This Clarification regarding GST rates & classification (goods) is based on the recommendations of the GST Council in its 54th meeting held on 9th September, 2024, at New Delhi.
Clarification regarding GST Rates & Classification of certain Goods: Based on the recommendations made by the GST Council during its 54th meeting, held on September 9, 2024, in New Delhi, and exercising the authority granted under Section 168(1) of the Central Goods and Services Tax Act, 2017, the Board issues the following clarifications to ensure uniform implementation of the discussed matters.
1. Clarification on the GST rate for extruded/expanded savoury food products:
Several representations were received seeking clarification on the correct classification of savoury or salted extruded snack pellets and whether they should be categorized under HS 2106 as Namkeens, due to disputes in the field.
Based on the recommendations of the GST Council, effective from 10.10.2024, extruded or expanded products that are savoury or salted (except un-fried or uncooked snack pellets, regardless of the name, produced through extrusion) falling under HS 19059030 will attract a GST rate of 12%. This rate is listed under entry 32C of Schedule II of notification 1/2017-Central Tax (Rate) dated 28th June 2017, aligning with similar edible preparations such as namkeens, bhujia, mixtures, and chabena (pre-packaged and labelled) ready for consumption, classified under HS 210690 of entry 46 of Schedule II of the same notification.
The GST rate of 5% remains applicable to un-fried or uncooked snack pellets, regardless of the name, produced through extrusion.
Additionally, it is clarified that the reduced GST rate of 12% for extruded or expanded savoury or salted products (other than un-fried or uncooked snack pellets, produced through extrusion) under HS 19059030 will be applied prospectively from the effective date of the relevant notification. For the period before this, a GST rate of 18% will be applicable.
2. Clarification on GST Rate for Roof Mounted Package Unit (RMPU) Air Conditioning Machines for Railways
There have been representations regarding the classification of roof-mounted air conditioning machines for railways, specifically whether they should be classified under HS 8415, which attracts a 28% GST rate, or under HS 8607, which has an 18% GST rate.
In this context, goods classified under heading 8415 (including air conditioning machines) attract a GST rate of 28%, as per S.No. 119 of Schedule IV of notification No. 01/2017-CT (Rate) dated 28.06.2017 (as amended). Meanwhile, goods under heading 8607 (covering parts of railway or tramway locomotives) attract a GST rate of 18%, as per S.No. 398G of Schedule III of the same notification.
According to Section Note 2 of Section XVII of the Customs Tariff Act, 1975, machines and apparatus under heading 8415, which includes air conditioning machines, are excluded from the definition of “parts” covered under heading 8607. A combined reading of Note 2 and Note 3 of the Section notes for Section XVII confirms that goods under headings 8401 to 8479 (including 8415 – Air Conditioning Machines) are not considered “parts” under Chapter 86.
Although there is no ambiguity in the classification, to remove any confusion, it is clarified that Roof Mounted Package Unit (RMPU) Air Conditioning Machines for Railways are to be classified under HS 8415 and will attract a 28% GST rate.
This clarification aims to provide a clear understanding of the GST rates applicable to roof-mounted air conditioners used in railways, ensuring uniformity in classification and tax compliance.
3. Clarification on GST Rate for Car and Motorcycle Seats
Clarifications were requested regarding the classification of seats for four-wheeled cars and two-wheelers, as well as the applicable GST rates for these vehicle seats.
Regarding seats for two-wheelers, it is important to note that the Explanatory Note for HS 9401 specifically excludes items classified under HS 8714, which includes parts and accessories of two-wheelers. The Explanatory Note for HS 8714 lists “saddles (seats)” as included under this heading. Therefore, seats for two-wheelers (HS 8711) are classified under HS 8714, attracting a GST rate of 28%, as per S.No. 174 of Schedule IV of notification No. 1/2017-Central Tax (Rate) dated 28th June 2017 (as amended).
For seats intended for four-wheeled vehicles, HS 9401 covers “Seats, whether or not convertible into beds, and parts thereof,” with tariff item 94012000 specifically addressing seats for motor vehicles. The Explanatory Note for this heading confirms that seats for vehicles fall under HS 9401. Furthermore, the Explanatory Notes for Chapter 94 do not exclude vehicle seats, indicating that car seats are appropriately classified under HS 9401.
Therefore, seat assemblies for four-wheelers are classified under HS 9401, while seats for two-wheelers fall under HS 8714. There is no ambiguity in the GST rates for these goods: car seats classified under HS 9401 attract a GST rate of 18%, as per S.No. 435A of Schedule III of notification No. 1/2017-Central Tax (Rate) dated 28th June 2017 (as amended), while seats for two-wheelers classified under HS 8714 attract a GST rate of 28%.
To ensure parity with motorcycle seats classified under HS 8714, which already attract a 28% GST rate, based on the recommendation of the GST Council, effective from 10.10.2024, car seats classified under HS 9401 will also attract a 28% GST rate. This change is reflected in S.No. 210A of Schedule IV of notification No. 1/2017-Central Tax (Rate) dated 28th June 2017 (as amended). It is clarified that the 28% GST rate for car seats under HS 9401 applies prospectively from the effective date of the notification.
This clarification ensures consistency in the application of GST rates on car and motorcycle seats, providing clear guidance for manufacturers and businesses in the automotive sector.
To Access the official Notification of Circular No 235/29/2024 Click Here
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