45th GST Council Meeting Update

The GST Council’s 45th meeting was held on 17th September 2021 in Lucknow under the chairmanship of the Union Finance & Corporate Affairs Minister Smt. Nirmala Sitharaman, wherein, several amendments have been recommended related to GST rates of assorted goods and services, extension of relaxations provided amid COVID pandemic, clarification related to intermediary services, relaxation of interest liability on reversal of wrong availment of input tax credit and braces the measures for streamlining the compliances under GST. A Synopsis of all is provided below:

1. Council has recommended extension of existing concessional GST rates on four COVID-19 treatment drugs, viz., Amphotericin B –nil, Remdesivir – 5%, Tocilizumab –nil and Anti-coagulants like Heparin – 5% till 31st December, 2021. Further, reduced the rate of GST to 5% on seven more COVID 19 treatment drugs till 31st December, 2021, i.e., Itolizumab, Posaconazole, Infliximab, Favipiravir, Casirivimab & Imdevimab, 2-Deoxy-D-Glucose, Bamlanivimab & Etesevimab.
2. Major recommendations on GST rate and classification in relation to Goods and services [w.e.f. 1st October, 2021]

• E-commerce operators like Swiggy, Zomato, Ola, Uber etc. to pay GST on restaurant service or transport service supplied through them; tax to be charged at point of delivery. There is no new tax. Previously the tax was paid by restaurants but now aggregators like Zomato and Swiggy will pay the tax
• GST Council has provided relaxations on conditions relating to 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 such goods are transferred to a new lessee in India upon expiry or termination or where the lessor located in SEZ pays GST under forward charge.
• GST exemption on transport of goods by vessel or air from India to Outside India extended till 30th September 2022.
• GST Council cuts tax rates on medicines used in cancer treatment, retro fitment kits, fortified rice kernels and Biodiesel supplied to OMCs for blending with Diesel from 12%/18% to 5%.
• Increase tax rates on cartons, boxes, Railway parts, Locomotives, all kind of pens, waste and scrap of polyurethanes, paper like cards, catalogue, printed material from 5%/12% to 18%.
• IGST exemption on Life-saving drugs Zolgensma and Viltepso used in treatment of Spinal-Muscular Atrophy when imported for personal use and goods supplied at Indo-Bangladesh Border Haats.
• Exemption to unintended waste generated during the production of Fish meal except fish oil for the period 1st July 2017 till 30th September 2019.
• Exemption is extended to Services by way of grant of National Permit to goods carriages on payment of fee, Skill Training for which Government bears 75% or more of the expenditure [ presently exemption applies only if Govt. funds 100%] and Services related to AFC Women's Asia Cup 2022.
• GST rate on licencing services/the right to broadcast and show original films, sound recordings, Radio and Television programmes to bring parity between distribution and licencing services and 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 has been increased from 12% to 18%.
• Withdrawal of exemption provided on leasing of rolling stock by IRFC to Indian railways.

3. GST Council has provided clarification in relation to certain GST rate and classification on Goods and Services, like

• Carbonated Fruit Beverages of Fruit Drink" or with Fruit Juice" will attract GST rate of 28% and Cess of 12%,
• Pharmaceutical goods falling under heading 3006 attract GST at the rate of 12%, External batteries sold along with UPS Systems/ Inverter will attract GST rate of 28% for batteries other than lithium-ion battery while UPS/inverter would attract 18%
• Coaching services to students under the central sector scheme of ‘Scholarships for students with Disabilities” is exempt from GST
• Selling of already manufactured ice-creams by the parlors would attract GST rate of 18%, etc.

4. Council has brought Supply of mentha oil from unregistered person under reverse charge and also recommended that exports of Mentha oil should be allowed only against LUT and consequential refund of input tax credit.
5. Council has brought Brick kilns under special composition scheme with threshold limit of Rs. 20 lakhs, with effect from 1.4.2022, GST Rate of 6% without ITC and 12% with ITC, would apply to bricks.
6. Council agrees to correction of inverted duty structure on footwear and textiles from 1st, January, 2022
7. Council felt it isn't time to bring petroleum products under GST regime.
8. GST Council has decided to form two GOMs:

• One Group of Ministers to look at issues related to GST rate rationalization such as anomalies in rate structure, the GoM will come back on this with great clarity on the issue, within 2 months after its formation.
• Another GoMs will be formed to look into related issues of e-way bills, FASTAGs, technology, compliances, plugging of loopholes, composition schemes & so on GoM will help ensure max. use of tech and to ensure those gaming the system do not succeed.

9. Further it was brought out by the council that the revenue collections from Compensation Cess in the period beyond June 2022 till April 2026 would be exhausted in repayment of borrowings and debt servicing made to bridge the gap in 2020-21 and 2021-22.
10. Some other relaxations relating to GST Law and procedure:

• Relaxation in requirement of Filing FORM GST ITC-04 under rule 45 (3) of the CGST Rules, where taxpayers having aggregate annual turnover > 5 crores in preceding financial year shall furnish ITC-04 semi-annually and otherwise shall furnish ITC-04 annually.
• Council has amended section 50 (3) of the CGST Act retrospectively, where interest should be charged on ineligible ITC availed and utilized at 18% (Previously interest was charged on “ineligible ITC availed”) and Nil rate where the ITC is utterly availed and not utilized.

11. The unutilized balance lying in CGST and IGST cash ledger now allowed to be transferred between two registration bearing same PAN in different states, without going through the refund procedure.
12. Clarification is provided regarding scope of “intermediary services”, wherein 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 above provision for considering a supply of service as export of services.
13. Clarification regarding Sec16(4) of the CGST Act, 2017, now the date of issuance of debit note shall determine the relevant financial year for the claiming of ITC not the date of underlying invoice.
14. Those goods 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 ITC.
15. A Provision will 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.
16. Some other compliances in GST:

• Aadhaar authentication made mandatory 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 in next return FORM GSTR-3B.
• Refund will be disbursed in the bank account linked with same PAN through which registration has been obtained under GST.
• Rule 59(6) of the CGST Rules to be amended with effect from 01.01.2022 where a registered person shall not be allowed to furnish FORM GSTR-1, if he has not furnished the return GSTR-3B for the preceding month.