The GST Council has exempt from GST, all items specified below in the list, when sold loose, and not pre-packed or pre-labeled.
They will not attract any GST.
The decision is of the GST Council and no one member.
The process of decision making is given below.
Recently, the GST Council in its 47th meeting recommended to reconsider the approach for imposition of GST on specified food items like pulses, cereals, flour, etc.
There have been a lot of misconceptions about this that have been spread. Here is a thread to lay the facts:
Is this the first time such food articles are being taxed? No. States were collecting significant revenue from foodgrain in the pre-GST regime.
Punjab alone collected more Rs 2,000 cr on food grain by way of purchase tax. UP collected Rs 700 cr.
Taking this into account, when GST was rolled out, a GST rate of 5% was made applicable on BRANDED cereals, pulses, flour.
Later this was amended to tax only such items which were sold under REGISTERED brand or brand on which enforceable right was not foregone by supplier.
However, soon rampant misuse of this provision was observed by reputed manufacturers & brand owners and gradually GST revenue from these items fell significantly.
This was RESENTED by suppliers and industry associations who were paying taxes on branded goods. They wrote to the Govt to impose GST uniformly on all packaged commodities to stop such misuse. This rampant evasion in tax was also observed by States.
The Fitment Committee—consisting of officers from Rajasthan, West Bengal, Tamil Nadu, Bihar, Uttar Pradesh, Karnataka, Maharashtra, Haryana & Gujarat—had also examined this issue over SEVERAL meetings and made its recommendations for changing the modalities to curb misuse.
It is in this context that the GST Council in its 47th meeting took the decision. With effect from July 18, 2022, only the modalities of imposition of GST on these goods was changed with no change in coverage of GST except 2-3 items.
It has been prescribed that GST on these goods shall apply when supplied in “pre-packaged and labelled” commodities attracting the provisions of Legal Metrology Act.
For example, items like pulses, cereals like rice, wheat, and flour, etc, earlier attracted GST @ 5% when branded and packed in unit container.
From 18.7.2022, these items would attract GST when “pre-packaged and labeled”.
It must also be noted that items specified below in the list, when sold loose, and not pre-packed or pre-labeled, will not attract any GST.
This was a unanimous decision by the GST Council. All states were present in GST Council when this issue was presented by the Group of Ministers on Rate Rationalisation in the 47th meeting held in Chandigarh on Jun 28, 2022.
All States, including non-BJP States (Punjab, Chhattisgarh, Rajasthan, Tamil Nadu, West Bengal, Andhra Pradesh, Telangana, Kerala) agreed with the decision. This decision of the GST Council is yet again by consensus.
Further, the GoM that recommended these changes was composed of members from West Bengal, Rajasthan, Kerala, Uttar Pradesh, Goa & Bihar and was headed by CM of Karnataka. It carefully considered this proposal, taking into account the tax leakage.
To conclude: this decision was a much-needed one to curb tax leakage. It was considered at various levels including by officers, the Group of Ministers, and was finally recommended by the GST Council with the complete consensus of all members.
The Government of India celebrated the 5th GST Day today with the vision GST@5 साधन, देश के सर्वांगीण विकास का. ( for the country’s all-round development)
Union Minister for Finance & Corporate Affairs Smt. Nirmala Sitharaman presided over as the Chief Guest of the event and Minister of State for Finance, Shri Pankaj Chaudhary was the Guest of Honour.
Senior officials from Ministry of Finance, Central Board of Indirect Taxes and Customs and Central Board of Direct Taxes were also present.
Speaking on the occasion, Union Finance Minister Smt. Nirmala Sitharaman said that GST stood the test of every possible challenge in these five years may it be technological or due to pandemic.
The Finance Minister was appreciative of the officers that they were receptive to continuous suggestions made by trade regarding possible changes needed in the automation.
Smt. Sitharaman thanked the five representatives from Trade for making presentations on five topics relating to the implementation of GST and how timely amendments have been to meet the need of the hour.
The Finance Minister conveyed appreciation for CBIC officers who since 2017 have been working hard to have smooth implementation of GST.
She noted that the GST Collections are buoyant and consistent which is a result of efforts of all officers.
Smt. Sitharaman paid homage to all those who lost life during pandemic.
On the occasion, the Finance Minister also took lead to mention that the gross GST Collections has been Rs.1.44 lakh crore for June, 2022 which is 56% more than the same month of the previous year.
Congress Party Briefing by Shri P Chidambaram and Shri Jairam Ramesh at AICC HQ.
Today, GST celebrates its 5th birthday. There is nothing really to celebrate. GST had serious birth defects. In the last five years these defects have only become worse and all those touched by GST have been seriously injured.
The Congress Party wishes to make it absolutely clear that the so-called GST that is in force today was not the GST envisaged by the UPA government.
I had made it clear on the floor of Parliament that the GST of our conception was a single, low rate across all goods and services with few exemptions.
We may remind you that the current GST law was passed against the express advice of the then Chief Economic Adviser whose recommendations were contained in an official publication titled Towards a Revenue Neutral Rate.
The GST that we have today is a complex web of many rates, conditions, exceptions and exemptions that will leave even an informed tax payer completely bewildered. As a result, they are at the mercy of the tax-collector.
After 5 years of GST, there is no rationalisation in the number of returns to be filed. Compliance with e-way bill and e-invoicing is no simpler.
Various provisions of the GST laws have still not been implemented and, instead, the government has resorted to stop-gap or “temporary” arrangements, some of which have lasted 5 years. Claiming refunds is a nightmare.
In five years, the government has issued 869 notifications, 143 circulars and 38 orders! That is a change every second day! This is a GST that is flawed, defective and unstable.
A flawed GST has led to large-scale destruction of the MSMEs, a sector that contributes upto 90% of the jobs in the manufacturing sector. Many small units have simply gone out of business.
The only beneficiaries of the flawed GST are big businesses, chartered accountants and tax lawyers.
VAT and GST were introduced on the basis of mutual trust and to promote cooperative federalism. But the manner in which the GST laws were passed and are being administered have deepened the distrust between the Centre and the States.
The skewed formula on voting rights of the Centre and the States has been used by the Centre to push through decisions that are bitterly opposed by the States including, privately, by BJP-ruled States.
The holding back of the arrears of Compensation Cess and the excessive resort to cesses (rather than shareable taxes) has increased the chasm between the two sides.
Despite the promise in 2017, no State has achieved an annual revenue growth of 14 per cent. The States have filled the gap through the Compensation Cess but, in two years, the gap was filled through a back-to-back loan.
The delaying of fiscal transfers to the States during the Covid-19 pandemic when they needed it the most came as a shock.
The States, collectively, have felt betrayed by the Centre and several finance ministers have expressed their regret and anguish publicly. Some of them have gone to the extent of demanding a re-think on GST.
As far as the Congress Party is concerned, we reject the current GST and, as promised in the Election Manifesto of 2019, we will work toward the replacement of the current GST by GST 2.0 that will be a single, low rate.
We will administer the law such that the GST revenues will be shared fairly & equitably between the Centre & the States & in a manner that will promote the growth of business, especially small businesses, and bring back the lost jobs.
GoI owes nothing to states on GST, other than what has been agreed in the GST Council.
Formula for GST compensation, terms of back-to-back loans, payment period – everything has been decided through consensus in the Council.
CMs questioning the devolution must speak to their FMs.
It's a collective decision of the GST Council & we don't need to politicise this. No individual has right to tweak the formulation & therefore there's no differentiation made on the basis of party.
Chaired the first meeting of the Group of Ministers (GoM) to examine GST concession and exemption of Covid relief materials as mandated by FM N Sitharaman Ji in the 43rd GST Council meeting.
FM N Sitharaman addressing the media post 43rd GST Council Meeting. Excerpts. via PIB Maharashtra:
Had a detailed engaging meeting today; we were due to meet in early Feb, but due to Union Budget, Parliament Session, subsequent state elections, we could not meet earlier Several decisions were taken at 43rd GST Council meeting today
Import of #COVID -related relief items, even if purchased or meant for donating to Govt. or to any relief agency upon recommendation of State authority, to be EXEMPTED from IGST till 31 Aug 2021
AmphotericinB (required for treating Mucormycosis fungal infection) has also been included in list of items EXEMPTED from IGST, in view of rising cases of the infection
Group of Ministers to be formed quickly (by tomorrow), who will submit report by 8 June 2021; to examine need for further reductions & decide on any new rates in exemptions
Like last year, GST Council felt that this is not the appropriate time for correction in Inversion duty, so this remains where it is
To provide relief to small taxpayers, amnesty scheme has been recommended for reducing late fee
To benefit around 89% of GST taxpayers, they can file pending returns, avail benefits of scheme, with reduced late fees
Late fees have also been rationalized Maximum amount of late fee has been reduced; will come into effect from future tax periods
This will provide long-term relief for small GST Taxpayers
Annual Return Filing will continue to be optional for 2020-21, for small Taxpayers with turnover less than Rs. 2 Crore
Reconciliation statements for 2020-21 to be furnished by taxpayers with turnover of Rs. 5 Crore or more
Law Committee will look into issues involving Quarterly Return Filing and Quarterly Payment, the modalities need to be worked out
On GST compensation cess, same formula as last year to be adopted this year too Rough estimate is that Centre will have to borrow Rs. 1.58 Lakh Crore and pass it on to States
As we are in the last of the 5 years of 14% compensation protected revenue arrangement, I have assured the members, we’ll hold a special session of GST Council, exclusively on single-point agenda of, how compensation cess be collected, how long, how much, beyond July 2022
GST Council examined whether the decisions (involving exemptions) being taken will be passed on to the end-user – the COVID19 patient, the citizen On this, there were some differing views, hence, I suggested a GoM go into details & then take a call
COVID19 vaccine is being purchased by Centre and states and GST on it is coming back to them, since they are giving Vaccines free of cost
But the question arose whether lowering #GST will benefit Pvt. hospitals (the intermediary) or to end-user, the citizen – Revenue Secretary
Similar question was raised whether lowering GST on ventilators will benefit end-users (the patients) or only benefit Pvt. hospitals (considering Govt. hospitals who purchase the ventilators get back the GST purchased on them) – Revenue Secretary
Economy is not suffering as much this year as compared to last year when there was complete lockdown
So, even if we are able to collect Rs. 1.1 Lakh Cr. per month on average, our deficit for the Year would be Rs. 1.5 lakh Crore
At this time of the pandemic when the people are troubled and in search of ambulances, beds, ventilators, oxygen, medicines, vaccines, levying GST on such products is cruel and insensitive.
Today in the GST Council Meeting, the government should remove GST on all life saving medicines and equipment being used in the fight against Covid.
As you are aware, Delhi is in the midst of unprecedented COVID surge which has stretched the health infrastructure to the maximum level.
At present, Delhi has 16,272 non-ICU oxygen beds and 4,866 ICU beds.
The Delhi Government is creating an additional 15,000 oxygenated non-ICU beds and 1,200 ICU beds which are likely to be operationalized over the next ten days. The work is going on 24×7 on war-footing basis.
On an average, there has been 25,000 new COVID cases everyday and about 10% of them require some form of hospitalization including oxygen support.
More than 50,000 patients currently are in home isolation and about a quarter of them need some form of oxygen support at home due to difficulty in availability of oxygen beds in the NCT of Delhi.
Oxygen concentrators are in short supply and even if one manages to arrange oxygen cylinder, there is unprecedented shortfall in the availability of medical oxygen creating uncertainty and panic among patients under home isolation.
There is no availability of oxygen concentrators in the market.
I am grateful to the Government of India for allowing the import of oxygen concentrators for personal use through e-commerce portals till 31st July, 2021 and also the reduction of IGST on such imports from 28% to 12%.
During this unprecedented health crisis, oxygen concentrators have become essential life support machines.
It would be appropriate if the Government of India and the GST Council consider exempting GST on oxygen concentrators for a period of six months to make them more affordable for our citizens.
In view of the challenges faced by taxpayers in meeting the statutory and regulatory compliances under Goods & Services Tax (GST) law due to the outbreak of the second wave of COVID-19 pandemic, the Government has issued notifications, all dated 1st May, 2021, providing various relief measures for taxpayers. These measures are explained below:
Reduction in rate of interest:
Concessional rates of interest in lieu of the normal rate of interest of 18% per annum for delayed tax payments have been prescribed in the following cases.
For registered persons having aggregate turnover above Rs. 5 crore:
A lower rate of interest of 9 per cent for the first 15 days from the due date of payment of tax and 18 per cent thereafter, for the tax payable for tax periods March 2021 and April 2021, payable in April 2021 and May 2021 respectively, has been notified.
For registered persons having aggregate turnover upto Rs. 5 crore:
Nil rate of interest for the first 15 days from the due date of payment of tax, 9 per cent for the next 15 days, and 18 per cent thereafter, for both normal taxpayers and those under QRMP scheme, for the tax payable for the periods March 2021 and April 2021, payable in April 2021 and May 2021 respectively, has been notified.
For registered persons who have opted to pay tax under the Composition scheme:
NIL rate of interest for first 15 days from the due date of payment of tax and 9 per cent for the next 15 days, and 18 per cent thereafter has been notified for the tax payable for the quarter ending 31st March, 2021, payable in April 2021.
Waiver of late fee
For registered persons having aggregate turnover above Rs. 5 crore: Late fee waived for 15 days in respect of returns in FORM GSTR-3B furnished beyond the due date for tax periods March, 2021 and April, 2021, due in the April 2021 and May 2021 respectively;
For registered persons having aggregate turnover upto Rs. 5 crore:
Late fee waived for 30 days in respect of the returns in FORM GSTR-3B furnished beyond the due date for tax periods March, 2021 and April, 2021 (for taxpayers filing monthly returns) due in April 2021 and May 2021 respectively / and for period Jan-March, 2021 (for taxpayers filing quarterly returns under QRMP scheme) due in April 2021.
Extension of due date of filing GSTR-1, IFF, GSTR-4 and ITC-04
Due date of filing FORM GSTR-1 and IFF for the month of April (due in May) has been extended by 15 days.
Due date of filing FORM GSTR-4 for FY 2020-21 has been extended from 30th April, 2021 to 31st May, 2021.
Due date of furnishing FORM ITC-04 for Jan-March, 2021 quarter has been extended from 25th April, 2021 to 31st May, 2021.
Certain amendments in CGST Rules:
Relaxation in availment of ITC:
Rule 36(4) i.e. 105% cap on availment of ITC in FORM GSTR-3B to be applicable on cumulative basis for period April and May 2021, to be applied in the return for tax period May 2021. Otherwise, rule 36(4) is applicable for each tax period.
The filing of GSTR-3B and GSTR-1/ IFF by companies using electronic verification code has already been enabled for the period from the 27.04.2021 to 31.05.2021.
Extension in statutory time limits under section 168A of the CGST Act:
Time limit for completion of various actions, by any authority or by any person, under the GST Act, which falls during the period from 15th April, 2021 to 30th May, 2021, has been extended upto 31st May, 2021, subject to some exceptions as specified in the notification.
GST e-invoice system, the game changer in the GST system, has successfully completed journey of six months.
During this period more than 39.81 Crores e-invoices have been generated by 88,000+ suppliers.
There are more than 47 lakh recipients involved in these transactions, who will be receiving Input Tax Credits easily.
On 31st March 2021, 37.42 Lakh e-Invoices are generated which is the highest for a day in last 6 months.
E-invoice system was launched on 1st Oct 2020 for the tax payers whose annual aggregate turnover is more than Rs 500 Crores and subsequently on 1st Jan 2021, the tax payers whose annual aggregate turnover is between Rs. 100 Crores and Rs. 500 Crores have been enabled.
From 1st April 2021, as per the government order, tax payers whose annual aggregate turnover is between Rs. 50 Crores and Rs. 100 Crores are mandated to generate e-invoice from the portal. National Information Centre (NIC) has already enabled these tax payers on the portal and is geared up to handle the generation of e-invoices by the tax payers.
With effect from the 1st April, 2021, it has been made mandatory for a GST taxpayer, having turnover of more than Rs 5 crore in the preceding financial year, to furnish 6 digits HSN Code (Harmonised System of Nomenclature Code), or as the case may be, SAC (Service Accounting Code) on the invoices issued for supplies of taxable goods and services.
A taxpayer having turnover of upto Rs 5 crore in the preceding financial year is required to mandatorily furnish 4 digits HSN code on B2B invoices.
Earlier, the requirement was 4 digits and 2 digits respectively.
Accordingly, with effect from the 1st April, 2021, GST taxpayers will have to furnish HSN/SAC in their invoices, as per the revised requirement.
HSN codes for goods at 6 digits are universally common.
Therefore, common HSN codes apply to Customs and GST.
Accordingly, codes prescribed in the Customs tariff are used for the GST purposes too (as has been specifically mentioned in the GST rate schedule).
In Customs Tariff, HS code is prescribed as heading (4 digits HS), sub-heading (6 digits HS) and tariff items (8 digits).
These documents are accessible on the CBIC web-site.
Further, HSN search facility is also available on the GST portal.
Manufacturers and importers/exporters have been commonly using HSN Codes.
Manufacturers were furnishing these codes even in the pre-GST regime.
Importers and exporters have been furnishing these codes in import/export documents.
Traders would mostly be using HSN codes furnished in the invoices issued to them by the manufacturer or importer suppliers.
As such, a large number of GST taxpayers are already furnishing HS codes/SAC at 6/8 digits on voluntary basis on the invoices, e -way bills and GSTR 1 returns.
GST revenues above ₹ 1 lakh crore for a stretch of four months and a steep increasing trend over this period are clear indicators of rapid economic recovery post pandemic.
The gross GST revenue collected in the month of January 2021till 6PM on 31.01.2021 is ₹ 1,19,847 crore of which CGST is ₹ 21,923 crore, SGST is ₹ 29,014 crore, IGST is ₹ 60,288 crore (including ₹ 27,424 crore collected on import of goods) and Cess is ₹ 8,622 crore (including ₹ 883crore collected on import of goods).
The total number of GSTR-3B Returns filed for the month of December up to 31stJanuary 2021 is 90 lakhs.
The government has settled ₹ 24,531 crore to CGST and ₹ 19,371 crore to SGST from IGST as regular settlement.
The total revenue earned by Central Government and the State Governments after regular settlement in the month of January 2021 is ₹ 46,454 crore for CGST and ₹ 48,385 crore for the SGST.
In line with the trend of recovery in the GST revenues over past five months, the revenues for the month of January 2021 are 8% higher than the GST revenues in the same month last year, which in itself was more than ₹ 1.1 lakh crore.
During the month, revenues from import of goods was 16% higher and the revenues from domestic transaction (including import of services) are 6% higher than the revenues from these sources during the same month last year.
The GST revenues during January 2021 are the highest since introduction of GST and has almost touched the ₹ 1.2 lakh crore mark, exceeding the last month’s record collection of ₹1.15 lakh crore.
GST revenues above ₹ 1 lakh crore for a stretch of last four months and a steep increasing trend over this period are clear indicators of rapid economic recovery post pandemic.
Closer monitoring against fake-billing, deep data analytics using data from multiple sources including GST, Income-tax and Customs IT systems and effective tax administration have also contributed to the steady increase in tax revenue over last few months.
The average YoY growth in GST revenue over the first four months in the second half of the financial year has been 8% as compared to (-) 24% during the first half of the year.
The chart below shows trends in monthly gross GST revenues during the current year.
The GST revenues during December 2020 have been the highest since the introduction of GST and it is the first time that it has crossed ₹ 1.15 lakh crore.
Ministry of Finance via PIB India:
The gross GST revenue collected in the month of December 2020 is ₹ 1,15,174 crore of which CGST is ₹ 21,365 crore, SGST is ₹ 27,804 crore, IGST is ₹ 57,426 crore (including ₹ 27,050 crore collected on import of goods) and Cess is ₹ 8,579 crore (including ₹ 971 crore collected on import of goods).
The total number of GSTR-3B Returns filed for the month of November up to 31st December 2020 is 87 lakhs.
The government has settled ₹ 23,276 crore to CGST and ₹ 17,681 crore to SGST from IGST as regular settlement.
The total revenue earned by Central Government and the State Governments after regular settlement in the month of December 2020 is ₹ 44,641 crore for CGST and ₹ 45,485 crore for the SGST.
In line with the recent trend of recovery in the GST revenues, the revenues for the month of December 2020 are 12% higher than the GST revenues in the same month last year.
During the month, revenues from import of goods was 27% higher and the revenues from domestic transaction (including import of services) are 8% higher that the revenues from these sources during the same month last year.
The GST revenues during December 2020 have been the highest since the introduction of GST and it is the first time that it has crossed ₹ 1.15 lakh crore.
The highest GST collection till now was ₹ 1,13,866 crore in the month of April 2019.
The revenues of April normally tend to be high since they pertain to the returns of March, which marks the end of financial year.
The December 2020 revenues are significantly higher than last month’s revenues of ₹ 1,04.963 crore. This is the highest growth in monthly revenues since last 21 months.
This has been due to combined effect of the rapid economic recovery post pandemic and the nation-wide drive against GST evaders and fake bills alongwith many systemic changes introduced recently, which have led to improved compliance.
Till now, GST revenues have crossed ₹ 1.1 lakh crore three times since introduction of GST. This is the third month in a row in the current financial year after the economy has been showing signs or recovery post pandemic that the GST revenues have been more than ₹ 1 lakh crore.
The average growth in GST revenues during the last quarter has been 7.3% as compared to (-) 8.2% during the second quarter and (-) 41.0% during the first quarter of the financial year.
In order to curb the GST fake invoice frauds, the Govt on the recommendations of the GST Council’s Law Committee has issued a notification to deal with the menace of fraudsters who avail & pass on ineligible ITC by fake or fly-by-night firms.
Addressing some myths around the same
Only in fraudulent cases where there are significant discrepancies based on data analytics and sound risk parameters, and not mere clerical errors, the action of suspension and cancellation will be taken up.
Precise targeting of fraudsters is being done only in specific cases, after doing a comprehensive analysis, using advanced data analytics tools. etc.
Further, multiple risk indicators are checked and only then few high-risk entities are selected.
Government of Chhattisgarh has communicated its acceptance of Option-1 to meet the revenue shortfall arising out of GST implementation. The number of States who have favoured Option-1 has gone up to 27. All States except Jharkhand and all the 3 Union Territories with Legislative Assembly have decided in favour of Option-1.
The States & Union Territories who choose Option-1 are getting the amount of shortfall arising out of GST implementation through a special borrowing window put in place by the Government of India. The window has been operationalised since 23rd October, 2020 and the Government of India has already borrowed an amount of Rs.30,000 crore on behalf of the States in five instalments and passed it on to the States and Union Territories, who chose Option-1. The funds borrowed through the special window were released to the States and UTs on 23rd October, 2020, 2nd November, 2020, 9th November, 2020, 23rd November, 2020 and 1st December, 2020. Now the State of Chhattisgarh will also receive funds raised through this window starting from the next round of borrowing.
Under the terms of Option-1, besides getting the facility of a special window for borrowings to meet the shortfall arising out of GST implementation, the States are also entitled to get unconditional permission to borrow the final instalment of 0.50% of Gross State Domestic Product (GSDP) out of the 2% additional borrowings permitted by the Government of India, under AtmanirbharAbhiyaan on 17th May, 2020. This is over and above the Special Window of Rs.1.1 lakh crore. On receipt of the choice of Option-1, the Government of India has granted additional borrowing permission of Rs.1,792 crore to the State Government of Chhattisgarh (0.50 % of Chhattisgarh’s GSDP).
The amount of additional borrowing permission granted to 27 States and the amount of funds raised through special window and released to the States and Union Territories so far is annexed.
T. S Singh Deo, Cabinet Minister in Chhattisgarh Government :
GOI which is akin to an elder member of a family in the federal structure of the country must come forward and shoulder it’s responsibility by standing with the States and the Country at such a critical time.
All states agreed that in time of plummeting GDP the states need to be fully supported financially. We are in complete agreement to the proposal that GOI takes a loan which will be serviced fully by GST Compensation Cess Fund.
The Central Govt is backtracking from its own decisions and amendments to the GST compensation drafted for states during the 10th GST council meet held on 18th February 2017.
Amid such critical conditions when the state govts need a helping hand from Central govt, it is not only withholding the resources but also suggesting unacceptable methods to provide compensation.
