The Goods and Services Tax (‘GST’) Council in its 45th Meeting held on 17 September  2021 has made following recommendations with respect to changes in GST rates on supply of goods and services and changes related to GST law and procedure.

We have hereinbelow summarized the key recommendation of the 43^rd GST Council Meeting:

A.    Clarifications related to changes in the rates of goods and services

1.     GST Rate on Covid-19 related goods

The concessional rates of GST applicable on Covid-19 treatment drugs such as Amphotericin B, Remdesivir, Tocilizumab, Anti-coagulants like Heparin which was earlier applicable upto 30^th September 2021 to be extended uptill 31^st December 2021.

Further, concessional rate of 5% shall be applicable to more Covid-19 treatment drugs which are Itolizumab, Posaconazole, Infliximab, Favipiravir, Casirivimab & Imdevimab, 2-Deoxy-D-Glucose, Bamlanivimab & Etesevimab upto 31^st December 2021.

2.     Recommendations have been given to change the rates of goods of certain goods w.e.f. 1^st October 2021 or from another period as may be stated.

 3.     Other changes related to GST goods:

• Supply of Mentha oil from unregistered person has been brought under reverse charge. Further, exports of Mentha oil should be allowed only against LUT and not on payment of IGST and refund should be given of unutilised ITC
• Special composition scheme to be introduced for brick kilns with threshold limit of 20 lakhs w.e.f. 1^st April 2022. GST rates on bricks would be 6% without ITC and 12% with ITC

4.     Changes in GST rates to correct the inverted duty structure in footwear and textiles sector w.e.f. from 1^st January 2022.

5.     The GST council is of view that as of now it is not appropriate to bring petroleum products within the ambit of GST

6.     Changes in relation of rate and scope of exemption of services w.e.f. 01^st October 2021 or from another period as may be stated. Key changes has been tabulated below:

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     Exemption on leasing of rolling stock by IRFC to Indian Railways to be withdrawn.

8.     E-commerce operators being made liable for payment of GST on following services provided through E-commerce operators w.e.f. 1st January 2022:

1. Transport of passengers by any type of motor vehicle
2. Restaurant services provided through E-commerce operators with some exceptions

9.     Relaxation to be given in the conditions of exemption of IGST on import of goods on lease where IGST is paid on lease to allow the exemption where:

1. Goods has been transferred to a new lessee In India upon expiry or termination of lease period
2. The lessor is located in SEZ and pays GST under forward charge

10.  Clarification on rates of certain goods along with their chapter heading and HSN codes has been provided under point no G of the press release.

11.  Clarification on rates of certain services has been given. The key clarifications has been summarised below:

• Coaching services to students provided by coaching institutions and NGOs under the central sector scheme of ‘Scholarships for students with Disabilities” is exempt from GST
• Services by cloud kitchens/central kitchens are covered under ‘restaurant service’, and attract 5% GST (without ITC)
• Admission to amusement park attracts GST @18% and where such parks have casinos etc. rate of GST @ 28%
• 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

B.    Recommendations related to GST Law procedure

1.     Relaxation of filing of form ITC-04 i.e. form to report details of challans issued for transferring the goods to job workers. Person with aggregate turnover in preceding financial year (‘FY’) of more than 5 crore is required to file ITC-04 half yearly and where aggregate turnover is less than 5 crore in preceding FY, ITC-04 to be file annually.

2.     Section 50 (3) of the CGST Act to be amended retrospectively, w.e.f. 01.07.2017, to provide that interest is required to be charged @18% where supplier has availed and utilised ineligible ITC and not where ineligible ITC has been availed but not utilised.

3.     Unutilised balance in the cash ledger of CGST and IGST can be transferred between distinct person without going into refund procedure i.e. cash ledger balance lies in CGST and IGST of one registration can be transferred in the cash balance of other registration under same PAN.

4.     In order to remove ambiguity, circulars to be issued on the below mentioned issues under GST:

1. Clarification on scope of ‘Intermediary’ services
2. Clarification relating to interpretation of term ‘merely establishment of distinct person’ as provided in condition no (V) of definition of ‘Export of services’ as per GST Law provisions. It has been recommended that 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) for considering a supply of service as export of services;
3. W.e.f. 1^st January 2021, the date of debit note (not original invoice) should be considered for determining the financial year upto which ITC can be claimed
4. No need to carry physical copy of invoice where invoice is issued under e-invoicing provisions
5. 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 i.e. from availment of refund of accumulated ITC

5.   Provisions to be inserted in the CGST Rules, 2017 to remove ambiguity regarding procedure and time limit for filing refund where tax has been wrongly paid i.e. CGST, SGST in place of IGST or vice versa.

C.    Measures to streamline the GST compliance system 

1.     Aadhaar authentication of registration to be made mandatory for being eligible for filing refund claim and application for revocation of cancellation of registration.

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

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

4.     Change in the CGST Rules w.e.f. 1^st January 2022 to effect that a registered person cannot file GSTR-1, where GSTR-3B for the proceeding period has not filed.

5.     Rule 36(4) of the CGST Rules to be amended i.e. after the proposed clause 16(2)(aa) of the CGST Act, 2017 gets notified. The change will restrict the availment of ITC limited to the invoices which shall be reported by the supplier in GSTR-1 and communicated to buyer in GSTR-2B. As of now, ITC can be claimed upto 105% of the eligible ITC reflected in GSTR-2B as per Rule 36(4).

D.    Recommended has been also given for amendments in certain provisions of the Act and Rules under GST