The 47th GST Council meeting was held on June 28-29, 2022, coinciding with the fifth anniversary of the GST roll-out. Key outcomes based on the council’s recommendations include removing exemptions on certain goods and services as well as GST rate rationalization. The council also proposed various measures to ease compliances and facilitate trade.

The Goods and Services Tax (GST) Council’s 47th meeting was held on June 28-29, 2022 under the chairmanship of the Finance Minister Nirmala Sitharaman and made several recommendations to implement changes to the GST regime.

The changes in GST rates for the concerned goods and services shall come into effect from July 18, 2022.

Key Changes in the GST Rates for Goods, w.e.f. July 18, 2022

Printing, writing, or drawing ink

Power-driven pumps primarily designed for handling water. For example, centrifugal pumps, deep tube-well turbine

pumps, submersible pumps, and bicycle pumps

LED lamps, lights and fixture, and their metal printed circuits board

Drawing and marking out instruments

Solar water heater and system

Prepared/finished leather, chamois leather, composition leather

Orthopedic appliances − splints and other fracture appliances, artificial parts of the body, or other appliances that

are worn or carried, or implanted in the body to compensate for a defect or disability, intraocular lens

Tetra packs (aseptic packaging paper)

IGST on specified defense items imported by private entities or vendors, when end-user is the defense forces of India

Cheques, lose or in book form

Maps and hydrographic or similar charts of all kinds, including atlases, wall maps, topographical plans and globes

Clarifications with respect to GST Rates on Goods

Refund of accumulated input tax credit (ITC) shall not be allowed on edible oils and coal.

Electric vehicles, whether or not fitted with a battery pack, are eligible for the concessional GST rate of five percent.

Sewage treated water is not the same as purified water and hence exempt from GST.

Nicotine polarilex gum attracts GST at 18 percent.

Earlier GST was exempted on specified food items, grains, etc. when they were either not branded, or right on the brand had been foregone. However, the 47th GST Council recommended to revise the scope of exemption, which will now be withdrawn from pre-packaged and pre-labelled retail packs, including pre-packed, pre-labelled curd, lassi, and butter milk.

Transportation by rail or vessel of railway equipment and material.

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

Fumigation in a warehouse of agricultural produce.

Services by Reserve Bank of India (RBI), Insurance Regulatory and Development Authority (IRDA), Securities and Exchange Board of India (SEBI), Food Safety and Standards Authority of India (FSSAI) and Goods and Services Tax Network (GSTN).

Renting of residential dwelling to registered business entities.

Services provided by cord blood banks by way of preservation of stem cells.

Key Changes in the GST Rates for Services, w.e.f. July 18, 2022

Services supplied by foreman to chit fund

Job work in relation to processing of hides, skins and leather

Job work in relation to manufacture of leather goods and footwear

Job work in relation to manufacture of clay bricks

Works contract for roads, bridges, railways, metro, effluent treatment plant etc.

Works contract service supplied to Central and State governments, local authorities for historical monuments, canals, dams, pipelines, plants for water supply, educational institutions, hospitals etc. and its sub-contracting

Works contract service supplied to Central and State governments and local authorities involving predominantly earthwork and its sub-contracting

Transport of goods and passengers by ropeways

5 percent (with ITC for services)

Renting of truck/ goods carriage where cost of fuel is included

Clarifications with respect to GST Rates on Services

GST exemption on transport of passengers by air to and from North-eastern states and Bagdogra is restricted to economy class.

Common bio-medical waste treatment facilities for treatment or disposal of biomedical waste shall be taxed at 12 percent with ITC benefit.

Hotel accommodation of value up to INR 1000 per day shall be taxed at 12 percent.

Room rent (excluding ICU) charged by a hospital, exceeding INR 5,000 per day per patient shall be taxed. The tax shall be levied only on the room rentals at five percent without ITC.

GST exemption on training or coaching in recreational activities relating to arts, culture or sports is restricted only when supplied by an individual.

Fee charged by universities for issuance of migration certificate or eligibility certificate for admission is exempt from GST.

Services associated with transit cargo both to and from Nepal and Bhutan are covered by exemption under entry 9B of notification No. 12/2017-CT(R).

Activity of selling of space for advertisement in souvenirs published in the form of books is eligible for concessional GST at five percent.

Renting of vehicle with operator for transportation of goods on time basis attracts GST at 18 percent. GST on such renting, where cost of fuel is included in the consideration charged will be taxable at 12 percent.

Allowing choice of location of a plot is part of supply of long-term lease of the plot of land. Therefore, location charge or preferential location charges are part of consideration charged for long-term lease of land and shall get the same treatment under GST.

Services in the form of assisted reproductive technology/in vitro fertilization covered under the definition of health care services for the purpose of exemption under GST.

Sale of land after levelling, laying down of drainage lines, etc., is sale of land and would not attract GST.

Renting of motor vehicles for transport of passengers to a body corporate for a period taxable in the hands of body corporate under reverse charge mechanism.

Services provided by the guest anchors to TV channels in lieu of honorarium attract GST.

The following relaxations are to be provided to suppliers making supplies through e-commerce operators (ECO) from January 1, 2023, subject to preparedness on the portal as well as by the ECOs:

The GSTN will institute artificial intelligence and machine learning-based mechanisms to verify the antecedents of the registration applicants and improved risk-based monitoring of their behavior post registration. This would help improve compliance and minimize risks to the exchequer.

Although reports of a flat 28 percent GST levy on casinos and skill gaming had been doing rounds, the council has deferred its decision in this regard until the next meet in August, 2022. The GST Council has directed the Group of Ministers (GoM) to re-examine the issue regarding casinos and skill gaming, and submit a report.

To prevent confusion regarding key tax compliances and reporting requirements, businesses are welcome to reach out to our tax advisors at india@dezshira.com.

India Briefing is produced by Dezan Shira & Associates. The firm assists foreign investors throughout Asia from offices across the world, including in Delhi and Mumbai. Readers may write to india@dezshira.com for more support on doing business in in India.

We also maintain offices or have alliance partners assisting foreign investors in Indonesia, Singapore, Vietnam, Philippines, Malaysia, Thailand, Italy, Germany, and the United States, in addition to practices in Bangladesh and Russia.

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