According to a government proclamation dated March 31, proposed changes to the 45th GST Council Meeting on building bricks, clay tiles or roofs, fly ash bricks, and petrol bricks took effect from April 1, 2022.
Implications of the new system on GST
- No composition scheme Benefits – From 1 April 2022 suppliers are not entitled to the previous composition scheme. So they have to opt out by filling GST form CMP-04 on GST portal.
- Issuance of tax Invoices – A taxpayer who switches from the last filing of the scheme to the new regime is now required to issue a tax receipt instead of an invoice for the supply of specified products.
- Filing of Monthly/Quarterly Returns – Taxpayer would now have to file monthly returns in Form GSTR-1 and GSTR-3B. The contractor may opt for the Quarterly Returns and Monthly Payments (QRMP) scheme if eligible.
Updates on GST on Brick Manufacturers
As per the government notification, brick kilns can choose a composition scheme to pay the 6% GST without the need for an Input Tax Credit (ITC), from the 5% GST. Entities that do not wish to participate in the composition system under the GST will be subject to 12% (GST) goods and services tax on the ITC (Input Tax Credit) option.
According to the notice, manufacturers of building bricks, clay or roof tiles, fly ash and blocks, and fossil bricks may choose the composition system.
The CBIC has notified the following GST rates for bricks of various kinds, including fly ash bricks-
| Item description | HSN code | GST rate |
| Sand lime bricks , also for stone inlay work | 68 | 12% |
| Fly ash bricks or aggregates or blocks | 6815 | 12% |
| Fossil meals bricks or bricks of similar siliceous earths | 6901 00 10 | 12% |
| Building bricks | 6904 10 00 | 12% |
| Refractory bricks | 6902 | 18% |
| Bricks of pressed or moulded glass | 7016 | 18% |
Changes in Threshold to Register and Pay GST
All the brick manufacturers with an annual turnover exceeding Rs.20 lakh (or the threshold notified for the north-eastern state) need to be registered under the GST regime and pay GST at new rates notified by the government. Earlier, this threshold was Rs.40 lakh.
Rates on GST on Bricks
Under the new tax rating framework, the Government has announced a high GST Rate of 12% on specified products, where the profit for ITC will be available to the supplier. Alternatively, the products mentioned may be offered for a minimum GST price of 6% provided that ITC profits will not be available in respect of goods or services used (exclusive or regular) in supplying those goods.
Providers of specified products will no longer be able to benefit from a design scheme under Section 10 of the CGST Act. The registration limit for such providers has also been reduced from Rs. 40 lakhs to Rs. 20 lakh. In other words, the supplier of the specified products will be required to register as a general taxpayer under GST law if his combined profit for the financial year exceeds Rs. 20 lakh.
| Particulars | Rate | Implications |
| Higher tax rate 12% | 12% |
|
| Tax payment at a lower rate | 6% | ITC tax will not be applied in respect of the following:
|
What has changed after the Notification for the brick manufacturers?
Particulars | Earlier | As of now |
Turnover threshold for GST registration | The point for GST registration earlier was only if the annual turnover exceeded Rs.40 lakhs | As per Notification No. 03/2022-Central Tax, the threshold for GST registration has been reduced to Rs.20 lakhs |
Composition scheme eligibility for registered person | Earlier a registered person could opt for the composition scheme if the aggregate annual turnover in the previous year didn’t exceed Rs.1.5 crores | As per Notification No. 04/2022-Central Tax, a registered person cannot opt for composition scheme. However, as per Notification No. 02/2022-Central Tax, such a registered person can avail the special composition scheme and pay GST at 6% without availing of the ITC. |
GST Rates for individuals not opting for the composition scheme | Earlier, a registered person involved in manufacturing & trading of bricks was charged GST at 5% and could claim a credit on inputs. | As per Notification No. 02/2022-Integrated Tax (Rate), the GST rate has been increased to 12% with ITC. |
Impact on suppliers not registered under GST due to Lower Overall Turnover
Suppliers supplying specified products are now required to register under the GST regime if their annual total turnover exceeds Rs 20 crore. The limit for GST registration has now been reduced to Rs.20 lakhs. If such supplier applies for GST registration within 30 days of becoming liable for GST registration, he will be eligible for input tax credit on supplies available from 1 April 2022.
Benefits for taxpayers who choose to pay 6% Tax
The new scheme is not like the composition scheme under Section 10 of the CGST Act. The Government of India has not announced any other benefits apart from the lower GST rate. The taxpayer would have to comply with all the general provisions of the GST Act such as issuance of documents under GST,
- Regular submission of returns,
- Payment of GST as per rate notification etc.
FAQs
Does a supplier who opts to supply such goods at 12% need to reverse the ITC on the stock purchased before 1st April 2022?
The supplier would not be required to reverse any ITC.
Persons registered under the composition scheme; how can they opt for the new tax structure?
Firstly, a registered person must withdraw from the existing composition scheme on the GSTN portal by applying the Form GST CMP-04. After the withdrawal from the current scheme, such a registered person would automatically be considered under the normal scheme.
What are the GST implications of the new scheme?
The implications of the new scheme for the registered persons would be as under:
- No benefits of the composition scheme -From 1st April 2022, the suppliers aren’t eligible for the previous composition scheme. Hence, they must opt out by filing Form GST CMP-04 on the GST portal.
- Issuance of tax invoices – A taxpayer transitioning from the last scheme composition to the new scheme is now required to issue a tax invoice instead of the supply bill for supplying specified products.
- Filing monthly/quarterly returns – A taxpayer would now be required to file the monthly return in Form GSTR-1 and GSTR-3B. The supplier can opt for the Quarterly Return and Monthly Payment (QRMP) scheme if eligible.
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