Recommendations of 47th GST Council Meeting

Recommendations of 47th GST Council Meeting

On June 29, 2022, under a press release, the Union Finance Minister Mrs. Nirmala Sitharaman informed 47th recommendations to the Goods and Services Tax (GST) which focussed on the reports tabled by various GoMs on GST rate rationalisation, fixation of GST rate rationalisation, fixation of GST rate on online gaming, and IT reforms. The GST council in its 47th Council session proposed an array of significant reforms and improvements in relation to GST rates on supply of goods and services, as well as GST law and procedure.

GST rates changes impact everyone, from business to consumer, who have to evaluate the consequence on their GST calculations stemming from the change.

The GST rate changes have been effective from July 18, 2022 while those pertaining to GST law and procedure, shall be made applicable from January 1, 2023.

The key recommendations made in the GST Council Meeting;

1. Rate Rationalisation to remove inverted duty structure.

  • GST rates on several items, like Kitchenware, stationary, tetra packs, LED lamps lights and fixtures, is likely to see and increase from 12% to 18%.
  • GST rates on solar water heaters and systems, few types of leather will see an increase to 12%
  • GST rate for cut and polished diamonds is going to see and increase from 0.25% to 1.5%.
  • GST on job work in relation to manufacture of leather goods and footwear will increase to 12%.
  • GST rates for transport of goods and passengers by ropeways with (Input Tax Credit of services) will see a significant decrease from 18% to 5%.
  • Renting of truck/goods carriage (where cost of fuel in included) is likely to see a decrease to 12% from 18%

2. Withdrawal of exemption on certain goods and services or both,

  • GST on unbranded rice, agricultural items like packaged cereals, wheat, maize, but sold in a labelled package, Curd, Lassi, puffed rice, when “prepacked and labelled” would be at the rate of 5%.
  • GST shall be made applicable on pre-packaged and pre-labelled retails pack in terms of Legal Metrology Act, 2009, where the package, or a label securely affixed, is required to bear the declaration under the Act and its rules.
  • GST upto 18% to be levied on cheques, maps and hydrographic or similar charts of all kinds, including atlases, wall amps, topographical plans and globes, printed.

3. Rationalisation of GST exemptions on services

  • Hotel accommodation priced up to INR 1000 per day would be taxed at 12%.
  • For Hospitals, room rents (excluding ICU) more than INR 5000 per day shall be taxed to the extent of amount charged for the room at 5% without ITC.

4. Concessional GST

  • Electric vehicles, whether or not fitted with a battery pack, are eligible for the concessional GST rate of 5%.

5. Relief to E-commerce supplier

  • Eliminating the mandatory registration for suppliers using e-commerce platforms is a major relief for small scale businesses, especially those in rural and semi-rural parts of India.
  • GST council has agreed to ease compliance e-commerce suppliers to register under the composition scheme for intra-state supplies easing their registration and reducing tax outgo.
  • This means that intra-state e-commerce suppliers will no longer need to obtain mandatory GST registration if their turnover does not exceed the limit of INR 40 lakhs (good) or INR 20 lacs (services) or such lower limits defined for some states/UT’s.

Other Miscellaneous changes

  • GoM on IT reforms, inter alia, recommended that the GSTN should be put in place on the Artificial Intelligence /Machine Learning based mechanism. This seems a little too early for the industry and the impact is yet to be seen.
  • All taxable service of Department of Posts would be subject to forward charge. Hitherto certain taxable services of Department of Posts were taxed on reverse charge basis.
  • Good 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.
  • Service provided by Indian Tour operator to a foreign resident for a tour partially in India and partially outside 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 durations.

The recommendation implemented will help in aiding the country’s economic growth and development.

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