In exercise of the powers conferred by subsection 1 of section 5 of the Integrated Goods and Services Tax Act

## Policy Analysis Report: Notification No. 01/2021 - Integrated Tax Rate Amendment **1. Executive Summary:** This report analyzes Notification No. 01/2021 issued by the Ministry of Finance, Department of Revenue, which amends the No.12017 Integrated Tax Rate, dated the 28th June, 2017. The amendment, effective June 2nd, 2021, substitutes the entry in column 2 against S. No. 259A in Schedule I related to Integrated Tax Rate and inserts 'Diethylcarbamazine' in List 1, after serial number 230. The amendment likely aims to clarify tax rates on specific goods. This report details these changes and their potential impact on relevant stakeholders. **2. Introduction:** This report provides an analysis of Notification No. 01/2021, an amendment to the No.12017 Integrated Tax Rate. The analysis is based solely on the provided policy text and aims to inform affected parties about the specific changes introduced. **3. Policy Overview:** * **Original Policy Amended:** No.12017 Integrated Tax Rate, dated the 28th June, 2017. * **Core Objective(s) (Inferred):** The No.12017 Integrated Tax Rate likely aims to define and regulate the Integrated Goods and Services Tax (IGST) rates for various goods. This specific amendment appears to be focused on clarifying and updating these rates for certain items. **4. Background and Rationale:** This amendment likely addresses the need to update or correct inconsistencies within the existing No.12017 Integrated Tax Rate. The substitution of the entry in column 2 against S. No. 259A in Schedule I suggests a possible error or need for a more precise classification. The addition of Diethylcarbamazine to List 1 after serial number 230 possibly signifies the inclusion of this item under a specific tax rate category or a previously overlooked item that now requires specification in this list. **5. Key Provisions / Changes:** This notification introduces two specific changes to the No.12017 Integrated Tax Rate. * **Change 1:** * **Affected Part of Original Policy:** Schedule I, against S. No. 259A, column 2. * **New Rule/Provision:** The entry in column 2 is substituted with "9503". * **Difference/Effect:** The original entry in column 2 (which is not specified in the provided text) is now replaced with the code "9503". This likely represents a change in the Harmonized System Nomenclature (HSN) code or a similar classification code associated with the good listed in S. No. 259A. Without knowing the original entry, the precise impact is difficult to determine, but it suggests a reclassification of the good for tax purposes. * **Change 2:** * **Affected Part of Original Policy:** List 1, after serial number 230. * **New Rule/Provision:** The item "Diethylcarbamazine" is inserted after serial number 230. * **Difference/Effect:** "Diethylcarbamazine", a medication, is now explicitly listed in List 1. This likely means that this medication is now subject to the specific IGST rate defined for items listed in that section. This would likely affect the tax rate of the said medication, making it explicitly defined. **6. Target Audience and Stakeholders:** The target audience and stakeholders primarily affected by these amendments include: * Manufacturers, suppliers, and distributors of goods classified under "9503" and/or previously classified under the original entry against S. No. 259A of Schedule I. * Manufacturers, suppliers, and distributors of Diethylcarbamazine. * Importers and exporters dealing with these goods. * Tax consultants and professionals involved in IGST compliance. **7. Implementation Aspects (Inferred):** * **Responsible Agency/Bodies:** The Ministry of Finance, Department of Revenue, is the responsible body for issuing and overseeing the implementation of these amendments. The Central Government and the Council are also mentioned, implying their roles in the recommendation and execution process. * **Timelines/Procedures:** The amendment is effective from June 2nd, 2021. Stakeholders need to comply with the updated IGST rates for the specified goods from this date onward. * **Specific to Changes:** Affected businesses need to update their accounting and invoicing systems to reflect the new "9503" classification and the inclusion of Diethylcarbamazine in List 1. **8. Expected Outcomes / Impact of Changes:** The likely intended outcomes of these changes are: * **For Change 1 (Substitution with "9503"):** To ensure accurate classification of the good under S. No. 259A for IGST purposes. This could lead to a more precise application of tax rates and potentially impact revenue collection. * **For Change 2 (Addition of Diethylcarbamazine):** To explicitly define the IGST rate applicable to Diethylcarbamazine. This aims to remove ambiguity and ensure consistent application of tax regulations across the supply chain of this medication. **9. Conclusion:** Notification No. 01/2021 introduces targeted amendments to the No.12017 Integrated Tax Rate, specifically related to the classification of a product under S. No. 259A Schedule I using code "9503," and inclusion of 'Diethylcarbamazine' in List 1. These changes are effective from June 2nd, 2021, and require businesses dealing with these goods to update their compliance procedures accordingly. The notification highlights the government's ongoing efforts to refine and clarify the IGST framework.

Key Entities Referenced