• Notification Date: 09-10-2023
• Notification No: N/A

Tax Rates lowered for Millet Products, Molasses and other Key Decisions taken in GST 52nd Meeting

The Goods and Services Tax Council, after its 52nd meeting on Saturday, decided to reduce the GST on pre-packaged and labelled millet flour with 70 per cent millet content from 18 per cent to 5 per cent. Millet floor has been exempted from GST if sold in loose form. 
 
Millet flour, known for its nutritional value and health benefits, has gained popularity among health-conscious consumers in India. The government's objective in lowering the GST rate on millet flour food preparations is to enhance public access to these nutritious food items. 

 
With 2023 being the international year of millets, this lowering of GST by India should help in augmenting production and consumption of millets, said Abhishek Jain, Partner and National Head - Indirect Tax, KPMG. 

GST reduction on molasses 
Moreover, the GST council approved a reduction in the GST rate on molasses to 5 per cent from 28 per cent. 
 
“This step will increase liquidity with mills and enable faster clearance of cane dues to sugarcane farmers. This will also lead to reduction in cost for manufacture of cattle feed as molasses is also an ingredient in its manufacture,” the council said in a press release. 

The GST rate notification will be amended to create an entry for ENA for industrial use attracting 18% GST. 
 
GST exemption on distilled alcohol 
The council led by Finance Minister Nirmala Sitharaman also decided to exempt distilled alcohol for human consumption from the indirect tax. 

The council decided that extra neutral alcohol (ENA) for industrial use will continue to attract Goods and Services Tax (GST). 
 
The Finance Minister during the press conference explained that the Allahabad High Court had ruled that the states had no power to impose tax on ENA and this was solely in the domain of the GST Council and the Centre. 
 
However, keeping the issue of healthy Centre-state relations in mind it was decided at GST Council meeting that this right would be “ceded to the states,” the Finance Minister explained. 
 
"If the states want to tax it, they are welcome to do it. If the states want to leave it, they are welcome to take a call on it," she said. 
 
"Ceding the right to tax ENA to the states despite the Allahabad HC decision speaks very highly of the cooperative federalism that GST has enabled," said Mani, Partner, Deloitte India. 

With the central government ceding powers to the states for taxability of ENA for use in alcohol coupled with rationalisation for rate on molasses brings a big cheer for the alcohol industry; specifically, as it rationalizes tax costs across the supply chain, said Jain. 
 
Services by Railways under forward charge mechanism 
Supply of all goods and services by Indian Railways shall be taxed under Forward Charge Mechanism to enable them to avail ITC. This will reduce the cost for Indian Railways, said the council. 
 
Amendments to GST Appellate 
The age limit for the President of GSTAT has been extended from 67 to 70 years, while members can serve until, they reach the age of 67 instead of 65 as before. The minimum age for both the President and members is 50 years. 
 
“It is essential that the GSTAT’s now start functioning at the earliest and the decision to amend the criteria for appointment of members of GSTAT will enable the same," Mani said. 
 
Water supply, public health and other services exempted 
The GST Council has exempted services of water supply, public health, sanitation conservancy, solid waste management and slum improvement and upgradation supplied to Governmental Authorities. 
 
GST rate on Zari brought down to 5% 
GST on the imitation zari thread or yarn made of metallised polyester film /plastic film was reduced to 5 per cent. 

GST on job work services processing barley into malt reduced to 5% 
The council lowered the GST on job work services for processing barley into malt from 18 per cent to 5 per cent. 
 
Corporate guarantee provided by a company director exempted from GST 
However, if a holding company provides a corporate guarantee, GST at a rate of 18 per cent will be applied to the entire guaranteed amount by the parent company. 

"Taxability of corporate and personal guarantees has been a vexed issue since inception of GST. Clarity on taxation and valuation issues comes as a welcome move and would help contain unwarranted litigations on the issue. However, taxability for the past period and in scenarios where full credit is not available, the issue specifically subjectivity in valuation may still be challenged by the industry,” Jain said. 

Amnesty scheme on appeal 
The Council has recommended providing an amnesty scheme on appeal against the demand order passed on or before the 31st March, 2023; whose appeal against the order was rejected solely on the grounds that the said appeal was not filed within the time period, filing of appeal by the taxpayers will be allowed against such orders up to 31st January 2024, subject to some conditions. 
 
"Akin to increased limitation period for revenue authorities to adjudicate, amnesty /auto condonation for industry to file appeals against orders passed under GST, comes as a big relief for businesses. Various players in the industry were worried on ex parte orders having been passed as these were not tracked on account of direct upload on GST websites. Such amnesty would aid a fair chance to businesses to litigate matters which businesses believes could be ruled in their favour,” said Jain.