The CBEC vide Notification No. 41/2017-Central Tax (Rate) dated 14th November 2017 effective from 15th November 2017 reduced GST rate on goods from 28% to 18% on goods falling in 178 headings at 4-digit level (including 4 tariff heading that are partially pruned). After these changes, only 50 items will attract GST rate of 28%. For details of updated GST rate chart may be referred.
Q- How do we determine the rate of tax in case, if there is change in the tax rates?
Ans. Three important events need to be considered –Date of raising invoice, receipt of payment and completion of supply. If any of the two events occur before the change in rate of tax, then the old rate will apply else the new rate will apply.
Illustration –Rate of GST on Supply made on or after November 15, 2017 reduced from say 28% to 18% then the tax to be applied on supplies will be as under :
Before –Event occurred before November 15, 2017
After –Event occurred on or after November 15, 2017
It may be noted that date of receipt of payment shall be the date of credit in the bank account if such credit in the bank account is after four working days from the date of change in the rate of tax.
Comment: Changes in the GST rates have been made with a view to rationalize and minimized classification disputes. Please note that date of payment will be as per books of accounts if the payment is realized in the bank account ‘within’ four days from the accounting date of the receipt.
The GST Council had also recommended issuance of certain clarifications to address the grievance of trade on issues relating to GST rates and taxability of certain goods and services.