GIST OF RECENT CBIC NOTIFICATIONS ON RATE CHANGES

[Dr. Sanjiv Agarwal]

47^th GST meeting of the GST Council was held on 28-29 June, 2022 wherein many decisions on GST – taxability, rate changes, exemptions and procedure etc. were taken. These inter alia relate to:

• GST rate changes
• Rate rationalization to remove inverted duty structure
• Withdrawal of certain exceptions including concessional in relation to goods and services
• Reverse charge mechanism
• Clarifications in GST rates on goods and services
• Trade facilitation measures

• Amendment in formula prescribed in sub-rule (5) of rule 89 of CGST Rules, 2017 for calculation of refund of unutilized Input Tax Credit on account of inverted rated structure
• Amendment in CGST Rules for handling of pending IGST refund claims
• Re-credit of amount in electronic credit ledger
• Section 110 and section 111 of the Finance Act, 2022 to be notified by Central Government
• Waiver of late fee for delay in filing FORM GSTR-4 for FY 2021-22 and extension of due date for filing FORM GST CMP-08 for Q1 of FY 2022-23

• Streamlining of  compliances and so on

Consequently, CBIC has issued six notifications, i.e., Notification No. 9 to 16/2022-CT, all dated 05.07.2022 / 13.07.2022 to notify amendments. To implement rate changes w.e.f. 18.07.2022, CBIC has issued rate Notification Nos. 3 to 11/2022-CT (Rate), all dated 13.07.2022. Further, CBIC has issued Circular Nos. 170 to 176, all dated 06.07.2022 to explain and clarify the changes.

This writes up explains and provide the gist of CBIC Rate Notifications issued on 13.07.2022 which are effective from 18.07.2022, to implement decisions of GST Council.

Changes in GST rates on various services (w.e.f. 18.07.2022)

To implement 47^th meeting of Council’s recommendations, CBIC has notified rate changes on various services inter alia, including:

1. Hotel rooms with tariff upto Rs. 1000 per day to be levied GST @ 12%. The threshold limit of Rs. 1000 has been omitted
2. Transport of passengers, with or without belongings by ropeway to be taxed @ 2.5% (no ITC)
3. Other passenger transport services to be taxed @ 18%
4. Services of GTA in relation to transportation of goods (including house hold goods for personal use) by GTA :

1. Without option to pay GST itself @ 5% (no ITC)
2. With option to pay GST itself @5% (no ITC) or 12%

5. GST @18% on supporting services in transport
6. Hospital room rent in non-ICU room with tariff of more than 5000 per day per person – GST @ 5% (no ITC)
7. Services by way of treatment /  disposal of bio medical waste - GST @ 12%

(Source: Notification No. 3/2022-Central Tax (Rate)  dated 13.07.2022)

Changes in exemption to supply of services (w.e.f. 18.07.2022)

To implement 47^th GST Council meeting recommendations, CBIC has notified changes in exemption to services by amending Notification No. 12/2017-CT(Rate) which inter alia, include:

1. Withdrawal of exemption to services of speed post, life insurance and agency services provided to non-Government persons
2. Withdrawal of exemption for rented residential dwelling unit to a registered person.
3. Exemption provided to services  by Department of posts for post card, Inland letter, book post, ordinary post.
4. Exemption provided to specified services to foreign tourist by tour operators to the extent of services performed outside India
5. Health care services towards providing rooms having charges exceeding Rs. 5000 per day per person carved out from exemption.

(Source: Notification No. 4/2022-Central Tax (Rate)  dated 13.07.2022)

Changes in Reverse Charge Mechanism (w.e.f. 18.07.2022)

• Notification No. 13/2017-CT (Rate) dated 28.06.2017 has been amended to modify payment of GST under reverse charge mechanism.

• For GTA services, reverse charge will not be applicable where GTA has opted for payment by itself, issued tax invoice and made a declaration.

• Services by way of renting of residential dwelling to a registered person by any person is brought under reverse charge.

(Source: Notification No. 5/2022-Central Tax (Rate) dated 13.07.2022)

Change in GST rates on goods (w.e.f. 18.07.2022)

• To implement decisions of GST Council’s 47^th meeting Notification No. 1/2017-CT (Rate) dated 28.06.2017 has been amended to effect changes in GST rate on supply of goods.
• Pre-packaged and labelled food items to be taxed
• “Brand name” substituted by ‘pre-packaged and labelled’ in many items
• For details of goods / rate, refer to notification.

(Source: Notification No. 6/2022-Central Tax (Rate)  dated 13.07.2022)

Changes in GST exemption on goods (w.e.f. 18.07.2022)

• To implement recommendations of GST Council ‘s 47^th meeting, CBIC has notified changes in exemption in GST on supply of goods.
• For various types of goods, food items etc. exemption will not be available to pre-packaged and labelled goods and such packaged / labelled goods are now out of exemptions and taxable.
• These items include curd, butter milk, lassi, sugar, jaggery, pulses, cereals etc.
• Pre-packaged commodity has been defined in Legal Metrology Act, 2000.
• For list of items, notification may be referred.

(Source: Notification No. 7/2022-Central Tax (Rate)  dated 13.07.2022)

Increase of GST rate on specified goods (we.f. 18.07.2022)

• To  implement recommendations of GST Council’s 47^th meeting, CBIC has amended Notification No. 3/2017-CT (Rate) dated 28.06.2022 to increase GST rate to 12% in respect of specified goods (present rate 5%)
• This includes :

• Goods in connection with specified petroleum operations, coal bed methane operations
• Goods supplied to specified persons

• These are 24 items specified in the Table where rate will be affected
• For details, refer to Notification No. 8/2022-CT (Rate) and Notification No. 3/2017-CT (Rate).

(Source: Notification No. 8/2022-Central Tax (Rate)  dated 13.07.2022)

No inverted duty benefit (w.e.f. 18.07.2022)

• To implement recommendations of 47^th meeting of GST Council, CBIC has amended Notification No. 5/2017-CT (Rate) dated 28.06.2017 providing that no refund of unutilized input tax credit will be allowed, where credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output services of goods (other than ‘nil’ rated or exempt supplies).
• Such items include soya bean oil, ground nut oil, olive oil, palm oil, specified vegetable oils and fats, coal lignite, beat etc.

(Source: Notification No. 9/2022-Central Tax (Rate)  dated 13.07.2022)

GST rate changes on “Fly-ash” items (w.e.f. 18.07.2022)

• Vide Notification No. 2/2022-CT (Rate) dated 31.03.2022 GST rate was specified as @ 3% on fly ash bricks or fly ash aggregate with 90% or more fly ash content and fly ash blocks.

• This entry has been amended to cover :

• Fly ash bricks
• Fly ash aggregates
• Fly ash blocks

• The rate of tax shall remain the same, i.e. @ 3%

• Credit of input tax charged on goods and services used exclusively in supply of such goods shall not be allowed.

(Source: Notification No. 10/2022-Central Tax (Rate)  dated 13.07.2022)

Removal of concessional GST rate on specified items (w.e.f. 18.07.2022)

• CBIC has rescinded Notification No. 45/2017-CT(Rate) dated 14.11.2017
• The said notification provided concessional rate of 5% GST on supplies to specified public funded research institutions.
• Public funded research institution refers to a research institution where not less than 51% of the recurring expenditure is met by the Central Government or State Government or Union Territory administration.

(Source: Notification No. 11/2022-Central Tax (Rate) dated 13.07.2022)

These Notifications may be read along with relevant Circulars / Instructions.