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47th GST Council Meeting

On 29th June 2022 at Chandigarh, the 47th GST Council meeting was held. It was organized to impose new GST on various new items and increase tax on some other items to increase government revenue. As per the GST Council, it has been decided to charge 12% on hotel rooms below Rs. 1000. GST Council meet has provided a big relief to all the MSMEs. As Rs. 40 Lakh threshold exemption has been provided for intra-state sales and Rs. 1.5 crore threshold under composition scheme to online sellers.

Pre-packed and labeled meat (except frozen) fish, curd, paneer, honey, dried leguminous vegetables, dried makhana, wheat and other cereals, wheat or meslin flour, jaggery, puffed rice (muri), all goods and organic manure and coir pith compost will not be exempted and shall also be chargeable to GST at a rate of 5%.

Moreover, 18% GST shall be applicable on the following mentioned list of items, namely: –

  • Printing, writing or drawing link
  • Knives with cutting blades, paper knives, pencil sharpeners, blades, spoons, forks, ladles, skimmers, cake-servers
  • Power driven pumps primarily designed for handling water such as centrifugal pumps, deep tube-well turbine pumps, submersible pumps, bicycle pumps
  • Machines for cleaning, sorting or grading, seed, grain pulses; Machinery used in milling industry or for the working of cereals etc.; Pawan Chakki that is Air Based Atta Chakki; Wet grinder
  • Machines for cleaning, sorting or grading eggs, fruit or other agricultural produce and its parts, Milking machines and dairy machinery
  • LED Lamps, lights and fixture, their metal printed circuits board
  • Drawing and marking out instruments

The GST Council has also agreed to impost 18% cess on cheques may it be loose or in the cheque book. And the GST will also be levied on fees charged by banks for the issue of cheques.

Also, it is decided in the 47th meeting of the GST Council that items that are unpacked, unlabelled and unbranded will continue to be out of the applicability of GST.

In the council meeting, the Union Finance Minister Nirmala Sitharaman deferred to imposing 28% rate of GST on online gaming, casino, race courses. And it has been decided by the council further to conduct the next meeting in the upcoming first week of August in order to re-examine the issues in its terms of reference based on further inputs from states and submits its report within July 15.

There were four Group of Ministers (GOM) that were supposed to submit reports on different matters as it was constituted by the GST Council to address various concerns raised by the States in relation to the constitution the of GST Appellate Tribunal and make recommendations for appropriate amendments in CGST Act.

The first GOM submitted a report on rationalization, exemptions, and correction of inversion nature.

The second GOM, decided on the matter of betting, gambling, horse racing, online gaming, and lottery.

The third GOM, formed to discuss on IT related matters and recommended in order to identify non-compliant tax payers early on and take appropriate action to reduce risk to the exchequer, the GOM on IT Reforms, among other things, recommended that the GSTN put in place an AI/ML based mechanism to verify the antecedents of registration applicants and improved risk-based monitoring of their behavior after registration.

The fourth Group of Ministers was formed to decide on the movement of precious items such as gold etc.

Ad-hoc IGST apportionment to the cost of Rs. 27,000 crores were approved by the GST Council, along with the release of 50% of this sum, or Rs. 50,000 crores, to the State.

All the changes and updates recommended by the 47th GST Council will be made effective from 18th July, 2022.

Conclusion

The conclusion of the 47th GST Council meeting are as follows: –

The change in the rate of GST applicable on goods are as follows: –

NAME OF GOODPrevious RateUpdated Rate
Printing, writing or drawing ink12%18%
Knives with cutting blades, paper knives, pencil sharpeners and blades therefor, spoons, forks, ladles, skimmers, cake-servers12%18%
Power driven pumps primarily designed for handling water such as centrifugal pumps, deep tube-well, turbine pumps, submersible pumps, bicycle pumps12%18%
Machines for cleaning, sorting or grading, seed, grain pulses, machinery used in milling industry or for the working of cereals etc., Pawan Chakki that is Air Based Atta Chakki, wet grinder5%18%
Machines for cleaning, sorting or grading eggs, fruit or other agricultural produce and its parts, milking machines and dairy machinery12%18%
LED lamps, lights, fixture, their metal printed circuits board12%18%
Drawing and marking out instruments12%18%
Solar water heater and system5%12%
Prepared/ finished leather/chamois leather/ composition leather5%12%
Refund of accumulated ITC not to be allowed on following goods:

i)Edible oil

ii) Coal

The change in the rate of GST applicable on services are as follows: –

NAME OF SERVICEPrevious RateUpdated Rate
Services supplied by foreman to chit fund12%18%
Job work in relation to processing of hides, skins and leather5%12%
Job work in relation to manufacture of leather goods and footwear5%12%
Job work in relation to manufacture of clay bricks5%12%
Works contract for roads, bridges, railways, metro, effluent treatment, plant, crematorium etc.12%18%
Works contract supplied to central and state governments, local authorities for historical monuments, canals, dams, pipelines, plants for water supply, educational institutions, hospitals etc. & sub-contractor thereof12%18%
Works contract supplied to central and state governments, union territories & local authorities involving predominantly earthwork and sub-contracts thereof5%12%

 Other GST Rate changes recommended by the Council
Goods:

Name of GoodsPrevious RateUpdated Rate
Ostomy Appliances12%5%
Orthopedic appliance-splints and other fracture appliances, artificial parts of the body, other appliances which are worn or carried, or implanted in the body, to compensate for a defect or disability, intraocular lens12%5%
Tetra Pak (Aseptic packaging party)12%18%
Tar (whether from coal, coal gasification plants, producer Gas plants and Coke Oven Plants.5%  18%18%
IGST on import of Diethylcarbamazine (DEC) tablets supplied free of cost for National Filariasis Elimination Programme5%NIL
Cut and Polished diamonds0.25%1.5%
IGST on specified defense items imported by private entities/vendors, when end-user is the Defense forces.Applicable rateNIL

Services:             

Name of ServicesPrevious RateUpdated Rate
Transport of goods and passengers by ropeways18%5% (with ITC of services)
Renting of truck/goods carriage where cost of fuel is included18%12%

 Here is the list of goods mentioned, on which exemption form GST will be withdrawn:

Description of GoodsFromTo
Cheques, lose or in book formNIL18%
Maps and hydrographic or similar chats of all kinds, including atlases, wall maps, topographical plans and globes, printedNIL12%
Parts of goods of heading 8801NIL18%

Here is the list of services mentioned, on which exemption in form of a concessional rate of GST is being rationalized.

Description of GoodsFromTo
Petroleum/ Coal bed methane5%12%
Scientific and technical instruments supplied to public funded research institutes5%Applicable rate
E-waste5%18%

Here are the following services on which exemptions are being rationalized:

S.No. Description
1Exemption on transport of passengers by air to and from NE states & Bagdogra is being restricted to economy class
2Exemption on following services is being withdraws:

a)       Transportation by rail or a vessel of railway equipment and material

b)      Storage or warehousing of commodities which attract tax (nuts, spices, copra, jaggery, cotton etc.)

c)       Fumigation in a warehouse of agricultural produce

d)      Services by RBI, IRDA, SEBI, FSSAI

e)      GSTN

f)        Services provided by the cord blood banks by way of preservation of stem cells

3Like CETPs, common bio-medical waste treatment facilities for treatment or disposal of biomedical waste shall be taxed at 12% so as to allow them ITC
4Hotel accommodation prices up to Rs. 1000/day shall be taxed at 12%
5Room rent (excluding ITC) exceeding Rs. 5000 per day per patient charged by a hospital shall be taxed to the extent of amount charged for the room at 5% without ITC.
6Tax exemptions on training or coaching in recreational activities relation to arts or culture, or sports is being restricted to such services when supplied by an individual

Clarification on GST rate on goods:   

  1. Electric vehicles whether or not fitted with a battery pack are eligible for the concessional GST Rate of 5%.
  2. All fly ash bricks attract some concessional rate irrespective of fly ash content
  3. Stones covered in S.No. 123 of Schedule-I (such as Napa stones) even if they are ready to use and polished in minor ways (not mirror polished) attract concessional GST rate of 5%.
  4. The GST rate on all forms of mango under CTH 0804, including mango pulp (other than mangoes sliced, dried) attract GST at the 12%. Entry is also being amended to make this amply clear. Raw or fresh mangoes remain exempted.
  5. Sewage treated water is exempted from GST and is not the same as purified water provided in S.No. 99 of notification 2/2017-CT (Rate).
  6. Nicotine Polarilex Gum attracts a GST rate of 18%
  7. The condition of 90% fly ash content with respect to fly ash bricks applies only to fly ash aggregate, and not fly ash bricks.

Clarification in relation to GST rate on services

  1. Due to ambiguity in GST rates on ice cream parlour supplies, GST charged at 5% without ITC on the same from 1.07.2017 to 05.10.2021 shall be regularised to avoid unnecessary litigation.
  2. Application fee charged for entrance or for issuance of eligibility certificate for admission or issuance of migration certificate by universities is exempt from GST.
  3. Ginned or baled fiber is covered in entry 24B of notification no. 12/2017- Central Tax (Rate) dated 28.06.2017 in the category of raw vegetable fibers. The exemption under this entry is being rationalized.
  4. Services associated with transit cargo both to and from Nepal and Bhutan are covered by exemption.
  5. Activity of selling of space for advertisement is souvenirs published in the form of books is eligible for concessional GST at 5%
  6. Renting of vehicle with operator for transportation of goods on time basis is classified under Heading 9966 (rental services of transport vehicle with operators) and attracts GST at 18%. GST on such renting where cost of fuel is included in the consideration charged is being prescribed at 12%.
  7. Allowing choice of location of a plot is part of supply of long-term lease of plot of land. Therefore, location charge or preferential location charges (PLC) are part of consideration charged for long term lease of land and shall get the same treatment under GST.
  8. Services provided by the guest anchors to TV channels in lieu of honorarium attract GST.
  9. Additional fee collected in the form of higher toll charges from vehicles not having Fastag is essentially payment of toil for allowing access to roads or bridges to such vehicles and shall be given the same tax treatment as given to toll charges.
  10. Services in form of Assisted Reproductive Technology (APR)/ In vitro fertilization (IVF) are covered under the definition of health care services for the purpose of exemption under GST.
  11. Sale of land after leveling, laying down of drainage lines etc. is sale of land and does not attract GST.
  12. Renting of motor vehicles for transport of passengers to a body corporate for a period (time) is taxable in hands of body corporate under RCM.
  13. The expression ‘public transport’ used in exemption entry at SI No. 17(d) of notification No. 12/2017-CT (R) which exempts transport of passengers by public transport other than predominantly for tourism purpose, in a vessel between places located in India, means that such transport should be open to public for point to point transport.

Other miscellaneous change

  1. All taxable service of department of post would be subject to forward charge. Hitherto certain taxable service of department of post were taxed on reverse change basis.
  2. Goods 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. RCM option to continue.
  3. 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 duration.
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