Tax Rates for Printing Services Clarified: Own Inputs at 18%, Client-Supplied Inputs at 12% Under GST Rules

AAR ruled on tax rates for printing leaflets. For printing services using own inputs, the tax rate is 9% CGST and 9% SGST. When physical inputs are client-supplied, the tax rate reduces to 6% CGST and 6% SGST. The ruling clarified tax liability for printing services in pharmaceutical packaging, providing specific guidance on applicable GST rates.

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Issues:
Rate of tax and HSN code for printing of leaflets.

Analysis:
The case involves an application filed by a company engaged in printing leaflets and packing materials for pharmaceutical clients to determine the tax rate applicable to their services. The applicant sought clarification on the rate of tax and HSN code for printing leaflets. The Authority for Advance Ruling (AAR) admitted the application after verifying the payment of the requisite fee and receiving no objections from the jurisdictional officer.

During the personal hearing, the applicant's representatives explained their business activities, highlighting their printing services for pharmaceutical companies and the specific query regarding the tax rate applicable to leaflets. The applicant currently charges 18% tax on such leaflets but wanted to ascertain the accurate tax liability through the AAR.

In the discussion and findings, the AAR examined the relevant notifications under the GST Act. The AAR determined that the printing services provided by the applicant did not fall under the category of printing newspapers, books, journals, and periodicals, but rather under "Other manufacturing services; publishing, printing, and reproduction services" as per the notifications. As per the notifications, the printing activity was taxable at 9% CGST and 9% SGST.

Additionally, the AAR referred to an amended notification that specified a lower tax rate of 6% CGST for services involving the treatment or process on goods supplied by another person for printing goods falling under specific chapters. Therefore, if the applicant used physical inputs supplied by their client falling under certain chapters, the tax rate applicable would be 6% CGST.

Based on the discussion, the AAR provided a ruling stating that the tax rate for printing leaflets would be 9% CGST and 9% SGST when the applicant uses physical inputs, and 6% CGST and 6% SGST when the physical inputs are supplied by the recipient of services. This ruling clarified the tax liability for the printing services provided by the applicant, addressing the specific query raised in the application.

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