The 44th GST Council met on 12 June, 2021 for 44th time, just after a fortnight of its last meeting to consider and decide upon GST tax relief to goods and services being used in Covid-19 treatment and management. This is based on widespread public demand to do so for quite some time, though the Ministry of Finance had its own reasons not to do so. This meeting was convened solely for considering the recommendations of Group of Ministers (GoM) set up in 43 rd Council meeting to recommend GST relief on goods and Services being used/ consumed in Covid treatment and management.
These relaxations shall be for the time being applicable upto 30th September, 2021, though the GoM had recommended the same till end of August, 2021. These relaxations shall be reviewed for continuity or otherwise when this term ends. The notifications to give effected are expected anytime.
However, GST @ 5 percent shall continue to be levied on Covid vaccines as it may not affect general public to a large extent as vaccines upto 75% are being provided for free to citizens and only 25% are available for a price. In such 75% cases, where free vaccine is being given, GST shall be applicable @ 5% but borne by the Central Government.
While the GST rate reduction / waiver will bring down the prices to the extent of tax rate for end users, manufacturers may not be able to set off input tax credit to the full extent and where GST rate has been made zero / nil, no input tax credit may be available. Infact it would create a dilemma for the businesses as cost may actually not come down to the extent of GST reduced or waived but market would expect such price cut. This is because of no input tax credit available to such businesses where output is exempt Nevertheless, such reduction is a welcome step in present situation crippled with Covid pandemic.
Based on the 43rd and 44th GST Council meetings, Notifications and Circulars have been issued to implement the Council decisions and recommendations. Many of these will have a positive impact on the general public and shall facilitate ease of Covid treatment and management. CBIC has also issued clarification on QR Code on B2C invoices. All such changes and clarifications and exemptions find place in this issue. Further, on GST portal, new functionalities have been launched. On the GST portal, Form GSTR-2B, which is an auto-drafted ITC statement will be displayed for all registered tax payers based on the information furnished by its / his suppliers in their GSTR-1, GSTR-5 or GSTR-6. It will be made available for each month.
GST council’s tax relief for Covid management
In its 44th meeting, GST Council has decided to temporarily:
- Remove / fully exempt GST on two medicines
- Reduce GST rate on 15 items used in Covid treatment such as :
- Medicines and drugs
- Medical grade oxygen
- Oxygen generation plants, equipments etc
- Covid testing kits
- Sanitizers
- Oximeters
- Ventilators
- Masks, canula, other equipments
- Reduce levy on ambulances
This relief is applicable upto 30.09.2021.
[Source: Ministry of Finance, 44th GST Council Meeting dated 12.06.2021
(Press Release ID : 1726525)]
Reduced GST rate for specified structure
This shall be effective from 14.06.2021 to 30.09.2021.
[Source: Vide Notification No. 4/2021-CT(Rate) dated 14.06.2021]
New GST rates on Covid related items prescribed
|
S. No.
|
Description
|
Present GST Rate
|
GST Rate** recommended by GST Council / prescribed
|
- Medicines
|
|
1.
|
Tocilizumab
|
5%
|
Nil
|
|
2.
|
Amphotericin B
|
5%
|
Nil
|
|
3.
|
Anti-Coagulants like Heparin
|
12%
|
5%
|
|
4.
|
Remdesivir
|
12%
|
5%
|
|
5.
|
Any other drug recommended by Ministry of Health and Family Welfare (MoHFW) and Dept. of Pharma (DoP) for Covid treatment
|
Applicable Rate
|
5%
|
- Oxygen, Oxygen generation equipment and related medical devices
|
|
1.
|
Medical Grade Oxygen
|
12%
|
5%
|
|
2.
|
Oxygen Concentrator/ Generator, including personal imports thereof
|
12%
|
5%
|
|
3.
|
Ventilators
|
12%
|
5%
|
|
4.
|
Ventilator masks / canula / helmet
|
12%
|
5%
|
|
5.
|
BiPAP Machine
|
12%
|
5%
|
|
6.
|
High flow nasal canula (HFNC) device
|
12%
|
5%
|
- Testing Kits and Machines
|
|
1.
|
Covid Testing Kits
|
12%
|
5%
|
|
2.
|
Specified Inflammatory Diagnostic Kits, namely D-Dimer, IL-6, Ferritin and LDH
|
12%
|
5%
|
- Other Covid-19 related relief material
|
|
1.
|
Pulse Oximeters, incl personal imports thereof
|
12%
|
5%
|
|
2.
|
Hand Sanitizer
|
18%
|
5%
|
|
3.
|
Temperature check equipment
|
18%
|
5%
|
|
4.
|
Gas/Electric/other furnaces for crematorium, including their installation, etc.
|
18%
|
5%
|
|
5.
|
Ambulances
|
28%
|
12%
|
** Combined rate for both CGST and SGST /UTGST
[Source: Notification No. 5/2021-CT(Rate) dated 14.06.2021. Corresponding notifications in UTGST/IGST issued]
.GST on supply of food in aganwadi’s / schools
- Serving of food in schools under mid -day meal scheme is exempt if such supplies are funded by Government grants under Entry 66 of Notification No. 12/2017-CT (Rate) dated 28.06.2017.
- The scope of this entry is thus wide enough to cover any serving of any food to a school, including pre-school. Further, an Anganwadi interalia provides pre-school non-formal education. Hence, aganwadi is covered by the definition of educational institution (as pre-school).
- CBIC has now clarified that services provided to an educational institution by way of serving of food (catering including mid- day meals) is exempt from levy of GST irrespective of its funding from government grants or corporate donations [under said entry 66 (b)(ii)]. Educational institutions as defined in the notification include aganwadi. Hence, serving of food to anganwadi shall also be covered by said exemption, whether sponsored by government or through donation from corporates.
[Source: CBIC Circular No. 149/05/2021-GST dated 17.06.2021]
GST on construction of road on deferred payment basis
- GST is exempt on service, falling under heading 9967 (service code), by way of access to a road or a bridge on payment of annuity [entry 23A of notification No. 12/2017-Central Tax]. Heading 9967 covers “supporting services in transport” under which code 996742 covers “operation services of National Highways, State Highways, Expressways, Roads & streets; bridges and tunnel operation services.
- Entry 23 of said notification exempts “service by way of access to a road or a bridge on payment of toll. Together, the entries 23 and 23A exempt access to road or bridge, whether the consideration are in the form of toll or annuity [heading 9967].
- However, services by way of construction of road fall under heading 9954. This heading inter alia covers general construction services of highways, streets, roads railways, airfield runways, bridges and tunnels. Consideration for construction of road service may be paid partially upfront and partially in deferred annual payments (and may be called annuities).
- Thus, entry 23A does not cover services under heading 9954.
- It is now clarified that entry 23A of notification No. 12/2017-CT(R) does not exempt GST on the annuity (deferred payments) paid for construction of roads.
[Source: CBIC Circular No. 150/06/2021-GST dated 17.06.2021]
Clarification on taxability of services by central /state board
- Central /State Boards such as National Board of examination (NBE) provide various services including entrance examination ( on charging a fee) for admission to educational institution, input services for conducting such entrance examination for students, accreditation of educational institutions or professional so as to authorise them to provide their respective services.
- Taking into account entry at S.No. 66 of Notification No.12/2017-CT(Rate) dated 28.06.2017 and definition of ‘Educational Institutions’, it CBIC has clarified that :
- GST is exempt on services provided by Central or State Boards ( including the boards such as NBE) by way of conduct of examination for the students, including conduct of entrance examination for admission to educational institution [under S. No. 66 (aa) of Notification No. 12/2017-CT(R)]. Therefore, GST shall not apply to any fee or any amount charged by such Boards for conduct of such examinations including entrance examinations.
- GST is also exempt on input services relating to admission to, or conduct of examination, such as online testing service, result publication, printing of notification for examination, admit card and questions papers etc, when provided to such Boards [under S. No. 66 (b) (iv) of Notification No. 12/2017-CT(R)].
- GST at the rate of 18% applies to other services provided by such Boards, namely of providing accreditation to an institution or to a professional (accreditation fee or registration fee such as fee for FMGE screening test ) so as to authorise them to provide their respective services
[Source: CBIC Circular No. 151/07/2021-GST dated 17.06.2021]
Clarification on GST rate on construction services
“(vi) Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017, (other than that covered by items (i), (ia), (ib), (ic), (id), (ie) and (if) above) provided to the Central Government, State Government, Union Territory, a local authority a Governmental Authority or a Government Entity, by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of –
a civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession; “
- Entry No 3 (vi) does not apply to any works contract that is meant for the purposes of commerce, industry, business of profession, even if such service is provided to the Central Government, State Government, Union Territory, a local authority a Governmental Authority or a Government Entity.
- It is clarified that :
- Civil constructions, such as rope way for tourism development shall not be covered by said entry 3(vi) not being a structure that is meant predominantly for purposes other than business.
- While road, bridge, terminal, or railways are covered by entry No. 3(iv) and 3(v) of said notification, structures like ropeway are not covered by these entries too.
- Works contract service provided by way of construction such as of rope way shall fall under entry at sl. No. 3(xii) of notification 11/2017-(CTR) and attract GST at the rate of 18%.
[Source: Circular No. 152/08/2021-GST dated 17.06.2021]
GST on milling activities
- Composite supply of milling of wheat and its fortification by miller, or of paddy into rice, provided that value of goods supplied in such composite supply (goods used for fortification, packing material etc.) does not exceed 25% of the value of composite supply would be exempt from GST.
- In case the supply of service by way of milling of wheat into flour or of paddy into rice, is not eligible for the exemption for the reason that value of goods supply in such a composite supply exceeds 25%, in such case, the applicable GST rate would be 5% if such composite supply is provided to a registered person, being a job work service.
[Source: Circular No. 153/09/2021-GST dated 17.06.2021]
GST ON ‘guaranteeing loan’ services by state government to PSU’s
- Entry No. 34A of Notification no. 12/2017-Central Tax (Rate) dated 28.06.2017 exempts “Services supplied by Central Government, State Government, Union territory to their undertakings or Public Sector Undertakings (PSUs) by way of guaranteeing the loans taken by such undertakings or PSUs from the banking companies and financial institutions.”
- CBIC has clarified that guaranteeing of loans by Central or State Government for their undertaking or PSU is specifically exempt under said entry No. 34A.
[Source: Circular No. 154/10/2021-GST dated 17.06.2021]
GST on laterals / parts of sprinklers or drip irrigation system
- CBIC has clarified on GST rate on parts of Sprinklers or Drip Irrigation System, when they are supplied separately (i.e. not along with entire sprinklers or drip irrigation system).
- As per Notification No. 1/2017-CT (Rate) dated 28.06.2017, as amended at S.No. 195B, for sprinklers; drip irrigation systems including laterals; mechanical sprayer under heading No. 8424, rate of CGST is 6%.
- CBIC has clarified that intention of this entry has been to cover laterals (pipes to be used solely with sprinklers/drip irrigation system) and such parts that are suitable for use solely or principally with 'sprinklers or drip irrigation system', as classifiable under heading 8424 as per Note 2 (b) to Section XVI to the HSN. Hence, laterals/parts to be used solely or principally with sprinklers or drip irrigation system, which are classifiable under heading 8424, would attract a GST of 12%, even if supplied separately. However, any part of general use, which gets classified in a heading other than 8424, in terms of Section Note and Chapter Notes to HSN, shall attract GST as applicable to the respective heading.
[Source: Circular No. 155/11/2021-GST dated 17.06.2021]
Applicability of QR code on b2c invoices
- Any person, who has obtained a Unique Identity Number (UIN) as per the provisions of Sub-Section 9 of Section 25 of CGST Act 2017, is not a “registered person” as per the definition of registered person provided in section 2(94) of the CGST Act 2017. Therefore, any invoice, issued to such person having a UIN, shall be considered as invoice issued for a B2C supply and shall be required to comply with the requirement of Dynamic QR Code.
- Given that UPI ID is linked to a specific bank account of the payee/ person collecting money, separate details of bank account and IFSC may not be provided in the Dynamic QR Code.
- In cases where the payment is collected by some person, authorized by the supplier on his/ her behalf, the UPI ID of such person may be provided in the Dynamic QR Code, instead of UPI ID of the supplier.
- Wherever an invoice is issued to a recipient located outside India, for supply of services, for which the place of supply is in India, as per the provisions of IGST Act 2017, and the payment is received by the supplier in foreign currency, through RBI approved mediums, such invoice may be issued without having a Dynamic QR Code, as such dynamic QR code cannot be used by the recipient located outside India for making payment to the supplier.
- In cases, where the invoice number is not available at the time of digital display of dynamic QR code in case of over the counter sales and the invoice number and invoices are generated after receipt of payment, the unique order ID/ unique sales reference number, which is uniquely linked to the invoice issued for the said transaction, may be provided in the Dynamic QR Code for digital display, as long as the details of such unique order ID/ sales reference number linkage with the invoice are available on the processing system of the merchant/ supplier and the cross reference of such payment along with unique order ID/ sales reference number are also provided on the invoice.
- The purpose of dynamic QR Code is to enable the recipient/ customer to scan and pay the amount to be paid to the merchant/ supplier in respect of the said supply. When the part-payment for any supply has already been received from the customer/ recipient, in form of either advance or adjustment through voucher/ discount coupon etc., then the dynamic QR code may provide only the remaining amount payable by the customer/ recipient against “invoice value”. The details of total invoice value, along with details/ cross reference of the part payment/ advance/ adjustment done, and the remaining amount to be paid, should be provided on the invoice.
- Circular No. 146 dated 23.02.2021 also stands modified accordingly.
[Source: Circular No. 156/12/2021-GST dated 21.06.2021]
New facility for HSN codes
- GSTN has provided a new facility to search HSN code and SAC code on GSTN portal.
- The new facility enables the users to find HSN/SAC codes online in an excel format which can also be down loaded.
- This updated codes facility can be accessed at Services> User services> HSN code> Download HSN in Excel Format.
- Taxpayers are advised to check and verify the codes being used and also search for any code here.
[Source from: https://services.gst.gov.in/services/searchhsnsac]
New functionality on GST portal for the taxpayers
- In Ledger module, negative liability statement has been made available to composition taxpayers by way of new functionality.
- In case of a negative liability in any tax period of a composition taxpayer (and if no amount is required to be paid by the taxpayer (during that period)), the said negative liability shall be maintained in Negative liability statement.
- Such negative balance lying in the negative liability statement shall be automatically adjusted against the liabilities of subsequent tax period(s).
- The statement can be accessed, post-login, by navigating to Services > Ledgers > Negative Liability Statement.
[Source GSTN]
