GST Update: Notification No. 05/2024 – Integrated Tax (Rate)
On 8th October 2024, the Ministry of Finance released Notification No. 05/2024 under the Integrated Goods and Services Tax (IGST) Act, bringing notable changes to tax rate schedules across industries, including pharmaceuticals, food processing, and automotive manufacturing. These updates, effective from 10th October 2024, are critical for businesses to maintain compliance with the latest tax policies.
Key Changes in IGST Rates:
| Tax Rate | Changes Introduced | Examples |
|---|---|---|
| 5% | Addition of life-saving drugs used in cancer treatment | Trastuzumab Deruxtecan, Osimertinib, Durvalumab |
| 12% | Inclusion of extruded or expanded savoury or salted products (excluding un-fried or un-cooked snack pellets) | Puffed snacks, salted chips |
| 18% | Revised classification of seats and snack pellets | Office and auditorium seats, snack pellets |
| 28% | Addition of motor vehicle seats under this category | Car and bus seats |
Detailed Overview of Notification No. 05/2024:
Issued Date: 8th October 2024
Effective From: 10th October 2024
Preceding Notification: No. 02/2024 – Integrated Tax (Rate)
Impact on Industries:
- Pharmaceuticals: Life-saving cancer drugs, newly categorized under the 5% tax bracket, will become more affordable, positively affecting cancer patients and healthcare providers.
- Snack Manufacturing: The 12% tax rate on extruded or expanded savoury snacks will impact snack manufacturers, pushing for possible changes in pricing and supply chains.
- Furniture and Automotive: The reclassification of office, auditorium, and motor vehicle seats to higher tax brackets (18%-28%) may influence costs in these sectors, affecting manufacturers and end-users alike.
Frequently Asked Questions (FAQs):
Q1: Which life-saving drugs are now taxed at 5% under the new notification?
A1: Trastuzumab Deruxtecan, Osimertinib, and Durvalumab, all used in cancer treatment, are now taxed at 5%.
Q2: How does this impact the food industry, especially snack manufacturers?
A2: Extruded and expanded snacks like puffed chips are now subject to a 12% tax, excluding un-fried or uncooked snack pellets.
Q3: What changes have been made for seating products?
A3: Seats (excluding motor vehicle and aircraft seats) now fall under the 18% tax rate, while seats used in motor vehicles are taxed at 28%.
How to Stay Compliant
For businesses in the affected sectors, it’s essential to review your product classifications and update your billing and pricing systems in line with the new GST rates. Failure to comply can result in penalties or delayed input tax credits, directly affecting cash flows.
Stay Informed
If you need assistance in understanding how these updates apply to your specific industry, feel free to reach out to our expert team. At efiletax, we are here to help you stay compliant and thrive in a changing tax landscape.
Resources:
The new GST notification brings both challenges and opportunities for various sectors. Staying updated with the latest tax changes ensures businesses can make necessary adjustments to maintain compliance and avoid unnecessary costs. For detailed insights, consult your tax advisor or let us guide you through these changes.