CBIC issues fresh GST Rate clarifications through notifications dated 13th January 2023

The Central Board of Indirect Taxes and Customs (CBIC) has notified all the GST rate clarifications that were decided at the 45th, 47th and 48th GST Council meetings. CGST Circulars 189 and 190 were issued on 13th January 2023, clarifying key decisions on the GST rate on goods and services.

Compensation cess on Sports Utility Vehicle (SUV)

All the SUVs attract a 22% compensation cess, over and above the levy of GST. It was notified in the CGST Notification no. 01/2017 Compensation Cess (Rate) dated 28th June 2017 at entry 52B. The HSN code is 8703 for SUVs which must satisfy all four criteria given below.

  • Popularly is called a sports utility vehicle or SUV
  • The engine capacity is more than 1,500 cc
  • The length is more than 4,000 mm
  • The ground clearance is 170 mm or more

The Circular clarified the SUV definition by laying down the specifications for businesses operating in this space.

Applicability of IGST rate of 5% on goods used for petroleum operations/coal bed methane operation

Suppose the imported goods that are notified in the list of notification no. 3/2017-Integrated Tax (Rate) for 12% levy is also notified for the levy of a lower GST rate of 5% by Schedule I of notification no. 1/2017-Integrated Tax (Rate) instead of 12%, then such a lower rate would apply. The decision was made at the 47th GST Council meeting.

GST on fryums clarified

Snack pellets made by extrusion process are classified under the HSN 1905 90 30 described as “Extruded or expanded products, savoury or salted”. 18% GST is levied as per the Schedule-III of notification No. 1/2017-Central Tax (Rate) at entry no. 16.

HSN code and GST for carbonated beverages of fruit drinks or with fruit juice

The HSN code shall be 2202 99 with a GST of 28% and a compensation cess of 12% for taxing the carbonated beverages of fruit drinks or fruit juice from 1st October 2022. These apply to all such drinks containing carbon dioxide. Accordingly, it is excluded from the Schedule II of notification No. 1/2017-Central Tax (Rate) at entry no. 48 by notification in December 2022.

GST on Chilka, Khanda and Churi/Chuni

Chilka, Khanda and Churi/Chuni are the by-products of milling pulses/dal and exempted from GST from 1st January 2023 by including it in notification No. 2/2017-Central Tax (Rate) at entry no. 102C. 

The applicability of GST is regularised from the date of issuing CGST Circular No. 179 on 3rd August 2022 till 31st December 2022.

Classification of ‘Rab’ under GST

‘Rab’, a semi-solid or liquid massecuite of sugarcane, cannot be classified under the HSN code 1701 or 1703. It must be classified under the HSN code 1702 and charged a GST of 18% as per Schedule III of notification No. 1/2017-Central Tax (Rate) against entry no. 11.

GST exemption for accommodation services by Air Force Mess and similar messes 

Wherever the air force mess and other similar messes like army/navy/police force messes or paramilitary mess provide accommodation services to their personnel, not being business entities can be covered by notification no. 12/2017–Central Tax (Rate) at entry no. 6 subject to a condition. Their services must qualify as services provided by the Central Government, State Government, Union Territory or Local Authority.

GST on incentive paid by MeitY to acquiring banks under special schemes

The payment of incentives by MeitY to acquiring banks as per the incentive scheme promoting the RuPay Debit Cards and low-value BHIM-UPI transfers will be subsidies. Accordingly, these are not taxable under GST. Such a subsidy is linked to the price of service and hence not part of the value of the supply as per the GST law.

For any clarifications/feedback on the topic, please contact the writer at annapoorna.m@clear.in

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