Notification No. 13/2021 – IGST Rate Amendments Explained

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Notification No. 13/2021 - Integrated Tax (Rate): Seeks to amend Notification No 1/2017- Integrated Tax (Rate) dated 28.06.2017.

[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 5 of the Integrated Goods and Services Tax Act, 2017 (13 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-Integrated Tax (Rate), dated the 28^th June, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 666(E), dated the 28^th June, 2017, namely:-

In the said notification, -

in Schedule II – 12%, S. No. 243 and the entries relating thereto shall be omitted;

in Schedule III – 18%, against S. No. 452P, in column (3), the words “in respect of Information Technology software” shall be omitted.

(Rajeev Ranjan)
Under Secretary to the Government of India

Note: - The principal notification No.1/2017-Integrated Tax (Rate), dated the 28^th June, 2017, was published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 666(E), dated the 28^th June, 2017, and was last amended by notification No. 08/2021 – Integrated Tax (Rate), dated the 30^th September, 2021,published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 698(E)., dated the 30^th September, 2021.

📚 Frequently Asked Questions (FAQs): Notification No. 13/2021 - Integrated Tax (Rate)

Q1: What is Notification No. 13/2021 – Integrated Tax (Rate)?

Answer:
Notification No. 13/2021 – Integrated Tax (Rate), issued on 27th October 2021, amends Notification No. 1/2017 – IGST (Rate). The key updates include removal of specific entries from Schedule II (12%) and modification in Schedule III (18%) relating to IT softwarenotfctn-13-2021-igst-rate-engli….
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Q2: What changes have been made under Schedule II (12%)?

Answer:
Under Schedule II, Serial No. 243 and its related entries were completely omitted. This means the goods or services earlier taxed at 12% IGST under this entry are no longer part of this schedule.
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Q3: What is the amendment in Schedule III (18%)?

Answer:
In Schedule III, Serial No. 452P, the phrase “in respect of Information Technology software” has been removed. This change alters how IT software-related supplies are categorized and taxed under GST.
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Q4: Why was the reference to IT software removed?

Answer:
The removal reflects the government’s effort to avoid ambiguity in classification and bring IT software under a uniform 18% GST rate, ensuring clarity for IT companies and end-users.
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Q5: How does this notification affect businesses in the IT sector?

Answer:
IT service providers may now fall under a clear 18% GST bracket.
Businesses must update GST invoices & ERP systems to align with changes.
Ambiguity in classification between goods vs. services in IT software reduces.
🌐 Startups can ensure compliance with One Person Company (OPC) Registration.

Q6: From when are these changes applicable?

Answer:
The notification was issued on 27th October 2021 and became effective immediately upon publication. Businesses had to adjust GST filing for October–December 2021 accordingly.

Q7: How does this notification connect to previous amendments?

Answer:
The principal Notification 1/2017 – IGST (Rate) introduced GST rates in 2017.
It has been periodically amended (last by Notification 8/2021 – IGST Rate, dated 30th Sept 2021).
Notification 13/2021 continues this trend by streamlining IT software taxation and cleaning redundant entries.
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Q8: What compliance steps should businesses take post-Notification 13/2021?

Answer:
Review product/service classification in GST returns.
Update tax rates in ERP and invoicing systems.
Ensure IT software-related services are correctly reported under 18% GST.
File revised GST returns if misclassifications occurred earlier.
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Q9: What is the broader impact on the GST ecosystem?

Answer:
Simplifies rate classification for IT-related services.
Reduces disputes between taxpayers and authorities over software GST treatment.
Helps in aligning GST with the digital economy’s growth.
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Q10: How can Finodha help with these changes?

Answer:
Finodha provides:
Advisory on GST rate applicability.
Filing support for IT and service-based businesses.
Entity setup guidance (Private Limited, OPC, MSME).
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