GST on Bricks Manufacturer

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. This article will provide an insight into the GST on bricks manufacturers.

Implications of the new system on GST

The implications of the new system for registered persons would be as follows:

• 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.

To date, the manufacture and sale of bricks have been subject to a GST tax of 5%, which businesses have the authority to claim for import credit.

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.

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.

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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.

Final words

In summary, it could be said that the tax structure initiated by the Government is the result of the recommendations of the 45th meeting of the GST Council. With the introduction of new standards, people involved in the provision of specified products will not be entitled to use the invention process. In other words, they would not be entitled to a minimum GST of 1% (excluding ITC). In addition, the threshold limit of Rs. 40 Lakhs is reduced to Rs. 20 Lakhs for GST registration.