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45th GST Council Meeting: Sectoral Highlights

The 45th GST Council meeting held in Lucknow on 17th September 2021 saw quite a few revisions in GST rates, clarifications, extensions of timelines for concessional rates as well as extension of exemption. Apart from that the council recommended other trade facilitation measures and conducted pertinent discussion on anomalies in revenue stream arising out of earlier rounds of rate rationalisation and inclusion of petrol and diesels within the ambit of GST. Following is a sectoral analysis of changes recommended by the GST Council:  

Changes in the GST rates and clarifications  issued in the 45th GST Council Meeting:

 

A. Pharmaceutical Sector

Extension of existing concessional rates 

GST exemption on Amphotericin B and Tocilizumab has been extended from September 30, 2021, to December 31, 2021. 

 

Reduced rate of GST @5% available to COVID-19 medicines including Remdesivir, Heparin, 2-Deoxy-D-Glucosemade and monoclonal antibodies like Casirivimab and Imdevimab has been extended from September 30, 2021, to December 31, 2021 

 

Reduction in GST rates from 12% to 5%, till December 31,2021 
  • Pembrolizumab, sold under the brand name Keytruda used as an antibody in cancer immunotherapy to treat lung, stomach, head, and neck cancer. 
  • Itolizumab, an antibody used for patients with COVID-19. 
  • Posaconazole an antifungal agent. 
  • Infliximab used in treatment of arthritis. 
  • Favipiravir, Bamlanivimab & Etesevima used for COVID-19 treatment. 
GST Rate reduced to Nil 
Import of Infliximab, Zolgensma and Viltepso used in treating arthritis and Spinal-Muscular Atrophy, are exempted from Basic Customs Duty but attracts Integrated Goods and Services Tax [IGST] @12%. The GST Council has recommended reducing the IGST rate to Nil 
Clarification 
All laboratory reagents, falling under heading 3822, to attract GST @12%. 

B. Mid-Day Meal Services  

Reduction in GST rates  

To reduce the cost of serving food in Anganwadi under the Integrated Child Development Services Scheme and Mid-Day Meals Schemes, the GST Council has recommended reduction in GST on Fortified Rice Kernels classifiable under HSN 19049090, from 18% to 5%.  

C. Skill Training  

Reduction in GST rates  

Notification No.12/2017-Central Tax (Rate) dated June 28, 2017, provides for Nil rate of GST on skill training if 100% funded by the Government. The GST Council has recommended to extend this exemption to skill training for which the Government bears 75% or more of the expenditure.  

 

 

D. Oil and Gas Sector  

GST on Petrol & Diesel  

In response to the direction of the Kerala High Court, based on a writ petition to decide levy of GST on petrol and diesel, the member states of the GST Council have unanimously rejected the proposal and opted not to include petroleum products under the GST regime at this stage. 

 

Reduction in GST rates  

GST on biodiesel supplied to oil marketing companies (OMCs) for blending with diesel reduced from 12% to 5%. 

 

Trade Facilitation Measure 

The Director-General of Hydrocarbons (DGH) is empowered to issue an Essentiality Certificate to Exploration & Production (E&P) operators to undertake E&P operations in India. Based on the said certificate, E&P operators avail exemption from customs duty on goods imported for E&P operations. The said certificate is applied online. Under the Goods and Service Tax Regime, stock transfers are taxable. However, stock transfers by E&P operators stand exempted provided operators have NOC from the DGH. Operators apply for NOC through filing a physical application. To ease trade operations in the E&P sector, the GST Council recommends waiving the NOC requirement making the essentiality certificate an eligible document to undertake stock transfers without payment of tax. 

 

 

E. Metal & Mining Sector  

Increase in GST  

GST on ores and concentrates of metals classified under Chapter 26 of the Customs Tariff Act, 1975 under tariff heading 2601, i.e., iron, under tariff heading 2608, i.e., zinc, under tariff heading 2603, i.e., copper, under tariff heading 2606, i.e., aluminium, increased from 5% to 18%. 

 

Clarification 

It is clarified that services by way of grant of mineral exploration and mining rights attract GST rate of 18% w.e.f. 01.07.2017. 

 

 

F. Infrastructure and Construction Sector 

Increase in GST 
  • GST on supply of bricks increased from 5% to 12%.  
  • Composition scheme has been extended to brick kilns with effect from April 01, 2022. The dealers opting for the composition scheme will pay GST@6% on supply of bricks. Dealers not opting for composition scheme will have to pay GST @12% with input tax credit facility. 

 

GST has been increased from 12% to 18% on – 

  • Railway or tramway locomotives, rolling stock and parts thereof 
  • Railway or tramway track fixtures and fittings and parts thereof  

 

 

G. Renewable Energy Sector 

Increase in GST rates  

GST rate increased from 5% to 12% on specified renewable energy devices and parts classified under Chapter 84, 85 or 94 of the Customs Tariff Act, 1975. 

 

Clarification 

GST on setting up of a renewable energy system clarified. On December 31, 2018, the Government, through a Notification (27/2018), amended the law providing that if renewable energy devices were supplied along with a supply of other goods and taxable services towards setting up, then 70% of the gross consideration is to be deemed as ‘value of supply of goods’ attracting GST of 5% and the remaining 30 % shall be ‘value of services’ attracting GST @18%. GST Council clarifies that on specified Renewable Energy Projects, GST can be paid in terms of 70:30 ratio respectively for goods and services from July 01, 2017 to December 31, 2018 following the manner prescribed for the period on or after January 01, 2019. 

 

 

H. Food Sector 

 

Levy of GST  

Purchase of Mentha Oil [Peppermint Oil] from unregistered suppliers to attract GST @12% under reverse charge mechanism. 

 

Food Aggregators like Swiggy and Zomato, providing restaurant services, to collect GST @5% [w.e.f. January 01, 2022]. 

 

Clarification 

GST Council clarifies that Brewers’ Spent Grain (BSG), Dried Distillers’ Grains with Soluble (DDGS) and other such residues, are to be classified under heading 2303, which reads for “Residues of starch manufacture and similar residues, beet-pulp, bagasse and other waste of sugar manufacture, brewing or distilling dregs and waste, whether or not in the form of pellets” and shall attract GST @5%. 

 

It is clarified that scented sweet supari and flavoured and coated illachi fall under heading 2106, which reads for “food preparations not elsewhere specified or included (other than a roasted gram), sweetmeats, batters including idli/dosa batter, namkeens, bhujia, mixture, chabena and similar edible preparations in ready for consumption form, khakhra, chutney powder, diabetic foods” and attract GST @ 18%.  

 

Under the current tax structure, aerated drinks are classified under sub-heading 220210 attracting GST @28% plus a compensation cess of 12% and non-aerated drinks (including fruit juice-based drinks) are classified under sub-heading 22029920, attracting GST of 12% and sub-heading 22029100 [Other non-alcoholic beverages (other than tender coconut water and caffeinated beverages)] attracting GST @18%. GST Council clarified that “Carbonated Fruit Beverages of Fruit Drink” and “Carbonated Beverages with Fruit Juice” to attracts GST@ 28% with Cess of 12%. 

 

Tamarind seeds fall under heading 1209 of the Customs Tariff Act, 1975, which reads for “Seeds, fruit and spores, of a kind used for sowing” will attract Nil rate of GST, irrespective of its use.  

 

GST Council clarified that cloud kitchens/central kitchens are covered under ‘restaurant service’ and attract GST @5%, without input tax credit. 

 

Supply of Ice creams by Ice Cream parlour to attract GST @18%.  

 

Alcoholic liquor for human consumption is not classifiable as food and food products. 

 

 

I. Entertainment Sector  

Increase in GST  

GST Council recommends increasing GST on licensing services/ right to broadcast and show original films, sound recordings, and radio and television programmes from 12% to 18%.  

 

GST on services by way of 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) classifiable under Service Accounting Code 9989, which reads for “Services by way of printing of all goods falling under Chapter 48 or 49 including newspapers, books (including Braille books), journals and periodicals], which attract CGST @6 % or @2.5% or Nil, where only content is supplied by the publisher and the physical inputs including paper used for printing belong to the printer” is increased from 12% to 18%.  

 

Clarification  

It is clarified that admission to amusement parks having rides etc. attracts GST @18% classifiable under Service Accounting Code 9996, which reads for “services by way of admission to amusement parks including theme parks, water parks, joy rides, merry-go-rounds, go-carting and ballet and not classifiable as services by way of admission to entertainment events or access to amusement facilities including casinos, race club, any sporting event such as Indian Premier League attracting GST @28%  

 

 

 

J. Mobility Sector  

 

Extension of existing concessional GST rates 

The 25th GST Council Meeting, held in New Delhi on January 18, 2018, proposed that the transportation of goods from India to outside India be exempted from GST until September 30, 2018. Accordingly, vide Notification No.2/2018 – Integrated Tax (Rate), dated January 25, 2018, the Central Government amended Notification No. 9/2017 – Integrated Tax (Rate), dated June 28, 2017, exempting services of transportation of goods by air and sea from India to outside India from IGST until September 30, 2018. This exemption was subsequently extended till September 2021.  

 

Now, the 45th GST Council meeting has decided to extend the above exemption up to September 09, 2022. 

 

GST on E-Commerce Operators  

Service by way of E-Commerce Operators i.e., Ola & Uber, are being made liable to pay tax on transport of passengers [w.e.f. January 01, 2022]. 

 

Reduction in GST  

The GST Council recommends that GST on services by way of grant of National Permit to goods carriages on payment of fee be redeuced from 18% to Nil. 

 

GST on Retro fitment kits for vehicles used by the physically disabled currently taxed @28% as normal vehicle as Tariff Item 87112019 reduced to 5%.  

 

Clarifications 

The GST Council recommends exempting overloading charges at toll plazas, being akin to toll. 

 

The GST Council clarified that the service of ‘giving on hire’ classifiable under Service Accounting Code 9966, which reads for, “Services by way of giving on hire – (a) to a state transport undertaking, a motor vehicle meant to carry more than twelve passengers; or (aa) to a local authority, an Electrically operated vehicle meant to carry more than twelve passengers; or Explanation.- For the purposes of this entry, “Electrically operated vehicle” means vehicle falling under Chapter 87 in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) which is run solely on electrical energy derived from an external source or from one or more electrical batteries fitted to such road vehicle. (b) to a goods transport agency, a means of transportation of goods. (c) motor vehicle for transport of students, faculty and staff, to a person providing services of transportation of students, faculty and staff to an educational institution providing services by way of pre-school education and education upto higher secondary school or equivalent” in addition to “Services by way of giving on hire – (a) to a state transport undertaking, a motor vehicle meant to carry more than twelve passengers; or (aa) to a local authority, an electrically operated vehicle meant to carry more than twelve passengers” shall also include the supply of renting of vehicle by the State Transport Undertakings and Local Authorities and it would qualify for exemption from GST. 

 

 

Other trade facilitation measures taken up in the 45th GST Council Meeting:

 

Sending Goods for Job Work  

GST Law requires a registered manufacturer to file a declaration in Form GST ITC-04 on supplying goods for job work. It is filed once every quarter if the manufacturer sends inputs or capital goods on job work and receives it back or sends inputs or capital goods to another job worker. Requirement of filing FORM GST ITC-04 under Rule 45 (3) of the CGST Rules, 2017 has been relaxed to provide that taxpayer whose annual aggregate turnover in preceding financial year is above Rs.5 crores shall furnish ITC-04 once in six months whereas taxpayer with annual aggregate turnover of up to Rs.5 crores in preceding financial year to furnish ITC-04 annually. 

 

Transfer of cash ledge balance between distinct persons 

GST Council recommends allowing transfer of unutilized balance in CGST and IGST cash ledgers between entities having common PAN but registered in different states without going through the refund procedure. Presently, if a taxpayer has any cash balance unutilized due to TCS, TDS or excess deposit, they have to avail refund and cannot adjust such excess with GST liability arising in other states owing to ‘additional place of businesses’. The relaxation will ease the working capital requirements for the entities operating in multiple states. 

 

Issue of Tax Invoice 

In cases where an e-invoice is generated by the registered person under Rule 48(4) of the CGST Rules, 2017 [manner of issuance of tax invoice], it is proposed to waive off the requirement of carrying the physical copy of the tax invoice. 

 

Other clarifications  issued in the 45th GST Council Meeting:                                             

 

Clarification regarding debit note to avail Input Tax Credit   

Sub-section 4 of Section 16 provides that a registered person shall not be entitled to take the input tax credit in respect of any invoice or debit note for the supply of goods or services or both after the due date of furnishing of the return under Section 39 of the CGST Act following the end of the financial year to which such invoice or invoice relating to such debit note pertains or furnishing of the relevant annual return, whichever is earlier. It is clarified that, w.e.f. January 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 the CGST Act, 2017.  

 

Interpretation of the term “merely establishment of a distinct person”  

 

The GST Council has clarified that a person incorporated in India under the Companies Act, 2013, and a person incorporated under the laws of any other country shall be treated as separate legal entities and supplies of services between the two will not be barred by Section 2(6)(v) of the IGST Act, 2017, and will be considered as ‘export’. 

 

Streamlining of GST compliance processes 

  • Aadhaar authentication to be made mandatory for filing refund claim and application for revocation of cancellation of registration.
  • A registered person shall not be allowed to furnish FORM GSTR-1 in case of non-filing of FORM GSTR-3B for the preceding month and late fee for delayed filing of FORM GSTR-1 to be auto-populated and be collected in FORM GSTR-3B for the succeeding month. This will be effective from 1st January 2022.

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The 45th GST Council meeting held in Lucknow on 17th September 2021 saw quite a few revisions in GST rates, clarifications, extensions of timelines for concessional rates as well as extension of exemption. Apart from that the agenda included other trade facilitation measures, pertinent discussion on anomalies in revenue stream arising out of earlier rounds of rate rationalisation and inclusion of petrol and diesels within the ambit of GST.

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Income Tax Due Date Extension: Return of income and Various Audit Reports

In view of the difficulties faced by the taxpayers and other stakeholders in e-filing of Return of Income (‘ROI’) and various audit reports for the Assessment Year (AY) 2021-22, the Central Board of Direct Taxes (‘CBDT’), vide Circular No. 17/ 2021 dated 9 September 2021, has notified the income tax due date extension for filing of return and various audit reports. The same have been summarized as under:

Income tax due date extension and relaxation for filing of return and various audit reports under the Income-tax Act, 1961:

Sr No

Compliance (AY 2021-22)

Original Due Date

Existing Due Date[1]

Extended Due Date[2]

1

ROI due date for taxpayers (such as individuals, firms, etc. not liable to audit)

31 July 2021

30 September 2021

31 December 2022

2

Furnishing of various audit reports (such as tax audit report u/s 44AB of the Act)

30 September 2021

31 October 2021

15 January 2022

3

Furnishing of transfer pricing report with respect to international / specified domestic transactions under section 92E of the Act

31 October 2021

30 November 2021

31 January 2022

4

ROI due date for taxpayers who are required to get their accounts audited under the Act or any other law for the time being in force (excluding taxpayers covered under Sr. No. 5 below)

31 October 2021

30 November 2021

15 February 2022

5

ROI due date for taxpayers who are required to furnish transfer pricing report under section 92E of the Act

30 November 2021

31 December 2021

28 February 2022

6

Belated / Revised ROI

31 December 2021

31 January 2022

31 March 2022

 

 

Clarification on interest calculation following the Income Tax due date extension:  

It is pertinent to note that, although, the due date for furnishing the ROI have been extended, however, the extended due date shall not be applicable for the purpose of computing interest under section 234A of the Act in a scenario where the payment of self-assessment tax exceeds INR 1,00,000.  

It is further clarified that, in case of a resident senior citizen not having any income chargeable to tax under the head business or profession, the tax paid till the original due date of filing of ROI shall be treated as an advance tax and accordingly no interest shall be chargeable on such amount.

 

Reason for the Income Tax due date extension:

The CBDT has launched the new income tax e-filing portal on 7 June 2021. However, since its launch, the taxpayers are facing various technical glitches in filing of various forms, certificates, and reports on this portal. In view of the difficulties faced, the ‘Finance Minister’ has given a deadline of 15 September 2021 to Infosys to resolve all the technical glitches such that taxpayers and professionals can work seamlessly on the portal. However, even if the technical glitches are resolved within the said date, it would leave a very short period for the taxpayers/professionals to file the return of income and audit reports on the portal.

Thus, the CBDT acknowledged the hardship caused to the various taxpayers and other stakeholders and accordingly extended the various dues dates with respect to filing of return of income and various audit reports under the Act. This, indeed, is a welcome move and provides much needed relief to the taxpayers.

Prior to this, the CBDT had issued Circular No. 16/ 2021, dated 29 August 2021, and extended the due dates w.r.t various other direct tax compliances.  

 

References:

[1] Circular No. 9/2021 dated 20 May 2021

[2] Circular No 17/2021 dated 9 September 2021 and press release dated 9 September 2021

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The CBDT acknowledged the hardship caused to the various taxpayers and other stakeholders and accordingly extended the various dues dates with respect to filing of return of income and various audit reports under the Act. This, indeed, is a welcome move and provides much needed relief to the taxpayers.

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