IGST Rate Changes Recommended by the GST Council on 10 November 2017
At its meeting on 10 November 2017, the GST Council recommended changes to the Integrated Goods and Services Tax (IGST) treatment of certain interstate supplies and imports. The five original proposals are reproduced below, together with their historical conditions and the legal framework for determining whether relief applies to a transaction.
Five IGST rate and exemption recommendations
The column headed "Present IGST rate" reflects the position described in the original November 2017 announcement. The "Recommended IGST rate" column records the Council's proposal at that time. "Nil on import" is subject to the prescribed eligibility and procedural conditions.
| S. No. | HSN / Chapter | Goods and historical conditions | IGST position stated in 2017 | Rate recommended in 2017 |
|---|---|---|---|---|
| 1 | 0402 | Skimmed milk powder, or concentrated milk [To extend the benefit of notification No. 30/2017- Integrated Tax (Rate) dated 22nd September, 2017 applicable in relation to milk distributed through dairy co-operatives to milk distributed through companies registered under the companies Act.] | Exempt from IGST, subject to certain conditions, under notification No. 30/2017- Integrated Tax (Rate) dated 22nd September, 2017 | Nil [On inter-state supply] |
| 2 | 30 | Imported Lifesaving Medicines for personal use supplied free of cost by overseas supplier, subject to conditions that: i. Drugs and medicines are supplied free of cost for free, for personal use, ii. Certification by the DGHS of Centre or State [or an equivalent officer of the State] that these medicines are lifesaving; and iii. Other specified conditions to ensure that the proposed exemption reaches to intended patients] | 12% / 5% | Nil on Import |
| 3 | Any Chapter | All goods, vessels, ships, rigs [other than motor vehicles] etc. imported under lease, subject to condition that IGST is paid on such lease amount. At present, exemption is available for i. Imported aircrafts and aircraft engines under lease; ii. Imported goods for temporary period under lease; iii. Imported Oils rigs and associated goods under lease | Applicable IGST rate | Nil on Import |
| 4 | All Goods | ATA Carnet System Expanding the scope of exemption from IGST, so as to extend the exemption to: i. professional equipment by accredited press persons who visit India for covering national / international events ii. equipment for broadcasting of events (sound and television) iii. goods imported for sports purposes and iv. testing, measurement and calibration equipment. subject to existing condition of re-export of these goods within specified period and other condition. | Temporary import is exempt | Nil on Import |
| 5 | Any Chapter | Specified goods, including rifles, pistols, bows, imported by a sports person of outstanding eminence, subject to specified condition | 12%,18%, 28% | Nil on Imports |
Applicable legal provisions explained
Article 279A of the Constitution of India
Article 279A establishes the GST Council and provides for its recommendations on matters including GST rates, exemptions and special provisions. A recommendation is a policy step; the applicable legal instrument must be checked separately.
Section 5 of the IGST Act, 2017
Section 5(1) is the charging provision for integrated tax on interstate supplies, subject to the Act and notified rates. In the case of imported goods, integrated tax is levied and collected in accordance with the customs-law mechanism. Section 5(3) and 5(4) concern specified reverse-charge arrangements, where applicable.
Section 6 of the IGST Act, 2017
Section 6 empowers the Central Government, on the recommendations of the GST Council and subject to the statutory conditions, to exempt specified supplies wholly or partly from integrated tax by notification. The precise notification text, scope, exclusions and conditions control eligibility.
Customs Tariff Act, 1975: Section 3(7) and Section 3(12)
Section 3(7) governs integrated tax on imported articles under the Customs Tariff Act, while Section 3(12) enables exemption notifications for specified imported articles subject to statutory conditions. Customs exemptions and IGST exemptions on domestic interstate supplies should not be treated as interchangeable.
IGST Act Sections 7 and 8: interstate and intrastate supplies
Section 7 defines interstate supply, including specified import transactions, and Section 8 addresses intrastate supply. These provisions help determine whether IGST or CGST and SGST treatment is relevant to a transaction.
Understanding the five historical proposals
1. Skimmed milk powder and concentrated milk - HSN 0402
The proposal concerned extending an existing conditional IGST exemption connected with milk distribution through dairy co-operatives to eligible companies registered under the Companies Act. The original reference was Notification No. 30/2017-Integrated Tax (Rate), dated 22 September 2017. The form of supply, eligible entity and conditions must be examined before claiming any benefit.
2. Life-saving medicines supplied free for personal use - Chapter 30
The Council proposed relief on specified imported life-saving medicines supplied without charge for personal use, subject to certification by the Director General of Health Services or an eligible state authority and other safeguards. A free-of-cost shipment does not automatically qualify for exemption without meeting the relevant notification requirements.
3. Goods imported under lease - any chapter
The proposal addressed leased goods such as vessels, ships and oil rigs, other than motor vehicles, where IGST was payable on the lease amount and other conditions were satisfied. The distinction between taxation of imported goods and taxation of the lease service is important.
4. Temporary imports under the ATA Carnet system
The proposed extension covered specified professional press equipment, broadcasting equipment, sports goods and testing or calibration equipment, subject to temporary-import and re-export requirements. An ATA Carnet is a customs facilitation document; its use does not eliminate the need to comply with the governing exemption conditions.
5. Sports equipment for outstanding sportspersons - any chapter
The Council proposed conditional import IGST relief for specified sporting goods, including rifles, pistols and bows, imported by eligible sportspersons of outstanding eminence. Such goods remain subject to applicable customs, import-policy, licensing and other regulatory requirements, independently of tax treatment.
How to verify the current IGST position
- Identify the exact HSN classification, transaction date and whether the supply is interstate or an import.
- Check the current consolidated statutory provisions and the original exemption notification together with amendments, substitutions and rescissions.
- Read every eligibility condition, including intended use, importer status, documentation, certification and re-export obligations.
- For imports, verify the relevant customs notifications and the Customs Tariff Act in addition to IGST notifications.
Official sources: GST Council, CBIC GST, CBIC Tax Information Portal, India Code, Central Board of Indirect Taxes and Customs and GST Portal.
Frequently asked questions
Did the 10 November 2017 Council recommendations automatically reduce IGST?
No. A recommendation required implementation through an applicable legal notification or other statutory instrument before it could operate.
Does a 2017 nil-rate recommendation mean IGST is nil today?
No. The current result depends on the transaction date, the governing notification as amended, and compliance with its conditions.
Is an import exemption the same as an exemption on an interstate sale?
No. Imports are subject to the Customs Tariff Act mechanism, whereas interstate supplies are governed by the IGST Act and its applicable notifications.
This article is intended as a historical legal reference and general information, not a transaction-specific tax opinion.