DSIR recognized R&D centres on GST exemption

The Indian public, the industries and the companies recognized by Department of Scientific and Industrial Research (DSIR) were in dilemma with the exemption of Custom duty and GST on purchase of capital goods, but there have been new notifications for Custom and
GST, introduced by Government of India, Ministry of Finance:

 Custom notification vide no. 43/2017
 Customs dated 30.06.2017
 IGST notification no 47/2017
 Integrated Tax (Rate) dated 14.11.2017; No. 9/2018
 Central Tax (Rate), No. 09/2018
 Union Territory Tax (Rate) & No. 10/2018
 Integrated Tax (Rate) dated 25.01.2018 against the previous notifications of Custom and excise duty.

In brief, under the above stated notification, if a research institution (other than a hospital) is registered with the Government of India with Department of Scientific and Industrial Research (DSIR), the company is exempted from paying any Custom duty on purchase of any goods (equipment, consumables, computer software, prototypes etc.) for conducting R&D. The subsidized GST rates for such items is 5% in case of import & interstate purchase and 2.5% along with SGST and 2.5% in case of purchases within state.
Hence the customs exemption has not been scrapped entirely; however earlier central excise duty exemption has been revised to GST concession.

Following are the items which are eligible for GST concession as per amendments made in the above notifications:

a) Scientific and Technical Instruments, apparatus, equipment (including computer)
b) Accessories, Part, Consumables and live animals (Experimental Purpose)
c) Computer Software, Compact-Disc Read, Only Memory (CD-ROM), recorded magnetic tape, microfilms, microfiches
d) Prototypes (the aggregate value of prototypes received by an institution does not exceed fifty thousand rupees in a financial year).

Following is the example of savings for the companies in terms of GST: –
IGST Only 5% GST @ 12%: Saving is 7%
GST @ 18%: Saving is 13%
GST @ 28%: Saving is 23%
CGST Only 2.5% GST @ 12%: Saving is 3.5%
GST @ 18%: Saving is 6.5%
GST @ 28%: Saving is 11.5%

SGST As applicable on the item
(No exemption)

UTGST 2 Only 2.5% GST @ 12%: Saving is 3.5%
GST @ 18%: Saving is 6.5%
GST @ 28%: Saving is 11.5%

To obtain concessional GST, the company will provide a certificate to supplier at the time of supply.
To summarize, DSIR recognized centres can avail customs duty exemption. This was the earlier scenario as well, but in case of GST there is comparatively better savings of indirect tax which was exempted earlier in terms of central excise duty exception.

Let’s talk
For a deeper discussion of how this issue might affect your business, please contact:
Head Office
109, Marine Chambers, 1st Floor, 43,
New Marine Lines, Mumbai-400020. (INDIA)
Phone: +91 9962696204 
Email: letstalk@scinnovation.in