Clarification regarding GST rates & classification (goods) based on the recommendations of the GST Council in its 45th GST Council Meeting
There are various kinds of goods for which registered persons face difficulties regarding GST rates due to the non-availability of proper distinction or classification.
To rectify issues and clarify GST rates, a meeting was held by the GST council on 17th September 2021 at Lucknow, and a circular no. 163/19/2021-GST was issued on 06.10.2021 for classification and applicable GST rates related to the following goods.
(1) Fresh vs dried nuts and fruits:
As per the circular, fresh fruits and nuts are exempted from GST unless frozen or dried. Fresh fruits and nuts cover fruits and nuts which are meant to be supplied in the state as plucked and continue to be fresh even if chilled.
Fruits and nuts do not qualify as fresh, cover fruits and nuts which are frozen (cooked or otherwise), or intentionally dried (dehydrated, evaporated or freeze-dried) for supply as dried fruits or nuts falling under heading 0801 and 0802, will attract GST at the rate of 5% and 12% as specified in the rate schedules.
(2) Tamarind seeds:
Tamarind seeds attracted a nil GST rate from 01.07.2017 to 30.09.2021, irrespective of its use.
With effect from 01.10.2021, GST at the rate of 5% will apply to seeds falling under heading 1209 (including tamarind seeds) if not supplied for sowing purposes. However, GST will not apply if seeds are used for sowing purposes.
(3) Coconut vs Copra:
Coconut fresh or dried falls under heading 0801 exempted from the GST, whether or not shelled or peeled.
The dried flesh of a coconut, i.e. Copra used to extract coconut oil, falls under heading 1203 and attracts GST at 5%, irrespective of use.
(4) Pure henna powder and leaves, having no additives:
Henna powder and henna leaves falls under heading 1404 90 90, on which GST is applicable at the rate of 5%.
Mehndi cones are classified under the headings 1404 and 3305 and attract GST at 5%.
(5) Scented sweet supari, flavoured and coated illaichi:
Scented sweet supari, known as “supari”, is a “Betel nut product”, falls under the heading 2106 90 30.
Flavoured & coated illaichi consists of Cardamom seeds, Aromatic spices, Silver leaf, Saffron, Artificial sweeteners, which falls under sub-heading 2106.
“The applicable rate of GST is 18% on both.”
(6) Brewers’ Spent Grains (BSG), Dried Distillers’ Grains with Soluble (DDGS) and other such residues:
These are classified under heading 2303, which includes residues of starch manufacture and similar residues (from maize, rice, potatoes), beet-pulp, bagasse, other waste products of sugar manufacture, brewing or distilling dregs etc.
The applicable GST rate on goods under heading 2303 is 5%.
(7) Goods falling under heading 3006 (miscellaneous pharmaceutical products):
Chapter note 4 of entry 65 covers all goods falling under heading 3006. The applicable GST rate under heading 3006 is 12%.
Chapter Note 4 of entry 65 covers the following goods:
- sterile surgical catgut, similar sterile suture materials and sterile tissue adhesives for surgical wound closure;
- sterile laminaria and its tents;
- dental adhesion barriers or dental haemostatics sterile surgical or sterile absorbable surgical;
- diagnostic reagents and opacifying preparations for X-ray examinations;
- blood-grouping reagents;
- dental cement and other dental fillings, bone reconstruction cement;
- first-aid boxes and kits;
- spermicides or chemical contraceptive preparations based on hormones;
- gel preparations designed for use in human or veterinary medicine;
- colostomy, ileostomy and urostomy pouches – appliances identifiable for ostomy use;
- Waste pharmaceuticals, for example, expiry of shelf-life.
(8) All laboratory reagents and other goods falling under heading 3822:
As per entry available at S. No. 80 – Schedule II of Notification No.1/2017- Integrated Tax (Rate) dated 28.6.2017, the concessional rate of GST of 12% is applicable for “all diagnostic kits and reagents”.
In the 45th meeting, the GST Council decided that the concessional GST rate of 12% is also applicable to all laboratory reagents and goods falling under heading 3822.
(9) Requirement of Original/ import Essentiality certificate on each inter-State stock transfer:
Inter-state stock transfer between the establishment of the same person is considered the supply of goods.
When a person imports goods of petroleum operations at a concessional GST rate of 5%, The Directorate General of Hydrocarbons (DGH) issues a document called “The Original/Import Essentiality Certificate,” that is used at the time of inter-state transfer of such goods (imported at the concessional rate) within the same company.
In the 45th meeting, the GST Council decided that “there is no need to obtain a certificate every time to transfer such imported goods from one state to another within the same establishment.”
(10) External batteries sold along with UPS Systems/ Inverter:
When the UPS/inverter and external battery are sold on the same invoice, and the price of both is known separately, and both are individually identifiable;
The GST rate for UPS/Inverter will be 18% under heading 8504 and for all external batteries (except lithium-ion battery) 28% under heading 8507.
(11) Specified Renewable Energy Projects/Solar PV Power Projects:
However, GST on such projects can be paid for goods and services in the ratio of 70:30, respectively, with effect from 1st January 2019.
In the 45th meeting, GST Council decided that GST on such projects can be paid for goods and services in the ratio of 70:30, respectively, for the period of 01.07.2017 to 31.12.2018.
No refund will be granted for GST already paid if paid amount is higher than the amount determined using the 70:30 ratio formula.
(12) Fiber Drums, whether corrugated or non-corrugated:
The dispute related to the GST rate on fibre drums (corrugated or non-corrugated) gets resolved by the GST Council in its 45th meeting by classifying such goods under the heading 4819, and the GST rate of 18% will be applicable with effect from 01.10.2021.
No refund is available for the GST already paid over & above 12% during the period from 01.07.2017 to 30.09.2021.