions.
In addition, the GST Council recommended lifting the mandatory registration requirement under Article 24(ix) of the CGST Law for persons supplying goods through e-commerce operators, under subject to certain conditions.
The Board also suggested amending the formula prescribed under Rule 89(5) of the 2017 CGST Rules for calculating the refund of unused input tax credit (ITC). The Board noted that this amendment would assist ratepayers who also availed themselves of the ITC on input services.
In addition, an amendment to the CGST rules has been proposed to suspend and withhold refund claims in respect of export goods where the provisions of the Customs Act 1962 are breached or where the exporter is identified as an exporter at risk.
In cases where an erroneous refund amount sanctioned by a taxpayer is deposited by him with interest and penalties, a new credit of the amount in the electronic credit register is offered, for which it is recommended to introduce a new GST FORM PMT-03A.
The waiver of late fees under Section 47 of the CGST Act for late filing of FORM GSTR-4 for the 2021-22 financial year, is proposed to be extended for approximately four additional weeks. i.e. until 28.07.2022.
Also, the deadline for producing the FORM GST CMP-08 for the 1st quarter of the financial year 2022-2023 is recommended to be extended from 18.07.2022 to 31.07.2022.
The Board recommended granting exemption to taxpayers with total annual turnover of up to Rs. 2 Crores from the filing of the annual return under FORM GSTR-9/9A for the financial year 2021-2022 .
The Council also recommended that the e-wallet program should not be continued.
To assist electricity exporters in claiming a refund of ITC used on zero-rated supplies, the Board has proposed that an amendment be made to the CGST rules to provide for the refund of unused ITC under the export of electricity.
In addition, it is recommended that supplies from Duty Free Shops (DFS) at international terminals to outbound international passengers be treated as exports by Duty Free Shops and therefore a consequential refund should be granted to them on such supplies.
The Board suggested that the proposed complete changes to FORM GSTR-3B be placed in the public domain to solicit stakeholder input and suggestions.
In addition, it is proposed to exclude the period from 01.03.2020 to 28.02.2022 from the calculation of the limitation period for filing a claim for reimbursement under Articles 54 and 55 of the CGST Law.
The Council also decided to form a group of Ministers to address concerns raised by States regarding the constitution of the GST Appeals Tribunal as well as to recommend changes to the CGST Act.
The group of ministers on IT reforms has suggested that a mechanism based on artificial intelligence and machine learning (AI/ML) be put in place by the Goods and Services Tax Network (GSTN) to check backgrounds applicants registered under the GST Act.
The Board also approved the release of Rs. 13,500 crore in the US, or 50% of the allocated IGST.
The GST Council has clarified that the GST rate changes it recommends will come into effect on 18e July 2022.
Click here to read/download the recommendations