Fresh GST rate revision clarifications issued by the CBIC

The Central Board of Indirect Taxes and Customs (CBIC) issued fresh Circulars 177 and 178 on 3rd August 2022. These Circulars clarify the applicability of the recently passed GST rate revisions on goods and services, as summarised below.

Goods

  • Taxpayers must classify electrically operated vehicles under HSN 8703 even if their battery is not fitted to the vehicle when sold. GST at 5% will get attracted.
  • HSN code 2515 – Caussine and other calcareous monumental or building stones; alabaster (except for marble and travertine), excluding mirror-polished stone, ready to use attracts a 5% concessional GST rate. It is clarified to include Napa stones that are brittle and hence, cannot extensively be mirror polished, called minor polished stones.
  • Fresh mangoes under HSN code 0804 are exempt, whereas sliced and dried mangoes attract 5% GST. Other forms of dried mango and mango pulp attract GST at 12%.
  • Treated sewage water is not purified. Yet, the entry HSN 2201 was recently amended and has exempted the treated sewage water.
  • Nicotine Polacrilex gum which is generally used orally and meant to assist in the cessation of tobacco use can come under tariff item 2404 91 00 with an applicable GST of 18%.
  • The 90% or more fly ash content condition applies to only fly ash aggregates and not to bricks and blocks but has been removed from 18th July 2022.
  • GST rate was clarified on various by-products of pulses and dal such as chilka, khanda, and churi under HSN code 2302. Aquatic and poultry feed, including the husk, hay, wheat bran, and others excluding rice bran, are exempted. Whereas bran and residues from sifting or milling of cereals, including rice bran, attract 5% GST. The department may regularise any interpretation otherwise than this in the previous tax periods on a case-to-case basis. However, henceforth, cattle feed ingredient attracts 5% GST under HSN code 2302.

Services

  • From 6th October 2021, the ice cream parlors must pay GST on the sale of ice-creams at 18% with Input Tax Credit (ITC) claims. So, in the past, if ice cream parlors settled GST AT 5% without ITC, it would be considered legally valid to avoid litigation.
  • An exemption is granted to the amount or fee charged from future students seeking entrance or admission or for eligibility or migration certificate to ex-students.
  • An exemption is no longer available for storing or warehousing ginned or baled cotton.
  • An exemption is granted to transit services of cargo to and from Nepal and Bhutan, including empty containers.
  • No exception from GST for any sanitation and conservancy services to the Indian Army or other government departments or ministries if it does not perform functions listed in the 11th and 12th Schedule for the general public.
  • The sale of space in souvenir book for advertisement attract GST at 5%.
  • Any transport of minerals from a mining pit to railway siding or a beneficiation plant using vehicles by a driver in a specific period falls under HSN code 9966 and attracts 12% (recently reduced if the fuel cost is included in consideration) or 18% (rest of the cases). It shall not be exempted from GST.
  • An exemption is granted to location charges or Preferential Location Charges (PLC) received over and above the lease premium. It applies in cases of a long-term lease of land and forms part of the upfront amount charged for a long-term lease of land.
  • Services provided by the guest anchors attract 18% GST only if they are subject to GST registration when their turnover exceeds the threshold limit.  
  • Additional toll fee received from vehicles not having Fastags is the payment of toll for providing access to bridges or roads is exempted from GST.
  • Health care services include Assisted Reproductive Technology (ART)/In vitro fertilisation (IVF) and are exempted from GST.
  • Service rendered for land development, such as leveling or laying drainage lines, will attract GST.
  • It is clarified that if companies hire any passenger vehicle for a fixed duration at their disposal, it falls under the HSN code 9966. They must pay GST on the same on a reverse charge basis. However, if the companies use the passenger transport service for particular journeys or voyages but do not rent the vehicle for a duration, it would fall under HSN code 9964. They need not pay GST under the reverse charge mechanism. The same applies to transporting employees to and from work in non-AC vehicles.
  • Contract for construction, installation, and commissioning of a dairy plant constitutes the sale of works contract to attract 18% GST from 18th July 2022.
  • No GST on tickets bought for public transportation from one place to another whether or not the ferry is publicly or privately owned or operated, excluding cases where it promotes tourism.

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

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