GST Rate clarifications given at 47th GST Council meeting

The 47th GST Council meeting occurred at Chandigarh on the 28th and 29th of June 2022. Key decisions were made on GST rate rationalisation, facilitation of trade, and ease of GST compliance for businesses. 

In addition to these, the Council also addressed representations received from trade and commerce on various GST taxation matters via clarifications. There were contrasting advance rulings as well that had led to confusion. The recommendations must be issued as Circulars by the Central Board of Indirect Taxes (CBIC).

GST rate clarifications on goods

• Taxpayers are eligible for a concessional 5% GST rate on electric vehicles irrespective of it being fitted with a battery pack.
• The same concessional GST rate is levied on all fly ash bricks (whether or not the fly ash content is below or above 90%). Since April 2022, as per the CBIC notification, the GST rates for fly ash bricks, and blocks for buildings, including roofing tiles (whether or not having a fly ash content of 90% or more), is increased from 5% to 12% with ITC availability (6% without ITC). The clarification further provides that 90% fly ash content in fly ash bricks is applicable only to fly ash aggregate and not for fly ash bricks. Therefore, the condition of 90% content is being removed.
• Napa stones and other stones covered in Sl. No.123 of Schedule-I of GST rates attracts a 5% concessional GST rate even if these are ready for use and polished in minor ways, except for mirror polished.
• A 12% GST rate is to be levied on all forms of mango under CTH 0804, mango pulp, except sliced and dried mangoes. Raw or fresh mangoes continue to be exempted under the GST law. Amendments to the entry will be made to keep it clear.
• Sewage-treated water is not the same as purified water provided in Sl. No. 99 of the CGST Rate notification 2/2017. Hence, it is exempted from GST. The word ‘purified’ will be omitted in the entry to make it clear.
• A GST rate of 18% shall be charged on the Nicotine Polarilex Gum used for de-addiction in the health industry. So far, any products containing nicotine attracted 18%, except where used with or without tobacco under Sl. No 15B of Schedule IV of GST rates attracting 28%. The clarification keeps doubts at bay about the rate of tax.

GST rate clarifications on services

• Due to vagueness in GST rates on the sale of ice cream by the ice cream parlours, GST charged at 5% without ITC between 1st July 2017 and 5th October 2021 will be regularised to avoid unwarranted litigation.
• The application fee collected by universities for issuing eligibility certificates for entrance or admission, including migration certificates, is exempt from GST.
• The GST exemption for ginned or baled fibre covered in entry no. 24B of the CGST Rate notification No., 12/2017 under raw vegetable fibres will be rationalised.
• Services pertaining to transit cargo to and from Nepal and Bhutan are exempted as per entry no. 9B of GGST Rate notification No. 12/2017.
• The sale of space for advertisement in souvenirs in books is chargeable to a 5% concessional GST rate.
• Time-based renting of the vehicle with an operator for goods transportation must be charged at 18% under the Heading 9966 (rental services of transport vehicles with operators). At the same time, the GST rate on such renting where consideration includes the fuel cost is 12%.
• For long-term leasing of a plot of land, the choice of location of a plot is allowed as part of the lease contract. Hence, location charges or preferential location charges (PLC) would undergo the same GST treatment and attract the same applicable GST rate.
• GST applies to services rendered by the guest anchors to TV channels for an honorarium.
• Additional fees for higher toll charges from vehicles without Fastag are for the same purpose as any other and must be treated the same as tool charges.
• GST exemption is available for Assisted Reproductive Technology (ART)/ In vitro fertilization (IVF) services as a health care service.
• GST is not applicable on the sale of levelled land, laying down of drainage lines, etc.
• The reverse charge applies on motor vehicles rented for passenger transportation to a body corporate for a particular period. Such a body corporate must pay tax.
• The term ‘Public transport’ in the exemption entry at SI. No. 17(d) of CGST Rate notification No. 12/2017 means that such transport should be open to the public for point-to-point transport (E.g., Andaman and Nicobar Islands). The notification exempts passenger transportation using public transport other than mainly for tourism, in a vessel domestically in India.

The Council also revised GST rates for some key consumables and removed GST exemptions on some items.

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