News dated 16 August 2022

Inverted duty refers to structures where the rate of tax on inputs is more than the rate of tax on outward supplies, which discourages value addition. 

• “The inverted duty correction exercise has not concluded yet and there is more work left,” said a senior official, adding that the GoM headed by Karnataka chief minister Basavaraj Bommai is working on the second round and a proposal may be floated before the next council meeting, which is likely in September.
• In September last year, the GST Council decided to rectify the inverted duty structure for footwear and textiles. Duty on footwear and finished apparel of any value was set at 12%. Earlier, the GST rate was 5% for sale value up to Rs 1,000 per piece in the case of finished apparel such as shirts, and per pair in the case of footwear.
• In June, the council adjusted rates to correct inverted duty on items such as edible oil, solar water heaters, LED lamps, printing ink and knives, among others. Additionally, it imposed 5% GST on pre-packaged and pre-labelled retail packs of certain food items to address tax evasion. It also removed many items from the exemption list.

Source from: https://economictimes.indiatimes.com/news/economy/policy/more-gst-rate-changes-likely-to-address-inverted-duty-exemptions/articleshow/93579401.cms