Important recommendations of 45th GST Council meeting
The 45th GST Council meeting was held on 17.09.2021 at Lucknow under the chairmanship of the Union Finance & Corporate Affairs Minister Smt. Nirmala Sitharaman. Various recommendations were made in this meeting in relation to extension of existing concessional GST rates on certain COVID-19 treatment drugs, reduction of GST rates on various other medicines, revision and clarification of GST rates of various Goods and Services, several measures relating to GST Law & Procedures, etc.
The changes and clarifications recommended shall be given effect through issuance of respective notifications and circulars. A brief list of recommendations for quick reference are as below:
1. Extension of existing concessional GST rates (currently valid till 30 September, 2021) on following COVID-19 treatment drugs, up to 31 December, 2021, namely:
i. Amphotericin B –nil
ii. Remdesivir – 5%
iii. Tocilizumab –nil
iv. Anti-coagulants like Heparin – 5%
Further, reduction of GST rate to 5% on more COVID-19 treatment drugs, up to 31 December, 2021, namely:
i. Itolizumab
ii. Posaconazole
iii. Infliximab
iv. Favipiravir
v. Casirivimab & Imdevimab
vi. 2-Deoxy-D-Glucose
vii. Bamlanivimab & Etesevimab
2. IGST on import of following medicines reduced from 12% to NIL, namely:
i. Zolgensma for Spinal Muscular Atrophy
ii. Viltepso for Duchenne Muscular Dystrophy
iii. Other medicines used in treatment of muscular atrophy recommended by Ministry of Health and Family Welfare and Department of pharmaceuticals.
3. GST Rate on following goods to be increased. The increase in GST rate will help mines and industries to adjust their ITC accumulated due to inverted duty structure, which was otherwise not eligible for refund.
a. Ores and concentrates of metals such as iron, copper, aluminum, zinc and few others increased from 5% to 18%
b. Specified Renewable Energy Devices and parts from 5% to 12%
c. Cartons, boxes, bags, packing containers of paper etc. from 12/18% to 18%
d. Waste and scrap of polyurethanes and other plastics from 5% to 18%
e. All kinds of pens from 12/18% to 18%
f. Railway parts, locomotives & other goods in Chapter 86 from 12% to 18%
g. Miscellaneous goods of paper like cards, catalogue and printed material (Chapter 49 of tariff) from 12% to 18%
4. GST rate reduced to 5% on Retro fitment kits for vehicles used by the disabled, Fortified Rice Kernels for schemes like ICDS etc, Medicine Keytruda for treatment of cancer and Biodiesel supplied to OMCs for blending with Diesel.
5. MENTHA OIL – Supply of mentha oil from unregistered person 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 input tax credit. Hence export of menthe oil with payment of IGST and getting refund of the same will not be allowed.
6. BRICK KILNS would be brought under special composition scheme with 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. GST rate of 12% with ITC would otherwise apply to bricks.
7. Various state transport authorities are charging GST on transport vehicles given on hire to transport operators. This GST leads to increase in their cost of service as the output service is exempted. GST Council has now clarified that the renting of vehicle by State Transport Undertakings and Local Authorities is covered by expression ‘giving on hire’ for the purposes of GST exemption
8. There has been long confusion in GST rate on Royalty paid on mining rights for the period 01.07.2017 to 31.12.2018. The confusion has been due to various contrary advance rulings. However it is now clarified that the services by way of grant of mineral exploration and mining rights attracted GST rate of 18% e.f. 01.07.2017.
9. Admission to amusement parks having rides etc. attracts GST rate of 18%. The GST rate of 28% applies only to admission to such facilities that have casinos etc.
10. Now Unutilized balance in CGST and IGST cash ledger may be allowed to be transferred between distinct persons (entities having same PAN but registered in different states), without going through the refund procedure.
11. The GST council had already clarified in its earlier meeting that Interest u/s 50 shall be charged only on delayed payment of tax from cash ledger. There has been continuous effort from the department to demand interest at 24% on all kinds of ITC reversals, even if it is ITC availed and not utilized, causing undue hardship on assesses.
However the GST council has now clarified that 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.
12. E-invoice – There is no need to carry the physical copy of tax invoice in cases where invoice has been generated from e-invoice portal having IRN;
13. As per the provision of section 54(3) of GST law, no refund of unutilised ITC shall be allowed in cases where the goods exported out of India are subjected to export duty. There has been a dispute from department that goods attracting NIL rate of duty is also a rate of duty as per the judgment of Hon’ble Supreme Court and therefore goods attracting NIL rate shall also be considered as goods subject to export duty, hence refund not allowed.
The issue is now clarified that 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 availment of refund of accumulated ITC.
14. GST law shall be amended to restrict registered person from filing of FORM GSTR-1, if he has not furnished the return in FORM GSTR-3B for the preceding month. Currently the condition is on non-filing of FORM GSTR-3B for the preceding two months.
Way Forward:
The Council decided to set up a GoM to examine the issue of correction of inverted duty structure for major sectors; rationalize the rates and review exemptions from the point of view of revenue augmentation, from GST. It was also decided to set up a GoM to discuss ways and means of using technology to further improve compliance including monitoring through improved e-way bill systems, e-invoices, FASTag data and strengthening the institutional mechanism for sharing of intelligence and coordinated enforcement actions by the Centre and the States.
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