INDIRECT TAX ALERT-JUNE 2022

GST Calendar –Compliances for the month of June’2022

Nature of Compliances	Due Date
GSTR-7 (Tax Deducted at Source ‘TDS’)	July 10,2022
GSTR-8 (Tax Collected at Source ‘TCS’)	July 10,2022
GSTR-1	July 11,2022
IFF- Invoice furnishing facility (Availing QRMP)	July 13,2022
GSTR-6 Input Service Distributor	July 13,2022
GSTR-2B (Auto Generated Statement)	July 14,2022
GSTR-3B	July 20,2022
GSTR-5 (Non-Resident Taxable Person)	July 20,2022
GSTR-5A (OIDAR Service Provider)	July 20,2022
PMT-06 (who have opted for QRMP scheme)	July 25,2022

47th GST Council Meet Recommendations

Goods -Clarification on GST rate w.e.f. July 18,

• Electric Vehicles: EV’s whether or not fitted with a battery pack, are eligible for the concessional GST rate of 5%.
• Fly Ash Bricks: All fly ash bricks attract same concessional rate irrespective of fly ash content. Further, the condition of 90% fly ash content with respect to fly ash bricks applies only to fly ash aggregate, and not fly ash bricks. As a simplification measure, the condition of 90% content is being omitted.
• Stones covered in S. No.123 of Schedule-I (such as Napa stones): Such stones even if they are ready to use and polished in minor ways [not mirror polished], attract concessional GST rate of 5%.
• Mango: 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 continue to be exempt.
• Sewage treated water: It is exempted from GST and is not the same as purified water provided in S. No. 99 of notification 2/2017-CT (Rate). The word ‘purified’ is being omitted to make this amply clear.
• Nicotine PolarilexGum: It shall attracts a GST rate of 18%.

Services -Clarification on GST rate w.e.f. July 18, 2022

• Preferential Location Charges for long term lease of plot: It has been clarified that 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. It may be said that in terms of the saidclarification, preferential location charges shall form as part of composite supply with long term lease of land.
• Developed Plots: It has been clarified that the sale of land after leveling, laying down of drainage lines etc. is sale of land and does not attract GST.
• Supply of ice-cream by ice-cream parlours: GST shall be charged @ 5% without ITC has been regularized in terms of industry practice.
• Application fee for entrance / issuance of eligibility certificate for admission / issuance of migration certificate by universities: Such fee shall be exempt from GST.
• GST on casinos, race course and online gaming: The Council has directed the Group of Ministers to re-examine on Casino, Race Course and Online Gaming the issues in its terms of inputs from States and submit its report within a short duration.
• Ginned or baled fibre: It 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.
• Additional fee collected in the form of higher toll charges from vehicles not having Fastag: It has been clarified that such payments are essentially payment of toll for allowing access to roads or bridges to such vehicles and shall be given the same tax treatment as given to toll charges.
• Services associated with transit cargo both to and from Nepal and Bhutan: It shall be exempted and is covered under Entry 9B of Notification No. 12/2017-CT(R) dated 28.06.2017.
• Activity of selling of space for advertisement in souvenirs: Activity of selling of space for advertisement in souvenirs published in the form of books is eligible for concessional GST at 5%.
• Renting of vehicle with operator for transportation of goods on time basis: Such activity shall be classifiable under Heading 9966 (rental services of transport vehicles with operators) and attracts GST at 18%. Further, GST on such renting where cost of fuel is included in the consideration charged is being prescribed at 12%.
• Services provided by the guest anchors to TV channels: Such services in lieu of honorarium to attract GST.
• Renting of motor vehicles for transport of passengers to a body corporate for a period (time) : It shall be taxable in the hands of body corporate under RCM.
• Services inform of Assisted Reproductive Technology (ART)/Invitrofertilization (IVF): These are covered under the definition of health care services for the purpose of exemption under GST.
• 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.
• Service provided by Indian Tour operator to a foreign resident for a tour partially in India and partially outside India: Taxable in proportion to the tour conducted in India for such foreign tourist subject to conditions that this concession does not exceed half of tour duration.

Other Measure’s & Clarifications:

• E-Commerce Operators (ECOs): Mandatory requirement of registration under section 24 (ix) of CGST Act for a person supplying goods through ECOs has been done away with, subject to below conditions:

1. the aggregate turnover on all India basis does not exceed the turnover specified undersub-section (1) of section 22 of the CGST Act and notifications issued there under;
2. the person is not making any inter-State tax able supply.
3. Composition tax payers to be allowed to make intra-State supply through e-commerce operators subject to certain conditions: GST Council has recommended to allow intra-state supplies by Composite supplier’s selling through ECO. The details of the scheme will be worked out by the Law Committee of the Council. The scheme would be tentatively implemented with effect from 01.01.2023, subject to preparedness on the portal as well as by ECOs.
4. Specified officer’ under Rule89 (1): GST Council has recommended insertion of an explanation to Rule89(1) Rules to clarify that “specified officer” under the said sub-rule shall mean the ‘specified officer’ or ‘authorized officer’ ,as defined under SEZ Rules, 2006 which provides that ‘Specified officer’ shall mean an Inspector or Preventive officer, or Appraiser or Superintendent of Customs posted in the Special Economic Zone and authorized by the Specified Officer to discharge any of his functions under SEZ Rules,2006.

• Inverted Duty Structure: GST Council has recommended for 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. The said change in formula for calculation of refund under rule89 (5) to take in to account utilization of ITC on account of inputs and input services for payment of output tax on inverted rated supplies in the same ratio in which ITC has been availed on inputs and input services during the said tax period. This would help those tax payers who are availing ITC on input services also.
• Risky Exporters: Amendment in CGST Rules for handling of pending IGST refund claims. In some cases where the exporter is identified as risky exporter requiring verification by GST officers, or where there is a violation of provisions of Customs Act, there fund claims in respect of export of goods are suspended / withheld. Amendment in rule 96 of the CGST Rules has been recommended to provide for transmission of such IGST refund claims on the portal in a system generated FORM GSTR FD-01 to the jurisdictional GST authorities for processing. This would result in expeditious disposal of such IGST refund claims, after due verification by GST officers, thus benefitting such exporters.

• Re-credit of amount in Electronic Credit Ledger: Where refund amount has been sanctioned erroneous to a tax payer on account of accumulated ITC or on account of IGST paid on zero rated supply of goods or services, in contravention of rule96 (10) of the CGST Rules, is deposited by him along with interest and penalty, wherever applicable. A new FORM GST PMT-03 A is introduced for the same. This will enable the tax payers to get re-credit of the amount of erroneous refund, paid back by them, in their electronic credit ledger.
• GST council has recommended the same to be notified by the Central Government at the earliest:
• Calculation of interest on ITC availed and utilized: An amendment was made to Section 50 (3) of the CGST Act, 2017 to provide for levy of interest on‘ ineligible ITC availed and utilized’ retrospectively i.e., from July 1,2017;
• Facility to transfer balance in Electronic Cash Ledgers of distinct persons: Section 49 (10) provides the facility to transfer balance in electronic cash ledger of registered person to electronic cash ledger of CGST and IGST of a distinct person.
• Present exemption of IGST on import of good sunder AA / EPCG / EOU scheme: It has been proposed that the present exemption of IGST on import of good sunder AA / EPCG / EOU scheme to be continued and the proposed E-wallet scheme not to be pursued further.
• GSTR-9/GSTR-9C: Exemption from filing annual return in FORM GSTR- 9/ 9A for FY 2021-22 to be provided to tax payer shaving AATO up to Rs.2crores.
• ITC Reversal in case of sale of Duty Credit Scrips by Exporters: Explanation 1 after rule 43 of CGST Rules to be amended to provide that there is no requirement of reversal of input tax credit for exempted supply of Duty Credit Scrips by the exporters.
• Mode of GST payment: UPI & IMPS to be provided as an additional mode for payment of GST for tax payers.
• Export of Electricity: Amendment in CGST Rules to provide for refund of unutilized Input Tax Credit on account of Export of Electricity. This would facilitate the exporters of electricity in claiming refund of utilized ITC on zero rated supplies.
• Supplies from Duty Free Shops (DFS) at international terminal to outgoing international passengers: Such supply to be treated as exports by DFS and consequential refund benefit to be available to them on such supplies. Rule 95 A of the CGST Rules, Circular No. 106 / 25 / 2019 – GST dated 29.06.2019 and related notifications to be rescinded accordingly.

• Automatic Revocation of suspension of Registration: Where GST registration has been suspended by the system under Rule 21 A (2A) of CGST Rules, for continuous non-filing of specified number of returns, the systems hall file automatic revocation application once all the pending returns are filed on the portal by the tax payer.
• Changes in GSTR-3B: Proposal for comprehensive changes in FORM GSTR-3B to be placed in public domain for seeking inputs / suggestions of the stake holders.
• Clarification for limitation period for refund claims: Time period from March 1, 2020 to February 28, 2022 to be excluded from calculation of the limitation period for filing refund claim by an applicant under section 54 and 55 of CGST Act, as well as for issuance of demand / order (by proper officer) in respect of erroneous refunds under section 73 of CGST Act. Further, limitation under section 73 for FY 2017-18 for issuance of order in respect of other demands linked with due date of annual return, to be extended till 30th September,2023.

GST Council has recommended for issuance of clarifications in relation to :

1. Clarification on issue of claiming refund under inverted duty structure where the supplier is supplying goods under some concessional notification.
2. Clarification on various issues relating to applicability of demand and penalty provisions under the CGST Act in respect of transactions involving fake invoices.
3. Clarification on mandatory furnishing of correct and proper information of inter-State supplies and amount of ineligible / blocked Input Tax Credit and reversal thereof in return in FOR MGSTR-3B.
4. Clarification in respect of certain GST related issues:

1. Clarification on the issues pertaining to refund claimed by the recipients of supplies regarded as deemed export;
2. Clarification on various issues relating to interpretation of section 17 (5) of the CGST Act;
3. Clarification on the issue of perquisites provided by employer to the employees as per contractual agreement
4. Clarification on utilization of the amounts available in the electronic credit ledger and the electronic cash ledger for payment of tax and other liabilities.

• GST Council has decided to constitute a Group of Ministers (GoM) to address various concerns raised by the States in relation to constitution of GST Appellate Tribunal and make recommendations for appropriate amendments in CGST Act. Further, the Go Mon ITR eforms, inter alia, recommended that the GSTN should put in place the AI/ML based mechanism to verify the antecedents of the registration applicants and an improved risk-based monitoring of their behavior post registration so that non-compliant tax payers could be identified in their infancy and appropriate action be taken so as to minimize risk to exchequer.

Goods: Rationalization of GST Rates (for removal of Inverted Duty Structure) w.e.f. July 18, 2022

S. No	Description of goods	From	To
1.	Printing, writing or drawing ink	2%	8%
2.	Knives with cutting blades, Paper knives, Pencil sharpeners and blades therefor, Spoons, forks, ladles, skimmers, cake-servers etc	2%	8%
3.	Power driven pumps primarily designed for handling water such as centrifugal pumps, deep tube-well turbine pumps, submersible pumps; Bicycle pumps	2%	8%
4.	Machines for cleaning, sorting or grading, seed, grain pulses; Machinery used in milling industry or for the working of cereals etc; PawanChakkithat is Air Based Atta Chakki; Wet grinder;	5%	8%
5.	Machines for cleaning, sorting or grading eggs, fruit or other agricultural produce and its parts, Milking machines and dairy machinery	2%	8%
6.	LED Lamps, lights and fixture, their metal printed circuits board;	2%	8%
3.	Power driven pumps primarily designed for handling water such as centrifugal pumps, deep tube-well turbine pumps, submersible pumps; Bicycle pumps	2%	8%
4.	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;	5%	8%
5.	Machines for cleaning, sorting or grading eggs, fruit or other agricultural produce and its parts, Milking machines and dairy machinery	2%	8%
6.	LED Lamps, lights and fixture, their metal printed circuits board;	2%	8%

Goods: Rationalization of GST Rates –(Others) w.e.f. July 18, 2022

S.No.	Description	From	To
1.	Ostomy Appliances	12%	5%
2.	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 lens	12%	5%
3.	Tetra Pak (Aseptic Packaging Paper)	12%	18%
4.	Tar (whether from coal, coal gasification plants, producer Gas plants and Coke Oven Plants.	5%/8%	18%
5.	IGST on import of Diethylcarbamazine(DEC) tablets supplied free of cost for National FilariasisElimination Programme	5%	NIL
6.	Cut and Polished diamonds	0.25%	1.5%
7.	IGST on specified defenceitems imported by private entities/vendors, when end-user is the Defenceforces.	Applicable Rate	NIL

Goods Rationalization of GST Rates–(Exemptions) w.e.f. July 18, 2022

S.No.	Description	From	To
1.	Cheques, lose or in book form	Nil	18%
2.	Maps and hydrographic or similar charts of all kinds, including atlases, wall maps, topographical plans and globes, printed	Nil	12%
3.	Parts of goods of heading 8801	Nil	18%
4.	Petroleum/ Coal bed methane	5%	12%
5.	Scientific and technical instruments supplied to public funded research institutes	5%	Applicable rate
6.	E-waste	5%	18%

Services -Rationalization of GST Rates (for removal of Inverted Duty Structure) w.e.f. July 18, 2022

S.No.	Description of Services	From	To
1.	Services supplied by foreman to chit fund	12%	18%
2.	Job work in relation to processing of hides, skins and leather	5%	12%
3.	Job work in relation to manufacture of leather goods and footwear	5%	12%
4.	Job work in relation to manufacture of clay bricks	5%	12%
5.	Works contract for roads, bridges, railways, metro, effluent treatment plant, crematorium etc.	12%	18%
6.	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 thereof	12%	18%
7.	Works contract supplied to central and state governments, union territories & local authorities involving predominantly earthwork and sub-contracts thereof	5%	12%

Services -Rationalization of GST Rates (Others) w.e.f. July 18, 2022

S.No.	Description	From	To
1.	Transport of goods and passengers by ropeways.	18%	5%(with ITC of Service)
2.	Renting of truck/goods carriage where cost of fuel is included	18%	12%

Services -Rationalization of GST (Exemptions) w.e.f. July 18, 2022

S.No.	Description of Services
1	Exemption on transport of passengers by air to and from NE states & Bagdograis
2	Exemption on following services is being withdrawn. (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)Renting of residential dwelling to business entities (registered persons). (g)Services provided by the cord blood banks by way of preservation of stem cells
3	Like 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
4	Hotel accommodation priced uptoRs. 1000/day shall be taxed at 12%
5	Room rent (excluding ICU) exceeding Rs5000 per day per patient charged by a hospital shall be taxed to the extent of amount charged for the room at 5% without ITC.
6	Tax exemption on training or coaching in recreational activities relating to arts or culture, or sports is being restricted to such services when supplied by an individual.