GST Circular No 205/2023
The recent circular addresses a significant query arising from the classification of metal-coated plastic film, subsequently transformed into metallized yarn and intertwined with materials like nylon, cotton, polyester, or other yarn to produce imitation zari thread.
The question pertains to whether this falls under Sl No. 218AA of Schedule I (attracting a 5% GST rate) or if it should be categorized under Sl No. 137 of Schedule III (attracting a 12% GST rate).
The resolution draws guidance from the HS Explanatory Notes, encompassing various products under heading 5605, which include yarn made of textile material combined with metal thread, processes like electro-deposition, and products with a core of metal foil or plastic film coated with metal dust between plastic film layers.
Following insights from the HS
Explanatory Notes, the GST Council has recommended the classification of imitation zari thread or yarn produced from metallized polyester film or plastic film (under HS 5605) to be under Sl No. 218AA of Schedule I, thereby subjecting such products to a 5% GST rate.
Additionally, the Council has specified the ineligibility for refund on polyester film (metallized) or plastic film due to the tax rate inversion.
