Clarification on Concessional Tax Rates for Interstate and Intrastate Sales

The Authority confirmed that the concessional tax rate of 5% under Notification No. 47/2017 applies to Interstate sales (IGST) and 2.5% CGST + 2.5% SGST for Intrastate supplies as per Notification No. 45/2017. Input Tax Credit is allowed for raw materials used in supplies under the concessional tax rates specified in the notifications. The applicant's query was resolved in accordance with these findings.

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Issues:
1. Applicability of concessional tax rate under Notification No. 47/2017 for Interstate and Intrastate sales.
2. Availability of Input Tax Credit (ITC) for raw materials used in supplies under concessional tax rate.

Analysis:
1. The applicant sought clarification on the applicability of the concessional tax rate of 5% under Notification No. 47/2017 for both Interstate (IGST) and Intrastate (SGST & CGST) sales. The Authority referred to the relevant notifications stating that goods supplied to specified institutions are eligible for a concessional tax rate subject to conditions. For Interstate sales, the rate is 5%, and for Intrastate supplies, it is 2.5% CGST + 2.5% SGST as per Notification No. 45/2017-Central Tax (Rate) dated 14.11.2017.

2. Regarding the availability of Input Tax Credit for raw materials used in supplies under the concessional tax rate, the Authority highlighted Section 17(5) of the Central Goods & Services Tax Act, 2017, which specifies goods and services where ITC is not allowed. However, since goods and services under concessional tax rates are not listed in the restricted categories, ITC is permissible for supplies made at concessional rates. Such supplies are not considered exempt supplies, making ITC allowable on raw materials used for these transactions.

Conclusion:
The Authority ruled that the concessional tax rate of 5% under Notification No. 47/2017 is applicable for Interstate sales (IGST) and 2.5% CGST + 2.5% SGST for Intrastate supplies as per Notification No. 45/2017. Additionally, Input Tax Credit is available for raw materials used in supplies made under the concessional tax rates specified in the notifications. The application filed by the applicant was disposed of accordingly.

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