The Tamil Nadu Advance Ruling Authority has clarified that polypropylene mats, which are plaited using polypropylene straw, will attract a goods and services tax of 5% (2.5% Central Goods and Services Tax and 2.5% State Goods and Services Tax) from January 1, 2019. Initially, it was 18% (9% under Central GST and 9 % under State GST).
An advance ruling helps a tax payer in planning his activities that are liable for payment of GST well in advance. It also brings certainty in determining the tax liability, as the ruling given by the Authority for Advance Ruling is binding on the applicant as well as the government authorities.
Kanyakumari-based Sameer Mat Industries is engaged in the trading of polypropylene mats. The firm buys them from various manufacturers.
The company’s proprietor Abubacker Kaleel Rahman had moved the Authority seeking clarity on the product classification of polypropylene mats and the GST rate applicable to them.
Under GST, most goods and services are classified using the Harmonised Commodity Description and Coding System (HSN). The HSN structure contains 21 sections, with 99 chapters, about 1,244 headings, and 5,224 subheadings. The GST rates for products are determined based on this classification.
In his application, Mr. Rahman said HSN code for the mats given by the manufacturer is 4601 and they are invoicing the outward supply mentioning this code. However, tax officials say that HSN Code 3902 is applicable for polypropylene mats, it added.
The Tamil Nadu Advance Ruling Authority ruled that polypropylene mats that are plaited using polypropylene straw is classifiable under code 4601. It stated that the applicable tax rate from July 1, 2017 to 24.1.2018 is 9% Central Goods and Services Tax and 9% State Goods and Services Tax. A reduced rate of 5% (2.5% of CGST and 2.5% SGST) will be applicable from 25.01.2018 to 31.12.2018 and from January 1, 2019 onwards as per the amendments, the Authority said.
