The Important changes recommended by the 47 th GST Council

[Jasbir Uppal]

The goods and services tax collection was above ₹1 lakh crore mark for the 11th month running in May, offering a big reprieve to the central government which is in a tight spot due to external and internal headwinds. Rolled out on July 1, 2017, GST had subsumed 17 central and state levies. States now have indirect tax autonomy only on excise revenues which come from fuel and liquor and on stamp duties. And five years on, the GST regime is still evolving.

In the 47th meeting of the Goods and Services Tax (GST) Council, chaired by Union Finance Minister Nirmala Sitharaman, on Tuesday, officials approved hiking the rates for some goods and services while removing exemptions for several mass consumption items to simplify the rate structure.

S.No.	Description	From	To
	GOODS
1	LED Lamps, lights and fixture, their metal printed circuits board	12%	18%
2	Solar Water Heater and system	5%	12%
3	Prepared/finished leather/chamois leather/composition leathers	5%	12%
4	Job work in relation to processing of hides, skins and leather	5%	12%
5	Job work in relation to manufacture of leather goods and footwear	5%	12%
6	Job work in relation to manufacture of clay bricks	5%	12%
7	Works contract for roads, bridges, railways, metro, effluent treatment plant, crematorium etc.	12%	18%
8	Works contract supplied to central and state governments, local authorities for historical monuments, canals, dams, pipelines, plants for water supply, educational institutions, hospitals etc. & sub-contractor thereof	12%	18%
9	Works contract supplied to central and state governments, union territories & local authorities involving predominantly earthwork and sub-contracts thereof	5%	12%
	Services
1	Renting of truck/goods carriage where cost of fuel is included	18%	12%
2	Cheques, lose or in book form	NIL	18%
3	E-waste	5%	18%
4	Exemption on following services is being withdrawn (a) Transportation by rail or a vessel of railway equipment and material. (b) Storage or warehousing of commodities which attract tax (nuts, spices, copra, jaggery, cotton etc.) (c) Fumigation in a warehouse of agricultural produce (d) Services by RBI,IRDA,SEBI,FSSAI, (e) GSTN. (f) Renting of residential dwelling to business entities registered persons).  (g) Services provided by the cord blood banks by way of preservation of stem cells
5	Hotel accommodation priced up to Rs.1000/ day shall be taxed at 12%
	Room rent (excluding ICU) exceeding Rs 5000 per day per patient charged by a hospital shall be taxed to the extent of amount charged for the room at 5% without ITC.
	Clarification on GST rate
	Goods
1	Electric vehicles whether or not fitted with abattery pack, are eligible for the concessional GST rate of 5%.
2	All fly ash bricks attract same concessional rate irrespective of fly ash content
3	Stones covered in S.No. 123 of Schedule-I (such as Napa stones), even if they are ready to use and polished in minor ways [not mirror polished],attract concessional GST rate of 5%.
	Clarification in relation to GST rate on Services
4	Due to ambiguity in GST rates on supply of ice-cream by ice-cream parlours, GST charged@ 5% without ITC on the same during the period 1.07.2017 to 5.10.2021 shall be regularized to avoid unnecessary litigation
5	Renting of vehicle with operator for transportation of goods on time basis is class if liable under Heading 9966 (rental services of transport vehicles with operators) and attracts GST at 18%. GST on such renting where cost of fuel is included in the consideration charged is being prescribed at 12%.
6	Allowing choice of location of a plot is part of supply of long term lease of plot of land. Therefore, location charge or preferential location charges (PLC) are part of consideration charged for long term lease of land and shall get the same treatment under GST
7	Sale of land after levelling, laying down of drainage lines etc. is sale of land and does not attract GST.
8	Renting of motor vehicles for transport of passengers to a body corporate for a period (time) is taxable in the hands of body corporate under RCM.
9	Goods transport agency (GTA) is being given option to pay GST at 5% or 12% under forward charge; option to be exercised at the beginning of Financial Year. RCM option to continue
10	Service provided by Indian Tour operator to a foreign resident for a tour partially in India and partially out side India is to be subject to tax proportionate to the tour conducted in India for such foreign tourist subject to conditions that this concession does not exceed half of tour duration.

The rate changes recommended by the 47 th GST Council will be made effective from 18 th July, 2022.

1.   Amendment in formula prescribed in sub-rule (5) of rule 89 of CGST Rules,2017 for calculation of refund of unutilized Input tax Credit on account of inverted rated structure

1. Change in formula for calculation of refund under rule 89 (5) to take in to account utilization of ITC on account of input and input services for payment of output tax on inverted rated supplies in the same ratio in which ITC has been availed on inputs and input services during the said tax period .This would help those taxpayers who are availing ITC on input services also.

2.   Amendment in CGST Rules for handling of pending IGST refund claims: In some cases where the exporter is identified as risky exporter requiring verification by GST officers, or where there is a violation of provisions of Customs Act , the refund claims in respect of export of goods are suspended/withheld.

Amendment in rule 96 of the CGST Rules has been recommended to provide for transmission of such IGST refund claims on the portal in a system generated FORM GST RFD-01 to the jurisdictional GST authorities or processing. This would result in expeditious disposal of such IGST refund claims, after due verification by GST officers, thus benefitting such exporters.

3.  Re-credit of amount in electronic credit ledger to be provided in those cases where erroneous refund amount sanctioned to a tax payer on account of accumulated ITC or on account of IGST paid on zero rated supply of goods or services, in contravention of rule 96(10) of the CGST Rules, is deposited by him along with interest and penalty, wherever applicable. A new FORM GST PMT-03A is introduced for the same. This will enable the taxpayers to get re-credit of the amount of erroneous refund, paid back by them, in their electronic credit ledger.

4.  Clause (c) of section110 and section 111 of the Finance Act, 2022 to be notified by Central Government at the earliest. These provisions relate to

1. Retrospective amendment in section 50(3) of CGST Act, with effect from 01.07.2017,to provide that interest will be payable on the wrongly availed ITC only when the same is utilized;
2. Amendment in sub-section(10) of section 49 of CGST Act to provide for transfer of balance in electronic cash ledger of are glistered person to electronic cash ledger of CGST and IGST of a distinct person.

5.  The rules providing for the manner of calculation of interest under section 50 of CGST Act have also been recommended for more clarity. This will remove ambiguities regarding manner of calculation of interest and will also provide for transfer of balance in CGST and IGST cash ledgers between distinct persons, thereby improving liquidity and cash flows of such taxpayers.

6.  Waiver of late fee for delay in filing FORM GSTR-4 for FY 2021-22 and extension of due date for filing FORM GST CMP-08 for Q1 of FY 2022-23:

7.  Present exemption of IGST on import of goods under AA/EPCG/EOU scheme to be continued and E-wallet scheme not to be pursued further

8.  Issuance of the following circulars in order to remove ambiguity and legal disputes on various issues, thus benefiting taxpayers at large:

1. Clarification on issue of claiming refund under inverted duty structure where the supplier is supplying goods under some concessional notification.
2. Clarification on various issues relating to applicability of demand and penalty provisions under the CGST Act in respect of transactions involving fake invoices.
3. Clarification on mandatory furnishing of correct and proper information of inter-State supplies and amount of ineligible/blocked Input Tax Credit and reversal thereof in return in FORM GSTR-3B.
4. Clarification in respect of certain GST related issues:
   1. Clarification on the issues pertaining to refund claimed by the recipients of supplies regarded as deemed export;
   2. Clarification on various issues relating to interpretation of section 17(5) of the CGST Act;
   3. Clarification on the issue of perquisites provided by employer to the employees as per contractual agreement;
   4. Clarification on utilization of the amounts available in the electronic credit ledger and the electronic cash ledger for payment of tax and other liabilities.

9.   Exemption from filing annual return in FORM GSTR-9/9A for FY 2021-22 to be provided to taxpayers having AATO up to Rs. 2 crores.

1. 1.  

10.  Explanation 1 after rule 43 of CGST Rules to be amended to provide that there is no requirement of reversal of input tax credit for exempted supply of Duty Credit Scrips by the exporters.

11.  UPI & IMPS to be provided as an additional mode for payment of Goods and Services Tax to taxpayers under Rule 87(3) of CGST Rules.

12.  In respect of refunds pertaining to supplies to SEZ Developer/Unit, an Explanation to be inserted in sub-rule (1) of rule 89 of CGST Rules to clarify that “specified officer” under the said sub-rule shall mean the “specified officer” or “authorized officer”, as defined under SEZ Rules, 2006.

13.   Amendment in CGST Rules to provide for refund of unutilized Input Tax Credit on account of Export of Electricity. This would facilitate the exporters of electricity in claiming refund of utilized ITC on zero rated supplies.

14.   Supplies from Duty Free Shops (DFS) at international terminal to outgoing international passengers to be treated as exports by DFS and consequential refund benefit to be available to them on such supplies. Rule 95A of the CGST Rules, Circular No. 106/25/2019-GST dated 29.06.2019 and related notifications to be rescinded accordingly.

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J.S.Uppal & Co

(Tax Consultants)

Jasbir Singh Uppal,  Sr Advocate

Ishtdeep Singh Uppal, Advocate

19, Chandra Palace Dholpur House,M.G.Road Agra

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