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Table of Contents
[F. No. 354/53/2021]
Government of India
Ministry of Finance
(Department of Revenue)
New Delhi, the 2nd June, 2021
Notification No. 01/2021 – Union territory Tax (Rate): Seeks to amend notification No. 1/2017- Union Territory Tax (Rate) to prescribe change in CGST rate of goods.
[To be published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i)]
G.S.R (E).- In exercise of the powers conferred by sub-section (1) of section 7 of the Union Territory Goods and Services Tax Act, 2017 (14 of 2017) read with sub-section (5) of section 15 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on the recommendations of the Council, hereby makes the following further amendments in the notification of the Government of India in the Ministry of Finance(Department of Revenue), No.1/2017- Union territory Tax (Rate), dated the 28th June, 2017,published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 710 (E), dated the 28th June, 2017, namely:-
In the said notification, -
- in Schedule I - 2.5%,against S. No. 259A, for the entry in column (2), the entry “9503” shall be substituted;
- after Schedule I, in the List 1, after serial number 230 and the entries relating thereto, the following shall be inserted, namely-
“(231). Diethylcarbamazine ”.
2. This notification shall come into force on the 2nd day of June, 2021.
(Rajeev Ranjan)
Under Secretary to the Government of India
Note: - The principal notification No.1/2017-Union territory Tax (Rate), dated the 28th June, 2017 was published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 710(E), dated the 28th June, 2017 and was last amended by notification No. 03/2020-Union territory Tax(Rate), dated the 25th March, 2020, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 218(E),dated the 25th March, 2020.
📚 Frequently Asked Questions (FAQs): Notification No. 01/2021 - Union Territory Tax (Rate)
Q1: What is Notification No. 01/2021 – Union Territory Tax (Rate)?
Answer:
Notification No. 01/2021 – UTGST (Rate) is a government order that amends Notification No. 1/2017 – UTGST (Rate) to update the tax rates on specific goods.
It primarily:
Substitutes tariff entry 9503, and
Adds Diethylcarbamazine under the taxable goods list.
📅 Effective Date: 2nd June 2021
Q2: What does tariff code “9503” represent?
Answer:
Tariff code 9503 under the Customs Tariff Act covers toys, puzzles, and models used for amusement or education.
By updating this entry, the notification ensures a 2.5% Union Territory GST (UTGST) rate, aligning with a total 5% GST rate (including CGST).
🎯 Example:
If a toy manufacturer in Chandigarh sells toys worth ₹1,00,000, they now need to charge ₹2,500 UTGST + ₹2,500 CGST = ₹5,000 total GST.
Ensure your GST invoices reflect this new rate via Finodha GST Return Filing.
Q3: What is Diethylcarbamazine, and why was it added?
Answer:
Diethylcarbamazine is a medicinal drug used for treating filarial diseases (a tropical disease caused by parasitic worms).
The government added it to the List 1 of concessional goods, promoting affordable access to essential medicines — a crucial public health measure.
💊 Example:
Pharmaceutical distributors in Union Territories like Puducherry or Andaman & Nicobar Islands can now apply a lower 2.5% UTGST rate on Diethylcarbamazine, reducing overall medicine costs.
Q4: What legal sections empower this notification?
Answer:
This notification is issued under:
Section 7(1) of the UTGST Act, 2017, which authorizes levying of tax on intra-UT supplies, and
Section 15(5) of the CGST Act, 2017, concerning valuation and rate determination of taxable goods.
These provisions empower the Central Government to revise tax rates for goods in the public interest based on GST Council recommendations.
Q5: How does this affect toy manufacturers and traders?
Answer:
For businesses selling toys and models under HSN 9503, the applicable UTGST rate is now 2.5%, making total GST 5%.
This change simplifies pricing for:
Toy retailers,
Online toy marketplaces, and
Importers of educational toys.
🔗 Need to update your business GST classification? Visit Finodha Business Setup Services.
Q6: Does this notification apply to all Union Territories?
Answer:
✅ Yes,
It applies to all Union Territories (UTs) governed under the UTGST Act, 2017, including:
Delhi, Chandigarh, Daman & Diu, Puducherry, Lakshadweep, Ladakh, and Andaman & Nicobar Islands.
Q7: What is the GST implication for pharmaceutical companies?
Answer:
Pharmaceutical companies selling Diethylcarbamazine will now apply a concessional GST rate (5% total).
This step:
Reduces cost for patients,
Promotes health accessibility, and
Simplifies compliance for pharma distributors.
💡 Example:
A hospital in Puducherry purchasing 100 packs of Diethylcarbamazine worth ₹1,000 each will now pay ₹50 GST per pack instead of higher previous rates.
Q8: What was the earlier rate for these items before Notification No. 01/2021?
Answer:
Before this notification:
Toys (HSN 9503) had multiple rates (12% or 18%) depending on classification.
Diethylcarbamazine was not listed in the concessional category.
Now, both are standardized at 2.5% UTGST, simplifying trade across India’s Union Territories.
Q9: How can businesses ensure compliance with this change?
Answer:
Businesses should:
Update product HSN codes in their GST records.
Modify their invoicing software to reflect revised rates.
Ensure their GSTR-1 and GSTR-3B filings show accurate classifications.
📊 Stay compliant with Finodha GST Compliance Services.
Q10: How do these rate changes help small traders and MSMEs?
Answer:
Small manufacturers and MSMEs in Union Territories benefit from:
Lower tax burden,
Increased price competitiveness,
Easier filing and bookkeeping.
👩💼 Example:
A small toy producer in Daman now saves up to 13% GST difference, directly increasing profit margins.
Need MSME registration? Apply for Udyam Registration
Q11: What role did the GST Council’s 43rd meeting play in this?
Answer:
The 43rd GST Council Meeting (28th May 2021) recommended:
Rationalization of tax rates for essential goods.
Inclusion of essential drugs under concessional tax brackets.
Simplifying compliance for small businesses.
This notification implements those very recommendations for UTGST.
Q12: What happens if businesses fail to apply these new rates?
Answer:
Failure to adopt revised rates may lead to:
Demand notices for tax shortfall under Section 73/74 of CGST Act.
Interest and penalty under Section 50.
💼 Avoid costly mistakes by using Finodha’s GST Return Filing.
Q13: Is any refund applicable due to this rate change?
Answer:
If businesses had paid a higher rate earlier, they may apply for a refund under Section 54 of the CGST Act, subject to conditions and documentation.
Q14: When did this notification come into effect?
Answer:
The amendment came into force on 2nd June 2021, as per Clause 2 of the notification.
Q15: Where can I find expert help to interpret this notification?
Answer:
You can consult Finodha’s GST experts for guidance on:
Product classification
GST registration
Return filing
Business setup
🏁 Conclusion
Notification No. 01/2021 – Union Territory Tax (Rate) brings much-needed rate rationalization and industry relief, especially for toy manufacturers and pharma suppliers.
It reflects the government’s commitment to ease of doing business and public welfare through tax reforms.
💼 Stay compliant and updated with Finodha GST Services to ensure every notification works in your favor.
Download PDF: Notification No. 01/2021 - Union Territory Tax (Rate)
More Information: https://taxinformation.cbic.gov.in/
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