GST Circular dated 11.10.2024 clarifies various GST rate changes!

The GST landscape in India continues to evolve, with the latest circular issued on October 11, 2024, offering crucial clarifications on various GST rate changes. This circular clarifies the revised tax rates across different sectors, addressing concerns raised by businesses and taxpayers. As these changes could significantly impact your business operations and compliance requirements, it’s essential to understand the updates in detail. 

Let’s understand the notification!

Circular No. 235/29/2024-GST dated 11th October, 2024

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GOVERNMENT OF INDIA

MINISTRY OF FINANCE

DEPARTMENT OF REVENUE

(TAX RESEARCH UNIT)

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F. No. CBIC-190354/149/2024-TO(TRU-II)-CBEC

Dated: 11.10.2024

Circular No. 235/29/2024-GST

To,

The Principal Chief Commissioners/ Principal Directors General,

The Chief Commissioners/ Directors General,

The Principal Commissioners/ Commissioners of Central Excise & Central Tax

Subject: Clarification regarding GST rates & classification (goods) based on the recommendations of the GST Council in its 54th meeting held on 9th September 2024, at New Delhi -reg.

Based on the recommendations of the GST Council in its 54th meeting held on 9th September 2024, at New Delhi, in the exercise of the powers conferred under section 168(1) of the Central Goods and Services Tax Act, 2017, the Board hereby clarifies the following issues through this circular for uniformity in their implementation:

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1. Clarification regarding GST rate on Extruded/Expanded Savoury food products:

1.1 Representations were received seeking clarification regarding appropriate classification and whether savoury or salted extruded snack pellets are classifiable under HS 2106 as Namkeens due to disputes in the field. Based on the recommendations of GST Council, with effect from 10.10.2024, extruded or expanded products, savoury or salted (other than un-fried or un-cooked snack pellets, by whatever name called, manufactured through a process of extrusion), falling under HS 1905 90 30 attract GST at the rate of 12% vide entry 32C of Schedule II of notification 1/2017-Central Tax (Rate) dated the 28th June 2017 at par with namkeens, bhujia, mixture, chabena (pre-packaged and labelled) and similar edible preparations in ready for consumption form which are classifiable under HS 2106 90 of entry 46 of Schedule II of Notification 1/2017-Central Tax (Rate) dated the 28th June 2017. The GST rate of 5% continues on un-fried or uncooked snack pellets, by whatever name called, manufactured through the process of extrusion.

1.2 However, it is clarified that the reduced GST rate of 12% on extruded or expanded products, savoury or salted (other than un-fried or un-cooked snack pellets, by whatever name called, manufactured through a process of extrusion) falling under HS 1905 90 30 shall apply prospectively from the date of effect of the said notification. For the past period, 18% GST shall be payable.

2. Clarification regarding GST rate on Roof Mounted Package Unit (RMPU) Air Conditioning Machines for Railways:

2.1 Representations have been received regarding the classification of Roof-mounted air conditioners for Railways as to whether these goods are to be classified under HS 8415 with a 28% GST rate or HS 8607 with 18% GST.

2.2 In this regard Goods falling under heading 8415 (including air conditioning machines) attract a GST rate of 28% vide S. No. 119 of Schedule IV of notification No. 01/2017-CT (Rate) dated 28.06.2017 (as amended). The goods falling under heading 8607 (including parts of railways or tramway locomotives) attract a GST rate of 18% vide S. No. 398G of Schedule III of notification No. 01/2017-CT (Rate) dated 28.06.2017 (as amended). Machines and apparatus of heading 8415, which include Air conditioning machines, are excluded from the ambit of 'parts' covered under heading 8607 as per Section Note 2 of Section XVII of the Customs Tariff Act, 1975. From a conjoint reading of Note 2 and Note 3 of the Section notes for Section XVII, it is clear that goods of heading 8401 to 8479 (including 8415 - Air Conditioning Machines) are excluded from the ambit of 'parts' covered under Chapter 86.

2.3 Although there is no ambiguity in the classification, to make it explicitly clear, it is clarified that the Roof Mounted Package Unit (RMPU) Air Conditioning Machines for Railways are classified under HS 8415.

3. Clarification regarding GST rate on Car and motorcycle seats:

3.1 Representations were received seeking clarification regarding the classification of seats meant for four-wheeled cars and two-wheelers and the consequent GST rate on seats meant for four-wheeled cars and two-wheelers.

3.2 With regards to seats for two-wheelers, it is pertinent to note that the Explanatory Note for HS 9401 has specifically excluded items under HS 8714 (includes parts and accessories of two-wheelers). The explanatory note for HS 8714 has a list of inclusions, which has mention of Saddles (seats). Thus, for two-wheelers (HS 8711), the seats would be classifiable under HS 8714 attracting a GST rate of 28% vide S. No. 174 of Schedule IV of notification No. 1/2017-Central Tax (Rate) dated 28th June 2017 (as amended).

3.3 As regards seats for 4-wheeled vehicles, HS 9401 covers 'Seats, whether or not convertible into beds and parts thereof' (Tariff Item 9401 20 00 specifically covers seats of a kind used for motor vehicles). The Explanatory Note for this heading has also mentioned that seats for vehicles are covered under the ambit of HS 9401. Further, the Explanatory Notes to Chapter 94 have a list of exclusions that are not to be classified under the said Chapter. This list of exclusions does not mention seats meant for vehicles. Thus, it is seen that the car seat would fall under HS 9401.

3.4 Thus, the seat assembly for 4-wheelers are classifiable under HS 9401 while seats for 2-wheelers are classifiable under HS 8714. There is no ambiguity in the GST rates on the said goods - car seats which are classifiable under 9401 attract GST @ 18 % vide S. No. 435A of Schedule III of notification No. 1/2017-Central Tax (Rate) dated 28th June 2017 (as amended) and seats meant for two-wheelers are classifiable under HS 8714 which attract a GST rate of 28%.

3.5 To bring parity with seats of motorcycles (classified under HS 8714) which already attract a GST rate of 28%, based on the recommendation of the Council, with effect from 10.10.2024 vide S. No. 210A of Schedule IV of notification No. 1/2017-Central Tax (Rate) dated 28th June, 2017 (as amended), car seats classifiable under HS 9401 attract GST at the rate of 28%. It is clarified that the 28% rate on car seats classifiable under HS 9401 is applicable prospectively, that is, from the date of effect of the said notification.

4. Field formations under your charge may be instructed accordingly.

5. Difficulty, if any, in the implementation of this circular may be brought to the notice of the Board.

(Limatula Yaden)

Joint Secretary (TRU)

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Key Highlights of GST Circular Dated 11.10.2024

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1. GST on Extruded/Expanded Savoury Food Products:
   • Effective from October 10, 2024, products like savoury or salted extruded snack pellets (excluding un-fried or un-cooked snack pellets) will now fall under HS 1905 90 30 and attract a 12% GST. This brings them to par with similar products like namkeens, bhujia, and mixtures.
   • Past period: A GST rate of 18% will apply to these goods for the period before the new classification came into effect.
   • Un-fried or un-cooked snack pellets will continue to attract a 5% GST.
2. GST on Roof Mounted Package Unit (RMPU) Air Conditioning Machines for Railways:
   • The circular clarifies the classification of Roof Mounted Air Conditioning Units for railways. These units, classified under HS 8415, will attract a 28% GST, aligning with other air conditioning machinery under the same heading.
   • It explicitly rejects the suggestion that these units should fall under HS 8607 (railway parts), reinforcing the 28% GST rate.
3. GST on Car and Motorcycle Seats:
   • Seats for two-wheelers are classified under HS 8714 and attract a 28% GST as parts and accessories of two-wheelers.
   • Seats for four-wheelers will now be classified under HS 9401 (Seats for motor vehicles) and will attract an 18% GST. This change, effective from October 10, 2024, aligns the GST rate for car seats with that of motorcycle seats.

Conclusion

The GST Circular dated 11.10.2024 clarifies the GST rates and classifications for several goods, ensuring consistency and uniformity in their implementation across different sectors. With the introduction of revised rates for products like extruded food items, air conditioning units for railways, and vehicle seats, businesses must stay informed about these updates to remain compliant. These changes, effective from October 10, 2024, offer simplified guidelines that should ease the process of tax computation and filing for affected industries.

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