In an effort to simplify GST compliance for manufacturers, the Central Board of Indirect Taxes and Customs (CBIC) issued Circular No. 208/2/2024-GST on 26th June 2024. This circular provides crucial clarifications on the special procedures for manufacturers of specified commodities, making it easier for businesses to understand and implement GST requirements. Let’s delve into the key points of this circular in straightforward terms.
Background
The special procedure for certain manufacturers was initially introduced in Notification No. 30/2023-Central Tax dated 31st July 2023. This procedure was updated and revised in Notification No. 04/2024-Central Tax dated 5th January 2024. Various trade associations raised concerns and sought clarification on several issues related to this procedure. The CBIC has now addressed these issues to ensure uniformity and clarity.
Key Clarifications in the Circular
- Non-availability of Make, Model, and Machine Number
- Issue: Many manufacturers use old or second-hand machines without available details of make, model, or machine numbers.
- Clarification: In Table 6 of FORM GST SRM-I, make and model numbers are optional. If unavailable, manufacturers can declare the year of purchase as the make number. The machine number is mandatory, but if it’s unavailable, manufacturers can assign any numeric number and provide these details in the form.
- Electricity Consumption Ratings
- Issue: Specifications for electricity consumption may not be available for some machines.
- Clarification: Manufacturers should declare electricity consumption ratings in Table 6 of FORM GST SRM-I based on available details. If not available, a Chartered Engineer must calculate and certify the consumption, which should then be uploaded along with the form.
- Value Reporting in Table 9 of FORM GST SRM-II
- Issue: How to report values for goods with no MRP (e.g., goods for export).
- Clarification: For goods without an MRP, the sale price should be entered in Column 8 of Table 9 of FORM GST SRM-II.
- Qualification of Chartered Engineers
- Issue: The required qualifications for Chartered Engineers providing certificates under this procedure.
- Clarification: Chartered Engineers must have a certificate of practice from the Institute of Engineers India (IEI).
- Applicability to SEZ Units
- Issue: Whether the special procedure applies to manufacturing units in Special Economic Zones (SEZ).
- Clarification: The special procedure does not apply to manufacturing units located in SEZs.
- Manual Packing Operations
- Issue: Applicability of the procedure to manual processes using electric heat sealers and seamers.
- Clarification: The special procedure does not apply to manual seamer/sealer operations or manual packing operations such as post-harvest packing of tobacco leaves.
- Issue: Applicability of the procedure to manual processes using electric heat sealers and seamers.
- Multiple Machines in Manufacturing
- Issue: Which machine’s serial number to declare when various machines are used for different stages of packaging.
- Clarification: Report the machine used for the final packing of the packages in Table 6 of FORM GST SRM-I.
- Issue: Which machine’s serial number to declare when various machines are used for different stages of packaging.
- Job Work or Contract Manufacturing
- Issue: Who is responsible for compliance in job work or contract manufacturing scenarios?
- Clarification: The special procedure applies to all involved in the manufacturing process, including job workers or contract manufacturers. If the job worker or contract manufacturer is unregistered, the principal manufacturer is responsible for compliance.
Conclusion
The CBIC’s clarifications in Circular No. 208/2/2024-GST are designed to make GST compliance more manageable for manufacturers, particularly those using older or manual machinery. By addressing these common issues, the circular not only ensures accurate reporting and management of GST obligations but also instills confidence in your business’s compliance.
If you have any difficulties in implementing these procedures or need further assistance, feel free to reach out to our team at Efiletax. We are here to help you navigate the complexities of GST compliance and ensure smooth operations for your business.