GST Notifications dated 19.10.2023

On October 19, 2023, the Central Board of Indirect Taxes and Customs (CBIC) issued nine notifications related to Central Goods and Services Tax (CGST) rates. These notifications introduce several changes that affect businesses and taxpayers. Know about the Changes in GST effective from 1st October 2023. Here's a simplified summary of these amendments:

1. Notification No. 12/2023 - Central Tax (Rate)

   For Rent-a-Cab services, taxpayers can now choose to charge either 5% GST without Input Tax Credit (ITC) or 12% with ITC. It's important to note that in cases where a person opts for 5% GST but avails services from another person in the same business line as a subcontractor who charges 12% GST, ITC has been limited to 5% only.

   Now, in such cases, ITC has been limited to 5% only. The following illustration is given in the notification:

   Example- Imagine 'A' hires 'B' for a cab ride from New Delhi to Jaipur for Rs. 1000. Now, 'B' needs a cab with a driver, so 'B' rents one from 'C' for Rs. 800. 'C' charges 'B' a central tax of 6%, which amounts to Rs. 48.

   If 'B' decides to charge 'A' a central tax of 2.5%, he can only claim an input tax credit on the service he got from 'C' to the extent of Rs. 20 (which is 2.5% of the Rs. 800), not the full Rs. 48.

   

2. Notification No. 13/2023 - Central Tax (Rate)

   This notification exempts certain services provided to "Government Authorities" from GST. The exempted services include water supply, public health, sanitation conservancy, solid waste management, and slum improvement and upgradation. Services provided by Indian Railways are now taxable, whereas certain services were previously exempt.

3. Notification No. 14/2023 - Central Tax (Rate)

   All services provided by Indian Railways are made chargeable under forward charge.

4. Notification No. 15/2023 - Central Tax (Rate)

   This notification clarifies that refunds under the inverted duty structure can be denied only in the case of the construction of a complex, building, or a part thereof. Refunds cannot be denied for other works contracts such as infrastructure projects and other constructions.

5. Notification No. 16/2023 - Central Tax (Rate)

   From January 1, 2022, the liability to pay GST on bus transportation services supplied through Electronic Commerce Operators (ECOs) has been placed on the ECOs under section 9(5) of CGST Act, 2017. The purpose of this provision was to relieve small-size bus operators from the compliance burden. However, bus operators organized as companies are excluded from this provision and should collect GST on their own. This would enable them to pay GST on their supplies using their ITC.

6. Notification No. 17/2023 - Central Tax (Rate)

   This notification prescribes the GST rate on "Food preparation of millet flour in powder form, containing at least 70% millets by weight" as 5% if sold in pre-packaged and labeled form. It also reduces the GST rate on molasses from 28% to 5% and specifies a GST rate of 18% on spirits for industrial use.

7. Notification No. 18/2023 - Central Tax (Rate)

   The GST rate on "Food preparation of millet flour in powder form, containing at least 70% millets by weight" is set at 0% if sold in other than pre-packaged and labeled form.

8. Notification No. 19/2023 - Central Tax (Rate)

   This notification specifies that the supply of "Used vehicles, seized and confiscated goods, old and used goods, waste, and scrap" by railways shall be under the forward charge mechanism.

9. Notification No. 20/2023 - Central Tax (Rate)

   No refund of the unutilized input tax credit shall be allowed when the credit has accumulated due to the tax rate on inputs being higher than the tax rate on the output supplies of such goods (other than nil-rated or fully exempt supplies). This rule applies specifically to "Imitation zari thread or yarn made out of Metallised polyester film/plastic film.

Conclusion

For further insights and detailed information on Council meetings, refer to Key Highlights of the 52nd GST Council meeting.

In conclusion, staying informed about these GST rate notifications is crucial for businesses. Adhering to these amendments is essential to maintain compliance with the evolving GST landscape. Advanced GST compliance solutions like LogiTax can assist in navigating these changes effectively. LogiTax streamlines the process, simplifies returns and reconciliation, and ensures compliance with GST regulations, making it a valuable resource for businesses.