GST: 20 important decision taken in 45th GST Council Meeting

45th GST Council Meeting held on 17th September 2021. Briefing the media on the outcomes of the meet, Finance Minister Nirmala Sitharaman said: “We have taken quite a few people-friendly decisions, I am very happy that some of them were long-pending.” 20 important decision taken in 45th GST Council Meeting are as follows-

1. GST Rate on Covid-19 treatment drugs reduced till 31st December 2021

i. Amphotericin B -nil
ii. Remdesivir – 5%
iii. Tocilizumab -nil
iv. Anti-coagulants like Heparin – 5%
v. Itolizumab -5%
vi. Posaconazole -5%
vii. Infliximab -5%
viii. Favipiravir -5%
ix. Casirivimab & Imdevimab -5%
x. 2-Deoxy-D-Glucose -5%
xi. Bamlanivimab & Etesevimab -5%

2. Registered person shall not be allowed to file GSTR-1, if he has not filed GSTR-3B for the preceding month

With effect from 01.01.2022, to provide that a registered person shall not be allowed to furnish FORM GSTR-1, if he has not furnished the return in FORM GSTR-3B for the preceding month. It will automatically stop the flow of input tax credit who does not deposit the GST to government.

Rule 36(4) of CGST Rules, 2017 to be amended, once the proposed clause (aa) of section 16(2) of CGST Act, 2017 is notified, to restrict availment of ITC in respect of invoices/ debit notes, to the extent the details of such invoices/ debit notes are furnished by the supplier in FORM GSTR-1/ IFF and are communicated to the registered person in FORM GSTR-2B

3. Late fee for delayed filing of GSTR-1 to be auto-populated and collected in next open GSTR-3B.

Until now, late fee on delay in filing of GSTR 3b was levied. But a decision has been taken in 45th GST Council Meeting to collect Late fee for delay in filing GSTR-1 as well.

4. Supply of menthil oil from URD brought under RCM

Previously, Reverse charge Mechanism (RCM) was applicable to purchases from unregistered person. However, w.e.f. october 2017, it was decided by the GST Council meeting to exclude unregistered person from RCM except in some cases. In 45th GST Council meeting, Supply of menthil oil from unregistered person has been brought under RCM. Further, Council has also recommended that exports of Mentha oil should be allowed only against LUT and consequential refund of input tax credit.

5. Brick manufacturers under composition to pay tax @ 6% instead of 1% as of now and threshold limit is 20 lakhs

Composition scheme is available to manufactures, traders and Restaurants upto Rs 1.5 crore and service providers upto Rs 50 lakh. It has been decided by GST Council to tax Brick manufacturers under composition to pay tax @ 6% instead of 1% as of now and threshold limit will be 20 lakhs with effect from April 1, 2022. GST rate of 12% with ITC would otherwise apply to bricks.

6. E Com Operators has to pay tax on food supplies made through them

E-Commerce Operators like Zomato and swiggy has to pay tax on food supplies made through them with some exception. Services by cloud kitchens/central kitchens are covered under ‘restaurant service’, and attract 5% GST without ITC Online food delivery aggregator firms Swiggy and Zomato will now be liable to pay GST and not the restaurant partners.

7. Interest is to be paid by a taxpayer on “ineligible ITC availed and utilized” and not on “ineligible ITC availed”

Section 50(3) of the CGST Act, 2017 to be amended retrospectively, w.e.f. July 01, 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. July 01, 2017.

8. Unutilized balance in CGST and IGST cash ledger may be allowed to be transferred

Unutilized balance in CGST and IGST cash ledger will be allowed to be transferred between distinct persons (entities having same PAN but registered in different states), without going through the refund procedure, subject to certain safeguards yet to be notified.

9. Ambiguity regarding Refund of Tax wrongly collected & paid

Provisions to be incorporated for solving ambiguity regarding Refund of Tax wrongly collected & paid under GST (IGST in place of CGST & SGST)

10. No decision on bringing petroleum products under ambit of GST

The GST Council felt it wasn’t the right time to bring petroleum products under the GST regime. The panel discussed including petrol and diesel prices under its regime as per the ruling by the Kerala high court, said Sitharaman.

After deliberations, it was unanimously decided by the GST Council to keep fuel prices out of GST regime, she said.

11. Relaxation given for filing Form ITC-04

Requirement of filing FORM GST ITC-04 under Rule 45(3) of the CGST Rules, 2017 has been relaxed as under:

a. Taxpayers whose annual aggregate turnover in preceding financial year is above Rs. 5 crores shall furnish ITC-04 once in 6 months;

b. Taxpayers whose annual aggregate turnover in preceding financial year is upto Rs. 5 crores shall furnish ITC-04 annually.

12. Aadhar authentication mandatory for Refund claim and revocation of cancellation of registration

The GST Council Meeting has also made Aadhaar authentication of GST registration mandatory for being eligible for filing refund claim and application for revocation of cancellation of registration.

The Central Board of Indirect Taxes and Customs (CBIC) had notified Aadhaar authentication for GST registration with effect from August 21, 2020.

The notification also provided that in case businesses do not provide Aadhaar number, then GST registration would be granted only after physical verification of the place of business.

Refund to be disbursed in the bank account, which is linked with same PAN on which registration has been obtained under GST.

13. GST rate changes in relation to Goods w.e.f. October 1, 2021

S. No.	Description	From	To
1.	Retro fitment kits for vehicles used by the disabled	Appl. rate	5%
2.	Fortified Rice Kernels for schemes like ICDS etc.	18%	5%
3.	Medicine Keytruda for treatment of cancer	12%	5%
4.	Biodiesel supplied to OMCs for blending with Diesel	12%	5%
5.	Ores and concentrates of metals such as iron, copper, aluminum, zinc and few others	5%	18%
6.	Specified Renewable Energy Devices and parts	5%	12%
7.	Cartons, boxes, bags, packing containers of paper etc.	12%/18%	18%
8.	Waste and scrap of polyurethanes and other plastics	5%	18%
9.	All kinds of pens	12%/18%	18%
10.	Railway parts, locomotives & other goods in Chapter 86	12%	18%
11.	Miscellaneous goods of paper like cards, catalogue, printed material (Chapter 49 of tariff)	12%	18%
12.	IGST on import of medicines for personal use, namelyi. Zolgensma for Spinal Muscular Atrophyii. Viltepso for Duchenne Muscular Dystrophyiii. Other medicines used in treatment of muscular atrophy recommended by Ministry of Health and Family Welfare and Department of Pharmaceuticals.	12%	Nil
13.	IGST exemption on goods supplied at Indo-Bangladesh Border haats	Appl. rate	Nil
14.	Unintended waste generated during the production of fish meal except for Fish Oil	Nil (for the period July 01, 2017 to September 30, 2019)	–

14. GST changes in relation to rates and scope of exemption on Services w.e.f October 1, 2021

No.	Description	From	To
1.	Validity of GST exemption on transport of goods by vessel and air from India to outside India is extended upto September 30, 2022.	–	Nil
2.	Services by way of grant of National Permit to goods carriages on payment of fee	18%	Nil
3.	Skill Training for which Government bears 75% or more of the expenditure [ presently exemption applies only if Govt funds 100%].	18%	Nil
4.	Services related to AFC Women’s Asia Cup 2022.	18%	Nil
5.	Licensing services/ the right to broadcast and show original films, sound recordings, Radio and Television programmes [ to bring parity between distribution and licencing services]	12%	18%
6.	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)	12%	18%

15. Inverted duty structure on footwear and textiles sector

GST rate changes in order to correct inverted duty structure, in footwear and textiles sector, as was discussed in earlier GST Council Meeting and was deferred for an appropriate time,
will be implemented with effect from 01.01.2022.

16. Clarification in relation to classification and GST rate on Goods

S. No.	Description	Chapter/ Heading	Rate
1.	Pure henna powder and paste, having no additives	Chapter 14	5%
2.	Brewers’ Spent Grain (BSG), Dried Distillers’ Grains with Soluble [DDGS] and other such residues	2303	5%
3.	All laboratory reagents and other goods	3822	12%
4.	Scented sweet supari and flavored and coated illachi	2106	18%
5.	Carbonated Fruit Beverages of Fruit Drink” and “Carbonated Beverages with Fruit Juice”		GST 28% and cess 12%
6.	Tamarind seeds for use other than sowing. Seeds for sowing will continue at nil rate.	1209	5% (w.e.f. 1.10.2021)
7.	Tamarind for sowing	1209	Nil
8.	External batteries sold along with UPS Systems/ Inverter (other than lithium-ion battery)	–	28%
9.	UPS/inverter	–	18%
10.	All paper and paper board containers, whether corrugated or non-corrugated		18%
11.	Fresh fruits	–	Nil
12.	Dried fruits and Nuts (almonds, cashew etc.)	–	5%/12%
13.	All pharmaceutical goods	3006	12%

17. Clarification in relation GST rate on Services

S. No.	Description	Rate
1.	Coaching services to students provided by coaching institutions and NGOs under the central sector scheme of ‘Scholarships for students with Disabilities”	Exempt
2.	Services by cloud kitchens /central kitchens are covered under ‘restaurant service’	5% (without GST)
3.	Ice cream parlor sells already manufactured ice- cream. Such supply of ice cream by parlors	18%
4.	Overloading charges at toll plaza being akin to toll	Exempt
5.	The services by way of grant of mineral exploration and mining rights	18% w.e.f. 1.7.2017
6.	Admission to amusement parks having rides etc.	18%
7.	Admission to such facilities that have casinos etc. only	28%

8. Alcoholic liquor for human consumption is not food and food products for the purpose of the entry prescribing 5% GST rate on job work services in relation to food and food products.

18. Compensation Cess

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.

In this context various options, as have been recommended by various committees/ forums were presented. The Council deliberated at length on the issue. 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.

19. Clarification on various issues

a. Clarification on scope of “intermediary services”;

b. Clarification relating to interpretation of the term “merely establishment of distinct person” in Section 2(6)(v) of the IGST Act, 2017 for export of services.A person incorporated in India under the Companies Act, 2013 and 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 condition (v) of the Section 2(6) of the IGST Act, 2017 for considering a supply of service as export of services;

c. Date of issuance of debit note–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 CGST Act, 2017;

d. There is no need to carry the physical copy of tax invoice in cases where invoice has been generated by the supplier in the manner prescribed under Rule 48(4) of the CGST Rules, 2017;

e. Clarification on restriction imposed under Section 54(3) of CGST Act, 2017– 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

f. Provision to 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, 2017 and Section 19(1) of the IGST Act, 2017

20. Other Decisions in 45th GST Council Meeting

Exemption on leasing of rolling stock by IRFC to Indian Railways withdrawn.

E Commerce Operators are being made liable to pay tax on following services provided through them
- transport of passengers, by any type of motor vehicles through it [w.e.f. January 01, 2022]
- restaurant services provided through it with some exceptions [w.e.f. January 01, 2022]

Certain relaxations have been made in 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 of lease; and
- the lessor located in SEZ pays GST under forward charge.

GST on specified Renewable Energy Projects can be paid in terms of the 70:30 ratio for goods and services, respectively, during the period from July 1, 2017 to December 12, 2018, in the same manner as has been prescribed for the period on or after January 01, 2019.

Essentiality certificate issued by Directorate General of Hydrocarbons on imports would suffice; no need for taking a certificate every time on inter-state stock transfer.

The renting of vehicle by State Transport Undertakings and Local Authorities is covered by expression ‘giving on hire’ for the purposes of GST exemption

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