GST Rate Changes From 1st January 2023

[Vivek Jalan]

GST Rate Changes –

1. No GST is payable where the residential dwelling is rented to a registered person if it is rented it in his/her personal capacity for use as his/her own residence and on his own account and not on account of his business.

In No.12/2017-Central Tax (Rate) (Services Exemption Notification), against S. No. 12, the following explanation is inserted, namely-

Earlier Entry -

Services by way of renting of residential dwelling for use as residence ⁴⁹[except where the residential dwelling is rented to a registered person].

New Insertion -

"Explanation. - For the purpose of exemption under this entry, this entry shall cover services by way of renting of residential dwelling to a registered person where, -

(i) the registered person is proprietor of a proprietorship concern and rents the residential dwelling in his personal capacity for use as his own residence; and

(ii) such renting is on his own account and not that of the proprietorship concern

Our Comments – Incase of a Proprietor of a GST registered business, the proprietor has the same PAN No as his Proprietorship Business. Now say he takes a house on Rent, then there was a doubt after the 47th Council meeting whether GST would be required to be paid by The Proprietor from his business account on reverse charge basis. The larger issue was that such GST Paid would not be eligible as Credit as the use of the house was for personal purpose. Now as a relief it has been clarified that this transaction would be out of GST subject to the following conditions –

1. He uses the accommodation for his own accommodation and no body else’s.

2. The rent if on his own account and not that of the proprietorship concern, i.e. he does not take a deduction of the expense for income tax purpose in from his business income.

2. Other Rate Changes -

Particulars	Amendment
Husk of pulses including chilka and concentrates including chuni/churi, khanda. Amendment in Sch I of  No.1/2017- Central Tax (Rate) (rate of Goods), against S. No. 103A, in column (3), for the entry, the following entry shall be substituted, namely: - Earlier Entry – Bran, sharps and other residues, whether or not in the form of pellets, derived from the sifting, milling or other working of cereals or of leguminous plants [other than aquatic feed including shrimp feed and prawn feed, poultry feed and cattle feed, including grass, hay and straw, supplement and husk of pulses, concentrates and additives, wheat bran and de-oiled cake]   New Entry – "Bran, sharps and other residues, whether or not in the form of pellets, derived from the sifting, milling or other working of cereals or of leguminous plants [other than aquatic feed including shrimp feed and prawn feed, poultry feed and cattle feed, including grass, hay and straw, supplement and additives, husk of pulses including chilka, concentrates including chuni or churi, khanda, wheat bran, de-oiled cake]"; Amendment in No.2/2017- Central Tax (Rate) (Exemption of Goods), against S. No. 102, the following entry is substituted, namely: - Earlier Entry – 9[Aquatic feed including shrimp feed and prawn feed, poultry feed & cattle feed, including grass, hay & straw, supplement & husk of pulses, concentrates & additives, wheat bran & de-oiled cake [other than rice-bran]] New Entry – "Aquatic feed including shrimp feed and prawn feed, poultry feed and cattle feed, including grass, hay and straw, supplement and additives, wheat bran and de-oiled cake [other than rice bran]"; Amendment in No.2/2017- Central Tax (Rate), new entry S. No. 102C, is inserted, namely: - New Entry – Husk of pulses including Chilka, Concentrates including chuni or churi, Khanda Our Comments – Hence Husk of pulses including chilka, chuni/churi and  khanda would also be exempt instead of being taxable. Further, from 3rd August to 1st Jan 2023, incase these supplies have been exempt, As a relief measure, to regularise the intervening period they would be treated on an “ as is basis” on account of genuine doubts as per press release.	Husk of pulses including chilka and concentrates including chuni/churi, khanda. – Taxable at Nil from 5%
Ethyl alcohol supplied to refineries for blending with motor spirit (petrol) Amendment in Sch I of  No.1/2017- Central Tax (Rate), against S. No. 102A the following entry is substituted – Earlier Entry – Ethyl alcohol supplied to Oil Marketing Companies for blending with motor spirit (petrol)]   New Entry – Ethyl alcohol supplied to Oil Marketing Companies or Petroleum refineries for blending with motor spirit (petrol) Amendment in In Schedule III - 9% of  No.1/2017- Central Tax (Rate), against S. No. 25, the following entry is substituted - New Entry – "Ethyl alcohol and other spirits, denatured, of any strength [other than ethyl alcohol supplied to Oil Marketing Companies or Petroleum refineries for blending with motor spirit (petrol)]". Our Comments – Hence Ethanol supplied even to refineries would now be taxable at 5% and not 18%	Ethyl alcohol supplied to refineries for blending with motor spirit (petrol) - 18% to 5%
Supply of “Mentha arvensis” on reverse charge In Notification No. 4/2017- Central Tax (Rate), Entry 3A is inserted – Earlier Entry – Following essential oils other than those of citrus fruit namely: (a) Of peppermint (Mentha piperita); (b) Of other mints: Spearmint oil (ex-mentha spicata), Water mint-oil (ex-mentha aquatic), Horsemint oil (ex-mentha sylvestries), Bergament oil (ex-mentha citrate). New Entry – Following essential oils other than those of citrus fruit namely: - (a) Of peppermint (Mentha piperita); (b) Of other mints: Spearmint oil (ex-mentha spicata), Water mint-oil (ex-mentha aquatic), Horsemint oil (ex-mentha sylvestries), Bergament oil (ex-mentha citrate), Mentha Arvensis Our Comments – Hence supply of Mentha Arvensis would also be on reverse charge incase supplied from any unregistered person to a registered person	Mentha Arvensis Under Reverse Charge now
Carbonated Beverages of Fruit Drink or Carbonated Beverages with Fruit Juice Amendment in Sch II of  No.1/2017- Central Tax (Rate), - 6%, - against S. No. 48, the following entry is substituted – Earlier Entry - Fruit pulp or fruit juice based drinks New Entry – "Fruit pulp or fruit juice based drinks [other than Carbonated Beverages of Fruit Drink or Carbonated Beverages with Fruit Juice]"; Our Comments – Hence Carbonated Beverages of Fruit Drink or Carbonated Beverages with Fruit Juice will fall under 12B of Sch IV which specifies “Carbonated Beverages of Fruit Drink or Carbonated Beverages with Fruit Juice”	Carbonated Beverages of Fruit Drink or Carbonated Beverages with Fruit Juice - Will be taxable at 28% under Entry 12B of Schedule IV
Pencil Sharpeners - In Schedule II - 6%, - against S. No. 180, in column (3), for the entry, the following entry shall be substituted – Earlier Entry - Mathematical boxes, geometry boxes and colour boxes, pencil sharpeners New Entry – "Mathematical boxes, geometry boxes and colour boxes"; Our Comments – Hence pencil sharpeners would fall under 18% now	Pencil Sharpeners - 12% to 18%
Toll Charges collected on Annuity Basis- In No.12/2017-Central Tax (Rate) (Services Exemption Notification), S. No. 23A shall be deleted - Deleted Entry - Service by way of access to a road or a bridge on payment of annuity Our Comments – Govt had already issued a Circular 150/06/2021-GST dated 17/6/21 clarifying that all services for access to a road or a bridge whether paid as annuity or otherwise would be covered in toll charges. Hence it seems that all such charges would be covered in Entry 23	Toll Charges collected on Annuity Basis would be exempted