GST Council may discuss 22% cess for all multi-utility vehicles
The fitment committee has recommended the inclusion of all utility vehicles, by whatever name called, of length greater than 4,000 mm, engine capacity greater than 1,500 cc and ground clearance of more than 170 mm in the 22% cess category along with SUVs, says a source.
Based on recommendation of the GST Council in its 21st meeting held in September, 2017 a higher rate of compensation cess of 22% was notified on Sports Utility Vehicles (SUVs).
The Goods and Services Tax (GST) Council, at its meeting on July 11, is likely to recommend a cess of 22 percent for all multi-utility vehicles (MUVs), with length more than 4 metres, engine capacity of more than 1,500cc and ground clearance of 170 mm, a source said.
“The fitment committee has recommended the inclusion of all utility vehicles, by whatever name called, provided they meet the parameters of length greater than 4,000 mm, engine capacity greater than 1,500 cc and ground clearance of more than 170 mm in the 22 percent cess bracket along with SUVs,” the person told Moneycontrol.
All SUVs and multi utilility vehicles are in the 28 per cent GST slab rate.
Based on the recommendation of the GST Council, at its 21st meeting held in September, 2017, a compensation cess of 22 percent was notified on Sports Utility Vehicles (SUVs).
It was seen that there were other utility vehicles that satisfy the conditions of length greater than 4,000 mm but are popularly called as Multi Utility Vehicles (MUVs) or multipurpose Vehicles or Crossover Utility Vehicles (XUVs).
Exemptions for RBL Bank, certain medicines to be discussed
The Council is also likely to discuss the inclusion of RBL Bank in the list of entities which enjoy IGST (Integrated Goods and Services Tax) exemption on the import of gold, silver or platinum.
The Council is also likely to exempt medicines and food for special medical purposes, like for the treatment of rare diseases, from the current 5 percent and 12 percent rates.
“The fitment committee has recommended to exempt IGST on medicines and Food for Special Medical Purposes (FSMP), used in the treatment of rare diseases enlisted under the National Policy for Rare Diseases (NPRD), 2021, which are imported for personal use, subject to existing conditions and when imported by Centres of Excellence,” he said.
Other goods
The Council is also likely to reduce rates on some other goods, like kachri papad (unfried snack pellets), manufactured through the extrusion process from 18 percent to 5 percent; fish soluble paste (by-product while making fish meal and fish oil) from 18 percent to 5 percent; and Dinutuximab (Quarziba), which is a cancer medicine imported by individuals for personal use, from 12 percent to nil.
Similarly, the Council is likely to reduce the GST rate on slag generated from basic oxygen furnaces or Linz-Donawitz (LD) from 18 percent to 5 percent at par with Blast Furnace Slag (BFS) Slag and Fly Ash.
LD Slag is one of the recyclable wastes generated in integrated steel plants. It is produced during the separation of molten steel slag from impurities in steel-making furnaces.
The Council is likely to clarify that raw cotton supplied by agriculturists to cooperatives is not taxable under reverse charge mechanism.
The fitment committee wants it to be clarified that the supply of raw cotton, including kala cotton, from agriculturists to cooperatives, will not attract 5 percent GST under reverse charge as there is no sale. The Council will discuss it in the meeting.
It is also likely to issue a clarification on the compensation cess rate on pan masala, chewing tobacco, etc.
Changes after new foreign trade policy
The Council will also discuss consequential changes, post the New Foreign Trade Policy (FTP), which came into force from April 1, 2023.
“Several schemes, including Advance Authorisation (AA), Export Promotion of Capital Goods (EPCG), Duty Free Import Authorisation (DFIA), Duty Drawback (DBK) Scheme, Rebate on State and Central Taxes and Levies (RoSCTL), and Remission of Duties and Taxes on Exported Products (RoDTEP) are continued in FTP 2023-28. Consequential changes will need to be carried out in notifications which would be technical in nature such as cross-referencing to new trade policy,” he said.
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