CGST Rate Updates: Key Changes in Tax Schedule for Goods

Simplified Explanation of Notification No. 17/2023-Central Tax (Rate) – Amendments to CGST Rate Schedule

Heading: Updates to CGST Rate Schedule for Goods

Purpose of the Notification:

This notification revises the Central Goods and Services Tax (CGST) rates for various goods by updating Notification No. 1/2017-Central Tax (Rate). These changes are aimed at adjusting tax rates on specific items and introducing new items under different tax brackets.

Key Points of the Notification:

1. Amendments in Schedule I – 2.5% Rate

• Addition of Molasses:

• • New Entry:
    • S. No. 92A: Molasses.
    • CGST Rate: 2.5%.
    • Example: If a business sells molasses, which was previously taxed at a different rate, it will now be taxed at 2.5% CGST.

• Food Preparation from Millet Flour:

• • New Entry:
    • S. No. 96A: Food preparation of millet flour, in powder form, containing at least 70% millets by weight, pre-packaged and labelled.
    • CGST Rate: 2.5%.
    • Example: A packaged and labelled millet flour-based food preparation with 70% or more millet content will be taxed at 2.5% CGST.

2. Amendments in Schedule III – 9% Rate

• Update to Existing Entry:

• • Revised Entry:
    • S. No. 13: Food preparations under heading 1905, including the previously listed items plus the new food preparation of millet flour, pre-packaged and labelled.
    • CGST Rate: 9%.
    • Example: The same millet flour-based food preparation, when not pre-packaged and labelled, will be taxed at 9% CGST if categorized under heading 1905.

• Addition of Spirits for Industrial Use:

• • New Entry:
    • S. No. 25A: Spirits for industrial use under heading 2207 10 12.
    • CGST Rate: 9%.
    • Example: Industrial-grade spirits, now specified under a particular sub-heading, will be taxed at 9% CGST.

3. Amendment in Schedule IV – 14% Rate

• Omission of Existing Entry:
  • Removed Entry:
    • S. No. 1: (No specific item listed in the notification.)
    • Impact: The previously listed item under this number, taxed at 14%, is now removed from this schedule.
    • Example: Any goods or services previously taxed at 14% under this entry are now no longer subject to this rate.

Effective Date:

• Date of Implementation: All these changes are effective from October 20, 2023.

Summary:

This notification updates the CGST rates by:

• Adding molasses and specific food preparations to the 2.5% tax bracket.
• Adjusting the tax rate and description for food preparations under the 9% bracket.
• Introducing a new category of spirits for industrial use under the 9% bracket.
• Removing an entry from the 14% tax bracket.

These changes impact the GST rates applicable to the specified goods and will be effective from October 20, 2023.