Special Composition Scheme has been introduced and made effective, for Brick Kilns manufacturers and traders, from 1st April 2022. Notably, the government has come up with a new GST tax slab of 6% in latest news on GSTR 1 Filing for the said special composition scheme for Brick Kilns.
Latest news on GSTR 1 filing newly tax slab of 6% introduced, the corresponding relevant changes are still under process on the GST portal. Hence, with a view to provide a temporary solution, the GSTN advisory was published on 10th May 2022.
The present article briefs the background of GST tax slab prevalent in India; explains introduction of new 6% GST tax rate and also covers the manner of reporting the newly introduced 6% tax slab in GSTR-1 as prescribed via GSTN advisory.
What are the four GST Tax Slabs?
1st July 2017 is marked as a historic day in India as the Goods and Services Tax was launched by the Prime Minister of India Shri Narendra Modi. With the introduction of GST, various Central and State taxes were subsumed into one single tax namely ‘Goods and Services Tax’.
GST was introduced with four tax slabs. That is all the goods and services, taxable under GST, were taxed at the rate of 5% or 12% or 18% or 28%. Looking at the overall classification, one can say that the essential goods and services are being taxed at the lower GST tax slabs. Whereas, luxury and de-merit goods and services are being taxed at higher GST tax slabs.Before turning into a five-year baby (GST will be turning five year old on 1st July 2022), the Government came up with the fifth tax slab of 6%. The said new 6% covers the special composition scheme under GST for Brick Kilns which is explained hereunder.
What is new 6% GST tax rate in GSTR-1
45th GST Council meeting held on 17th September 2021, with regard to brick kilns, recommended as under -
- With effect from 1st April 2022, brick kilns would be brought under a special composition scheme;
- The threshold limit recommended under the special composition scheme was INR 20 Lakhs;
- It was also recommended that the bricks would attract 6% GST [3% CGST + 3% SGST] without ITC. Whereas, bricks would attract 12% GST with ITC.
In order to adhere to the recommendation of the 45th GST council meeting, the Ministry of Finance, vide notification no. 02/2022- Central Tax (Rate) dated 31st March 2022, introduced special composition scheme rates as tabulated hereunder
Fly ash bricks/ fly ash aggregate with 90% or more fly ash content;
6% IGST or
6901 00 10
Bricks of fossil meals/ similar siliceous earths
6% IGST or
6904 10 00
6% IGST or
6905 10 00
Earthen/ roofing tiles
6% IGST or
Importantly, for availing the benefit of special composition scheme rates, the dealer needs to satisfy the following conditions
Condition 1 :
Input Tax Credit charged on goods or services which are exclusively used in supplying the above goods should not have been availed/ taken; and
Condition 2 :
Input Tax Credit charged on goods or services which are partly used for supplying the above goods should be reversed, in accordance with provisions of section 17(2) of the Central Goods and Services Tax Act, 2017, as if the supply of such goods is an exempt supply.
Accordingly, with effect from 1st April 2022, the person engaged in manufacturing and trading of Brick Kilns will have the following two options
Other important points relating to the special composition scheme for Brick Kilns are highlighted hereunder -
- The threshold limit for availing benefit under the special composition scheme is INR 20 Lakhs;
- The persons liable for registration under GST will not be eligible to opt for the normal composition levy under GST.
Latest News on GSTR 1 Filing : 6% GST Tax Rate
As stated above, since its inception, goods and services under GST were divided into four tax slabs i.e. 5%; 12%; 18% and 28%. It is only with effect from 1st April 2022, a new tax slab of 6% got introduced.
As the rate of 6% is newly introduced, the effect of the same is not given in the GST portal. Accordingly, the person who has opted for the special composition scheme will find it difficult to reflect the 6% tax payable while to file GST return in Form GSTR-1.
In order to solve the confusion, an advisory was issued by GSTN on 10th May 2022. The said advisory explains the manner in which the person opted for a special composition scheme needs to report the 6% GST rate in Form GSTR-1. The same is explained hereunder –
- Due to the new introduction of the 6% GST rate, relevant changes are in process on the GST portal. The 6% GST rate will shortly be made available on the GST portal.
- Accordingly, as a temporary measure, till the GST portal is updated, the entry should be reported in the following manner –
STEP 1 - Report the entry in 5% heading;
STEP 2 - Enter the taxable value against the 5% heading;
STEP 3 - In ‘Amount of Tax’ column, change the system computed tax amount from 5% to 6% [6% IGST or 3% CGST + 3% SGST].
- It is important to note that above steps are prevalent only till 6% tax entry is not implemented on the GST portal.
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