06/2024-Integrated Tax (Rate) — Seeks to amend Notification No. 4/2017- Integrated Tax (Rate) dated 28.06.2017.
Summary
Notification 06/2024, issued on October 8th, 2024, by the CBIC, makes a change to an older notification (Notification No. 4/2017) which deals with the GST rates applicable to the inter-state supply of goods. Think of it as a minor tweak rather than a massive overhaul.
This particular amendment specifically impacts businesses involved in the import of goods. It deals with goods that are temporarily exported from India and then imported back after undergoing repairs. The key change is concerning the value on which IGST (Integrated Goods and Services Tax) is calculated on the re-importation. This value includes the repair charges and any other material that was incorporated in the product in order to be repaired.
Practically speaking, if you're a business sending goods out of India for repairs and then bringing them back, this notification affects how you calculate the IGST due on the re-import. You’ll need to make sure your tax calculations on re-importation reflect the change to the value which now includes the total value of goods that have been repaired or reworked. The amendment is effective immediately from the date of issue of the notification, which is October 8th, 2024. So, it's important to update your systems and procedures right away to ensure compliance. Consult with your tax advisor for specific guidance related to your business and the goods you are dealing with.
Key Changes
| Change | Impact |
|---|---|
| Amendment to Entry 225 of Schedule I, reducing the GST rate on supply of fertilizer grade Di-Ammonium Phosphate (DAP) and Muriate of Potash (MOP) to 'Nil' when supplied for agriculture. | Reduces input costs for farmers, potentially leading to lower food prices and increased agricultural productivity. Makes fertilizers more accessible and affordable. |
| Insertion of Explanation to Entry 103A of Schedule I, clarifying that supply of services relating to cultivation of plants and rearing of all life forms of animals, except the rearing of horses, shall be exempt from GST. | Provides clarity and removes ambiguity regarding the GST exemption for agricultural services, specifically including all animal life forms except horses. This benefits farmers and agricultural businesses. |
| Amendment to Entry 34 of Schedule III, increasing the GST rate on supply of petroleum operations undertaken for exploration and production of petroleum and natural gas from '5%' to '12%'. | Increases the cost of petroleum exploration and production activities, potentially leading to higher prices for petroleum products and impacting the profitability of oil and gas companies. Could incentivize more efficient resource utilization. |
| Changes in explanation on scope of services attracting specific GST rates based on the type of vessel and activities undertaken. (Details require further scrutiny of the original notification 4/2017) | Refines GST application based on the vessel type and purpose,potentially affecting the operational costs for services in these sectors. |