Recommendations of 52nd GST Council Meeting
The GST Council inter-alia made the following recommendations relating to changes in GST tax rates, measures for facilitation of trade and measures for streamlining compliances in GST.
CHANGES IN GST RATES OF GOODS
GST Rates on Millet Flour (HS 1901) : GST rates on “Food preparation of millet flour in powder form, containing at least 70% millets by weight”, with effect from date of notification, have been prescribed as 0% GST rate if sold without pre-packaging and labelling. If sold in pre-packaged and labelled form, a 5% GST rate will apply.
Imitation Zari Thread (HS 5605): Covered by the entry for imitation zari thread or yarn attracting 5% GST rate. However, no refund will be allowed on polyester film (metallised) /plastic film on account of inversion.
IGST on Foreign Going Vessels Conversion: Foreign going vessels are liable to pay 5% IGST on the value of the vessel if it converts to coastal run. GST Council recommends conditional IGST exemption to foreign flag foreign going vessel when it converts to coastal run subject to its reconversion to foreign going vessel in six months.
OTHER CHANGES RELATING TO GOODS
• The GST Council has recommends excluding Extra Neutral Alcohol (ENA), which is used in the production of alcoholic beverages for human consumption, from the scope of the Goods and Services Tax (GST).
• A separate tariff HS code has been created at 8 digit level in the Customs Tariff Act to cover rectified spirit for industrial use. The GST rate notification will be amended to create an entry for ENA for industrial use attracting 18% GST.
• To reduce GST on molasses from 28% to 5%.
CHANGES IN GST RATES OF SERVICES
• The GST Council has recommended to retain the existing exemption entries related to pure and composite services provided to Central/State/UT governments and local authorities in relation to any function entrusted to Panchayat/ Municipality under Article 243G and 243W of the Constitution of India.
• Recommended to exempt services of water supply, public health, sanitation conservancy, solid waste management and slum improvement and up gradation supplied to Governmental Authorities.
OTHER CHANGES RELATING TO SERVICES
• Job work services for processing of barley into malt attracts GST @ 5%.
• Bus operators organised as companies may be excluded from the purview of section 9(5) of CGST Act, 2017.This would enable them to pay GST on their supplies using their ITC.
• District Mineral Foundations Trusts (DMFT) set up by the State Governments across the country in mineral mining areas are Governmental Authorities and thus eligible for the same exemptions from GST as available to any other Governmental Authority.
• Supply of all goods and services by Indian Railways shall be taxed under Forward Charge Mechanism to enable them to avail ITC. This will reduce the cost for Indian Railways.
AMNESTY SCHEME FOR FILING OF APPEALS AGAINST DEMAND ORDERS IN CASES WHERE APPEAL COULD NOT BE FILED WITHIN THE ALLOWABLE TIME PERIOD:
• The GST Council has introduced an amnesty scheme for taxable individuals who were unable to file appeals under Section 107 of the CGST Act against demand orders issued under Sections 73 or 74 of the CGST Act on or before March 31, 2023, or whose appeals were rejected solely due to late filing.
• Under this scheme, affected taxpayers are permitted to file appeals against such orders until January 31, 2024, provided they make a predeposit of 12.5% of the disputed tax, with at least 20% (2.5% of the tax in dispute) being debited from their Electronic Cash Ledger.
• This initiative aims to assist a significant number of taxpayers who missed the original appeal filing deadlines in the past.
CLARIFICATIONS REGARDING TAXABILITY OF PERSONAL GUARANTEE OFFERED BY DIRECTORS :
• Issue a circular clarifying that when no consideration is paid by the company to the director in any form, directly or indirectly, for providing personal guarantee to the bank/ financial institutes on their behalf, the open market value of the said transaction/ supply may be treated as zero and hence, no tax to be payable in respect of such supply of services.
• To insert sub-rule (2) in Rule 28 of CGST Rules, 2017, to provide for taxable value of supply of corporate guarantee provided between related parties as one per cent of the amount of such guarantee offered, or the actual consideration, whichever is higher.
• To clarify through the circular that after the insertion of the said sub-rule, the value of such supply of services of corporate guarantee provided between related parties would be governed by the proposed sub-rule (2) of rule 28 of CGST Rules, 2017, irrespective of whether full ITC is available to the recipient of services or not.
PROVISION FOR AUTOMATIC RESTORATION OF PROVISIONALLY ATTACHED PROPERTY AFTER COMPLETION OF ONE YEAR: Order for provisional attachment in FORM GST DRC-22 shall not be valid after expiry of one year from the date of the said order. This will facilitate release of provisionally attached properties after expiry of period of one year, without need for separate specific written order from the Commissioner.
CLARIFICATION ON VARIOUS ISSUES RELATED TO PLACE OF SUPPLY:
• Supply of service of transportation of goods, including by mail or courier, in cases where the location of supplier or the location of recipient of services is outside India;
• Supply of advertising services;
• Supply of the co-location services.
ISSUANCE OF CLARIFICATION RELATING TO EXPORT OF SERVICES: To clarify the admissibility of export remittances received in Special INR Vostro account, as permitted by RBI, for the purpose of consideration of supply of services to qualify as export of services in terms of the provisions of sub-clause (iv) of clause (6) of section 2 of the IGST Act, 2017.
ALLOWING SUPPLIES TO SEZ UNITS/ DEVELOPER FOR AUTHORISED OPERATIONS FOR IGST REFUND ROUTE BY AMENDMENT IN NOTIFICATION 01/2023-INTEGRATED TAX DATED 31.07.2023: To allow the suppliers to a Special Economic Zone developer or a Special Economic Zone unit for authorised operations to make supply of goods or services (except the commodities like pan masala, tobacco, gutkha, etc. mentioned in the Notification No. 1/2023-Integrated Tax dated 31.07.2023) to the Special Economic Zone developer or the Special Economic Zone unit for authorised operations on payment of integrated tax and claim the refund of tax so paid.
OTHER MEASURES PERTAINING TO LAW AND PROCEDURES:
• Alignment of provisions of the CGST Act, 2017 with the provisions of the Tribunal Reforms Act, 2021 in respect of Appointment of President and Member of the proposed GST Appellate Tribunals
• Law amendment with respect to ISD as recommended by the GST Council in its 50th meeting
Note: The recommendations of the GST Council have been presented in this release containing major item of decisions in simple language for information of the stakeholders. The same would be given effect through the relevant circulars/ notifications/ law amendments which alone shall have the force of law.
Disclaimer: The news articles/knowledge updates related to law, business and finance published by us are intended to provide general information and basic understanding only and are not substitute for any professional or legal advice. By accessing and using the news articles/knowledge updates on our website, you acknowledge and agree to the terms of this disclaimer. We reserve the right to modify or update this disclaimer at any time without prior notice.
