The GST Council convened for its 53rd meeting on June 22, 2024, in New Delhi, resulting in notable amendments to the GST rates on a range of goods and services. These modifications, set to take effect from July 15, 2024, aim to streamline the tax structure and provide relief in key areas. The Council’s decisions were officially communicated through a series of notifications issued on July 12, 2024.
The 53rd GST Council meeting recommended significant rate adjustments affecting products such as milk cans, cartons, boxes, and solar cookers. These changes are documented in the newly issued notifications.
For a comprehensive understanding of these changes, stakeholders can refer to the press release of the 53rd GST Council meeting.
Download Notifications:
- Notification No. 04/2024-Central Tax (Rate) – English | हिन्दी
Seeks to amend Notification No 12/2017-Central Tax (Rate) dated 28.06.2017. - Notification No. 03/2024-Central Tax (Rate) – English | हिन्दी
Seeks to amend Notification No. 2/2017-Central Tax (Rate). - Notification No. 02/2024-Central Tax (Rate) – English | हिन्दी
Seeks to amend Notification No. 1/2017-Central Tax (Rate).
Compensation Cess Exemption
The CBIC’s Notification No. 01/2024 – Compensation Cess (Rate), issued on July 12, 2024, exempts the supply of goods under Heading 2202 by Unit Run Canteens to authorized customers from the GST Compensation Cess. This exemption, effective from July 15, 2024, specifically applies to carbonated beverages of fruit drink or carbonated beverages with fruit juice, benefiting defense personnel and their families.
Central Tax (Rate) Amendments
Notification No. 02/2024, effective from July 15, 2024, revises the GST rates for various goods. Key changes include:
- Milk cans made from steel, iron, and aluminum: GST rate reduced from 9% to 6%.
- Cartons, boxes, and cases of corrugated and non-corrugated paper or paperboard: GST rate reduced from 9% to 6%.
- Solar cookers: GST rate set at 6%.
Notification No.3/2024 (Central Tax (Rate))
In a landmark decision, the GST Council, during its 47th meeting on June 29, 2022, in Chandigarh, spearheaded significant reforms under the esteemed leadership of the Hon’ble Union Finance Minister, Ms. Nirmala Sitharaman. The Council’s recommendation to redefine the GST applicability criteria for goods by replacing the “branded” exclusion with the “pre-packaged and labelled” condition marks a pivotal shift in tax policy. This crucial change aligns with the Legal Metrology Act & Rules, ensuring more precise tax governance on pre-packaged items.
Following this recommendation, the Central Board of Indirect Taxes and Customs (CBIC) took decisive action. On July 13, 2022, it issued Notification No. 6/2022-Central Tax (Rate), effectively amending the earlier Notification No. 1/2017-Central Tax (Rate) dated June 28, 2017. This amendment redefined the GST applicability to encompass food items that are “pre-packaged and labelled,” thus moving away from the previous “brand name” criterion.
Continuing this momentum, the CBIC released Notification No. 02/2024 – Central Tax (Rate) on July 12, 2024, further modifying the CGST Rate Notification, effective July 15, 2024. The updated notification included an important addition to Schedule VII, detailing the definition of “pre-packaged and labelled” as specified in the Legal Metrology Act, 2009. Specifically, it underscores that a “pre-packaged commodity” must bear necessary declarations as mandated by the Act and its accompanying rules.
A pivotal proviso has been inserted, stipulating that agricultural farm produce in packages exceeding 25 kilograms or 25 liters does not fall under the “pre-packaged and labelled” category, thus exempting such produce from GST. This amendment is mirrored in Notification No. 03/2024 – Central Tax (Rate), dated July 12, 2024, which amends Notification No. 2/2017-Central Tax (Rate).
The ramifications of these notifications are profound, particularly for the agricultural sector. Previously, GST was applicable to food items deemed “pre-packaged and labelled” under the Legal Metrology Act, 2009. The new proviso, however, exempts agricultural produce supplied in large packages from this classification, thereby alleviating the GST burden on farmers and suppliers handling substantial quantities of produce.
This strategic reform is anticipated to invigorate the agricultural sector by reducing the tax load and enhancing business ease for stakeholders. It promotes a balanced and clear approach to GST application, harmonizing with the Legal Metrology Act while accommodating the unique requirements of the agricultural industry. These measures underscore the government’s commitment to fostering a conducive business environment for farmers, ensuring equitable and precise tax policies that support large-scale agricultural commerce.
Agricultural Sector Relief
The CBIC’s amendments, through Notification No. 03/2024, redefine the criteria for GST applicability on goods, replacing the “branded” condition with “pre-packaged and labelled” as per the Legal Metrology Act & Rules. This change exempts agricultural farm produce in packages exceeding 25 kilograms or 25 liters from GST, alleviating the tax burden on the agricultural sector and promoting ease of business for farmers.
Notification No. 4/2024 (Central Tax (Rate))
The 53rd GST Council Meeting has heralded significant changes in the tax landscape, with the Central Board of Indirect Taxes and Customs (CBIC) issuing Notification No. 4/2024 (Central Tax (Rate)). This move underscores a strategic effort to streamline and rationalize the GST rates applicable to essential goods and services.
In an endeavor to ensure uniformity across the nation, similar notifications have been concurrently issued under the Integrated Goods and Services Tax Act, 2017 (the IGST Act) and the Union Territory Goods and Services Tax Act, 2017 (the UTGST Act). This harmonized approach ensures that the amended tax rates are uniformly applied, eliminating regional discrepancies and promoting a cohesive tax regime.
The amendments reflect a meticulous effort to address the evolving economic landscape, aiming to alleviate the tax burden on essential commodities while maintaining fiscal prudence. This strategic adjustment is poised to foster greater compliance and streamline the tax administration process, ensuring that the benefits of reduced rates are seamlessly passed on to the consumers.
Moreover, these changes signal a proactive stance by the GST Council in responding to the dynamic needs of the economy. By realigning the tax structure, the Council aims to enhance the affordability of essential goods and services, thereby bolstering consumer confidence and stimulating economic growth.
The harmonization of these rates across various jurisdictions underscores the Council’s commitment to a unified tax framework. This uniform application not only simplifies the tax compliance process for businesses operating in multiple regions but also mitigates the risk of litigation arising from inconsistent tax practices.
In summary, the recent amendments to the GST rates, as encapsulated in Notification No. 4/2024, mark a pivotal step towards a more rational and cohesive tax structure. This move, aligned with similar amendments under the IGST and UTGST Acts, exemplifies the Council’s dedication to fostering a more streamlined and equitable tax environment.
Uniformity Across GST Acts
The amendments also apply under the Integrated Goods and Services Tax Act, 2017, and the Union Territory Goods and Services Tax Act, 2017, ensuring consistent application of the new rates nationwide.
Impact Analysis
The recent notifications by the CBIC are designed to rationalize the GST structure, making it more efficient and equitable. The rate reductions on essential goods like milk cans and solar cookers are expected to provide substantial economic relief. The exemptions for agricultural produce aim to support the agrarian economy, fostering a more favorable business environment for farmers and large-scale suppliers.
In summary, the GST Council’s 53rd meeting and the ensuing notifications represent a strategic shift towards a more balanced and streamlined tax regime, reflecting the government’s commitment to economic efficiency and sector-specific relief.
CBIC’s Notification No. 02/2024 Alters GST Rates
On July 12, 2024, the Central Board of Indirect Taxes and Customs (CBIC) issued Notification No. 02/2024 – Central Tax (Rate), bringing substantial modifications to the GST landscape, effective from July 15, 2024. This notification amends the earlier Notification No. 1/2017-Central Tax (Rate) dated June 28, 2017, introducing new serial numbers and entries for various goods.
The notification outlines several changes, notably for the following items:
| Chapter / Heading / Sub-heading / Tariff Item | Description of Goods | Rate Before | Rate After |
|---|---|---|---|
| 4819 10, 4819 20 | Cartons, boxes, and cases of, – (a) corrugated paper or paperboard; or (b) non-corrugated paper or paperboard | 9% | 6% |
| 7310, 7323, 7612, or 7615 | Milk cans made of Iron, Steel, or Aluminium | 9% | 6% |
| 7321 or 8516 | Solar cookers | 9% | 6% |
| 8436 | Other agricultural, horticultural, forestry, poultry-keeping or bee-keeping machinery, including germination plant fitted with mechanical or thermal equipment; poultry incubators and brooders; parts thereof | 6% | 0% |
| 4819 (except 4819 10, 4819 20) | All Goods (other than Cartons, boxes, and cases of, – (a) corrugated paper or paperboard; or (b) non-corrugated paper or paperboard) | 0% | 9% |
| 7310 | Tanks, casks, drums, cans, boxes, and similar containers, for any material (other than compressed or liquefied gas), of iron or steel, of a capacity not exceeding 300 l, whether or not lined or heat-insulated, but not fitted with mechanical or thermal equipment; other than Milk cans made of Iron, or Steel | 9% | 0% |
| 7321 | Stoves, ranges, grates, cookers (including those with subsidiary boilers for central heating), barbecues, braziers, gas-rings, plate warmers, and similar non-electric domestic appliances, and parts thereof, of iron or steel [other than Kerosene burners, kerosene stoves and wood burning stoves of iron or steel, wood burning stoves of iron or steel, and solar cookers] | 9% | 0% |
| 7612 | Aluminium casks, drums, cans, boxes, etc.; other than Milk cans made of Aluminium | 9% | 0% |
| 7615 | All goods [other than table, kitchen or other household articles, of aluminium; Utensils; Milk cans made of Aluminium] | 9% | 0% |
| 8516 | Electric instantaneous or storage water heaters and immersion heaters; electric space heating apparatus and soil heating apparatus; electro-thermic hair-dressing apparatus (for example, hair dryers, hair curlers, curling tong heaters) and hand dryers; electric smoothing irons; other electro-thermic appliances of a kind used for domestic purposes [other than solar cookers]; electric heating resistors, other than those of heading 8545 | 9% | 0% |
Impact of the Notification
These adjustments by the CBIC have notable implications for the industry and consumers:
Reduction in GST Rates: The reduction in GST rates for cartons, boxes, and cases made of paper or paperboard, and milk cans made of steel, iron, or aluminum, is expected to provide significant relief to manufacturers and end-users alike, encouraging greater affordability and accessibility.
Promotion of Solar Energy: The reduced GST rate on solar cookers underscores the government’s commitment to promoting renewable energy sources, potentially driving increased adoption of solar cooking solutions.
Agricultural Sector Boost: The removal of GST on specific agricultural machinery will likely benefit farmers and agribusinesses, fostering growth and innovation in the sector.
Enhanced Compliance: The revised rates aim to streamline compliance and reduce the burden on taxpayers, fostering a more business-friendly environment.
In conclusion, Notification No. 02/2024 represents a strategic move by the CBIC to align GST rates with economic and policy objectives. By reducing the tax burden on essential goods and promoting sustainable practices, the notification is poised to have a positive impact on various sectors, enhancing overall economic efficiency and growth.
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