At the 52nd Goods and Services Tax (GST) Council meeting on Saturday, the council announced to cede the right to levy tax on extra neutral alcohol (ENA), supplied for the manufacture of alcoholic liquors, to the states.

Law Committee will examine suitable amendment in law to exclude ENA for use in manufacture of alcoholic liquors for human consumption from ambit of GST.

A separate tariff HS code has been created at 8 digit level in the Customs Tariff Act to cover rectified spirit for industrial use. The GST rate notification will be amended to create an entry for ENA for industrial use attracting 18% GST.

Another key recommendation by the council was the nil rate for food preparation of millet flour in powder form and containing at least 70% millets by weight when sold in loose form, and 5% if sold in pre-packaged and labelled form.

Recommendations related to changes in GST rates of goods

The Council has notified that the GST rates on “Food preparation of millet flour in powder form, containing at least 70% millets by weight”, falling under HS 1901, have been prescribed at 0% if sold in other than pre-packaged and labelled form 5% if sold in pre-packaged and labelled form.

To clarify that imitation zari thread or yarn made out of metallised polyester film/plastic film, falling under HS 5605, are covered by the entry for imitation zari thread or yarn attracting 5% GST rate.

However, no refund will be allowed on polyester film (metallised)/plastic film on account of inversion.

It has also been notified at the meeting that the foreign-going vessels are liable to pay 5% IGST on the value of the vessel if it converts to coastal run. Conditional IGST exemption has been recommended to foreign flag foreign going vessel when it converts to coastal run subject to its reconversion to foreign going vessel in six months.

At the meeting, the committee also decided to reduce GST on molasses from 28% to 5%. 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.

Changes in GST rates of services

Council further recommended to retain the existing exemption entries with no change in context of the exemption to pure and composite services provided to Central/State/UT governments and local authorities in relation to any function entrusted to Panchayat/ Municipality.

Further, it has also recommended to exempt services of water supply, public health, sanitation conservancy, solid waste management and slum improvement and upgradation supplied to Governmental Authorities.