![]()
GST on Waste Collection, Treatment,
and Disposal (Detailed Overview with Reference to the Advance Ruling)
By Yogesh Verma (CS/ LLB) /
2 min. read / GST Article
Introduction
The Goods and Services Tax (GST) regime in India aims to streamline indirect
taxation, and waste management services are no exception. Waste collection,
treatment, and disposal services play a crucial role in environmental
sustainability. These services, essential for both urban and rural communities,
also fall under the ambit of GST. This article explores the GST applicability
on waste management services, particularly focusing on biomedical waste
disposal, treatment, and the implications of various GST notifications and
rulings.
1. Waste Management Services under GST Waste management, including collection, treatment, and
disposal, is classified under different headings in the GST regime depending on
the nature of services. Most waste management services, including sewage and
biomedical waste management, fall under Chapter Heading 9994, defined in the
Service Accounting Code (SAC).
a. Pre-GST Era: Before the introduction of GST, services related to waste
management, especially for municipal waste and bio-medical waste, were often
either exempt from tax or subject to minimal taxation under various state and
central levies.
b. Post-GST Era: Under the GST regime, waste management services initially
enjoyed certain exemptions, but with changes introduced through various
notifications, several waste management services are now subject to GST. Let’s
delve into the details of the rates and notifications associated with different
waste management services.
2. Advance Ruling in Focus: M/s Instromedix Waste Management
Private Limited
The Rajasthan Authority for Advance Ruling (AAR) recently
delivered an important ruling concerning the GST applicability on the treatment
and disposal of biomedical waste. The applicant, M/s Instromedix Waste
Management Private Limited, is involved in the disposal and treatment of
biomedical waste generated by clinical establishments. The key takeaways from
this ruling clarify the taxation of these services.
Facts of the Case: The applicant collects biomedical waste from clinical
establishments and treats it at a facility allotted by the state government.
The service provided by the applicant falls under SAC 999433, part of Chapter
Heading 9994. Before July 18, 2022, services under this heading were exempted from
GST. However, with Notification No. 03/2022-CE (Rate) dated July 13, 2022
(effective from July 18, 2022), these services became taxable.
3. Notifications and GST Applicability on Waste Collection
and Disposal
a. Pre-July 2022 Scenario
- Notification
No. 12/2017-Central Tax (Rate) dated June 28, 2017: Exempted several services, including biomedical waste
management services, from GST. Under Entry 75 of this notification,
services provided by operators of biomedical waste treatment facilities to
clinical establishments were exempt from GST.
b. Post-July 2022 Scenario
- Notification
No. 03/2022-Central Tax (Rate) dated July 13, 2022: Amended Notification No. 11/2017, bringing biomedical
waste treatment and disposal services under the taxable bracket. Services
by operators of biomedical waste treatment facilities are now taxable at a
GST rate of 12% (6% CGST and 6% SGST).
The AAR in M/s Instromedix Waste
Management’s case confirmed that the services of biomedical waste disposal and
treatment, which were previously exempt, are now taxable from July 18, 2022,
onwards.
c. GST Rates on Various Waste
Management Services
- Effluent
Treatment: Services by way of treatment
of effluents by a common effluent treatment plant (CETP) are taxed at 12%.
- Biomedical
Waste Management: Post the notification of July
13, 2022, biomedical waste treatment and disposal services are subject to
a GST rate of 12%.
- Sewage
and General Waste Management:
Services related to sewage and waste collection, treatment, and disposal,
which are not specifically mentioned under other entries, are taxed at 18%
(9% CGST and 9% SGST).
4. Key Aspects from the Advance Ruling
a. Service Classification
The Rajasthan AAR classified the biomedical waste management
services provided by the applicant under SAC 999433. The service involves
collection, treatment, and disposal of waste from clinical establishments.
Services under this category are now taxable under GST as per the notification
changes introduced in July 2022.
b. Rate of GST
The GST rate for biomedical waste management services was
confirmed to be 12%, effective from July 18, 2022. This consists of 6% Central
GST (CGST) and 6% State GST (SGST).
c. Liability and Effective Date
The registered dealer providing these services is liable to
pay GST from July 18, 2022. The AAR clearly mentioned that services prior to
this date, falling under the previous exemption, would not be subject to GST.
5. Analysis of the GST Impact on Waste Management Services
The imposition of GST on waste management services,
particularly biomedical waste management, impacts both service providers and
recipients (e.g., hospitals, clinics). Providers must account for the 12% tax
while structuring contracts and pricing. However, the applicability of GST
should be viewed in the context of the broader framework for environmental
protection and waste management services, which require compliance with
multiple regulations.
For clinical establishments, the cost of waste management is
now subject to taxation, increasing the overall expense. However, as these
services are crucial for public health and safety, there may be limited scope
for price renegotiation, thereby passing on the tax burden to the end consumer.
6. Conclusion:
The GST on waste management services, particularly for biomedical waste,
represents an evolution in the tax treatment of essential environmental
services. With the Rajasthan AAR ruling, there is now clarity that services
related to the disposal and treatment of biomedical waste are taxable at 12%
from July 18, 2022. As more advance rulings are sought on similar issues,
stakeholders in the waste management industry will need to closely monitor
updates in GST notifications and rulings to ensure compliance and proper tax
planning.
Disclaimer: All the Information is based on the notification, circular and order issued by the Govt. authority and judgement delivered by the court or the authority information is strictly for educational purposes and on the basis of our best understanding of laws & not binding on anyone.
Click here
