247/04/2025-GST — Clarification regarding GST rates & classification (goods) based on the recommendations of the GST Council in its 55th meeting held on 21st December, 2024, at Jaisalmer.
Summary
This circular, issued by the CBIC on February 14, 2025, clarifies how Goods and Services Tax (GST) applies to various goods, based on decisions made during the 55th GST Council meeting held in Jaisalmer on December 21, 2024. Essentially, it provides specific guidance on which GST rate should be applied to different types of goods and how they should be classified under the GST system. Think of it as a detailed instruction manual for businesses dealing with these goods.
Who does this affect? It affects all businesses registered under GST who manufacture, trade, or deal with the specific goods mentioned in the circular. This includes manufacturers, wholesalers, retailers, importers, and exporters.
What do businesses need to do? These businesses need to carefully review the circular to understand how the GST rate and classification have been clarified for their goods. They must then ensure they are correctly applying the GST rates and reporting their transactions according to the new classifications outlined in the circular. Failing to comply with the correct GST rates and classifications can lead to penalties and legal issues. This circular takes effect immediately from its date of issue (February 14, 2025), and there aren't any explicit deadlines within the document, so you need to action and implement these changes within your systems ASAP. You must review the circular in detail to identify if it affects your business and what adjustments need to be made.
Key Changes
| Change | Impact |
|---|---|
| GST rate on Millets flour supplied in other than pre-packaged and labelled form clarified to be 0%. | Reduces the tax burden on consumers purchasing loose millets flour, promoting consumption of healthier food options. Simplifies tax compliance for suppliers of loose millets flour. |
| GST rate on imitation zari threads or yarn made out of man-made textile materials classified under heading 5605 remains at 5%. | Provides certainty in the applicable GST rate for imitation zari, benefiting the textile industry and preventing potential disputes regarding classification and tax liability. |
| Clarification regarding applicability of GST on supply of raw materials like flax fibre for manufacture of Agarbatti. | Removes ambiguity concerning the GST rate on flax fiber used in Agarbatti production, ensuring uniform taxation and reducing compliance costs for Agarbatti manufacturers. |
| GST rate on specified goods falling under heading 9021 such as artificial limbs, etc., remains at 5%. | Maintains a lower GST rate on essential assistive devices for persons with disabilities, making them more affordable and accessible. |
| Clarification on GST rate for Laterite blocks. Taxable as goods classifiable under heading 2516 with applicable rate | Provides clarity on the GST treatment of laterite blocks, resolving classification issues and ensuring a consistent tax rate across different states, benefitting the construction industry. |