Recommendations of 53rd Council Meeting
The 53rd Council Meeting introduced several welcome changes under the new government, marking a significant shift in the GST landscape. These reforms, aimed at streamlining compliance and enhancing the taxpayer experience, will be effective from as per the forthcoming notifications and circulars. Key updates and summary are given as below.
Rate changes in Goods
• Imports of parts, components, testing equipment, tools and tool-kits of aircrafts will have a uniform rate of 5% IGST.
• All milk cans (of steel, iron, and aluminium) will attract 12% GST.
• GST rate on carton, boxes, and cases of corrugated and non-corrugated paper or paper-board (HS 4819 10; 4819 20) reduced from 18% to 12%.
• All solar cookers, whether single or dual energy source, will attract 12% GST.
• Parts of poultry keeping machinery will attract 12% GST.
• All types of sprinklers including fire water sprinklers will attract 12% GST.
• IGST exemption on imports of specified items for defence forces extended for a further period of five years till 30th June, 2029.
• IGST exemption on imports of research equipment/buoys under the RAMA programme, subject to specified conditions.
• Compensation Cess exemption on imports in SEZ by SEZ Unit/developers effective from 01.07.2017.
Changes in Relation to Defence Sector:
• Compensation cess exemption on supply of aerated beverages and energy drinks to authorized customers by Unit Run Canteens under Ministry of Defence.
• Adhoc IGST exemption on imports of technical documentation for AK-203 rifle kits imported for Indian Defence forces.
Changes in Relation to Railway Sector:
• Exemption of GST on services provided by Indian Railways to the general public, including sale of platform tickets, retiring rooms/waiting rooms, cloak room services, and battery-operated car services. Regularization for past periods from 20.10.2023 onwards.
• Exemption of GST on services provided by Special Purpose Vehicles (SPV) to Indian Railways, allowing use of infrastructure and maintenance services during the concession period. Regularization on 'as is where is' basis from 01.07.2017 onwards.
Changes in Relation to Accommodation Services:
• Creation of a separate entry in notification No. 12/2017-CTR to exempt accommodation services up to Rs. 20,000 per month per person, provided the accommodation is for a minimum continuous period of 90 days. Similar benefits extended to past cases.
Changes in Relation to Insurance Sector:
• Declaration of co-insurance premium as non-supply under Schedule III of CGST Act, 2017, with regularization for past cases.
• Declaration of re-insurance commission as non-supply under Schedule III of CGST Act, 2017, with regularization for past cases.
• Regularization of GST liability on reinsurance services of specified insurance schemes for certain periods.
Changes in Relation to Real Estate Sector:
• Clarification that statutory collections by Real Estate Regulatory Authority (RERA) are exempt from GST under entry 4 of notification No. 12/2017-CTR.
Changes in Relation to Banking Sector:
• Clarification on non-taxability of further incentives shared by acquiring banks under the RuPay Debit Cards and BHIM-UPI transactions scheme, defined by NPCI in consultation with participating banks.
Measures for Facilitation of Trade:
GST RETURN RELATED UPDATES
GSTR-4 Filing Due Date Extension:
• Extension of due date for filing GSTR-4 for composition taxpayers from April 30th to June 30th from FY 2024-25 onwards.
Rule 88B Amendment in CGST Rules:
• Amendment in Rule 88B of CGST Rules to calculate interest on delayed filing of returns based on Electronic Cash Ledger balance.
Introduction of FORM GSTR-1A:
• Introduction of FORM GSTR-1A to amend or add details missed in FORM GSTR-1 before filing FORM GSTR-3B, enhancing reporting accuracy.
Exemption from GSTR-9/9A for Small Taxpayers:
• Proposed exemption from filing annual return for FY 2023-24 for taxpayers with turnover up to two crore rupees.
Reduction in B2C Inter-State Supplies Reporting Threshold:
• Recommendation to lower threshold for reporting B2C inter-State supplies invoice-wise in FORM GSTR-1 from Rs 2.5 lakh to Rs 1 lakh.
Monthly Filing of FORM GSTR-7 for TDS Deductors:
• Requirement for monthly filing of FORM GSTR-7 by registered persons under section 51, including nil returns without late fees, with invoice-wise details.
GST NOTICES/LITIGATION RELATED UPDATE
Conditional waiver of interest or penalty:
• Conditional waiver of interest or penalty under Section 128A of CGST Act for demands raised under Section 73, applicable from FY 2017-18 to FY 2019-20, if full tax amount is paid by 31.03.2025.
Reduction of Government Litigation by Fixing Monetary Limits for GST Appeals:
• Prescribed monetary limits for filing appeals in GST Appellate Tribunal (GSTAT), High Court, and Supreme Court: GSTAT - Rs. 20 lakhs, High Court - Rs. 1 crore, Supreme Court - Rs. 2 crores.
Reduction in Pre-deposit for GST Appeal and Appellate Tribunal:
• Reduction in maximum pre-deposit amounts for filing appeals under GST Appellate authority with a maximum of Rs. 20 crores each for CGST and SGST. Further, council recommended to reduce pre-deposit amount for filing appeal with Appellate Tribunal to 10% with a maximum of Rs.20 crores each for CGST and SGST.
Time Period Amendment for GST Appeals:
• Amendment to Section 112 of CGST Act to extend appeal filing period to three months before GST Appellate Tribunal.
Relaxation in Section 16(4) of CGST Act:
a) In respect of initial years of implementation of GST, i.e., financial years 2017-18,2018-19, 2019-20 and 2020-21:
• The GST Council recommended that the time limit to avail input tax credit in respect of any invoice or debit note under Section 16(4) of CGST Act, through any return in FORM GSTR 3B filed up to 30.11.2021 for the financial years 2017-18, 2018-19, 2019-20 and 2020-21, maybe deemed to be 30.11.2021. For the same, requisite amendment in section 16(4) of CGST Act, retrospectively, w.e.f. 01.07.2017, has been recommended by the Council.
With respect to cases where returns have been filed after revocation:
• The GST Council recommended retrospective amendment in Section 16(4) of CGST Act, to be made effective from July 1st, 2017, to conditionally relax the provisions of section 16(4) of CGST Act in cases where returns for the period from the date of cancellation of registration/effective date of cancellation of registration till the date of revocation of cancellation of the registration, are filed by the registered person within thirty days of the order of revocation.
Section 11A Insertion in CGST Act:
• Insertion of Section 11A in CGST Act to allow regularization of non-levy or short levy of GST due to common trade practices.
Amendment in Section 122(1B) of CGST Act:
• Retrospective amendment effective from 01.10.2023 clarifying applicability of penal provision under Section 122(1B) to e-commerce operators mandated to collect tax under Section 52 of CGST Act.
Amendment in Rule 142 of CGST Rules:
• Issuance of circular to establish mechanism for adjusting payments made via FORM GST DRC-03 against pre-deposits required for filing appeals.
Amendments in Sections 73, 74, and Introduction of Section 74A:
• Proposal to standardize time limits for issuing demand notices and orders irrespective of fraud or willful misstatement charges, effective FY 2024-25. Also, extension of time for reduced penalty benefit from 30 to 60 days.
Sunset Clause for Anti-profiteering Measures:
• Proposed sunset date of 01.04.2025 for new anti-profiteering applications, with handling of cases by Principal bench of GST Appellate Tribunal (GSTAT).
GST REFUND RELATED UPDATE
Refund of Additional IGST on Upward Revision in Export Prices:
• Mechanism proposed for claiming refund of additional IGST paid due to price revision post-export.
Curtailment of IGST Refund in Case of Export Duty:
• The recommended amendments to the IGST Act and CGST Act related to the refund of export duty should include a restriction, irrespective of whether the goods are exported without payment of taxes or with payment of taxes. This restriction should also apply if the goods are supplied to an SEZ developer or an SEZ unit for authorized operations.
GST INPUT CREDIT RELATED UPDATE
Valuation of Import of Services by Related Persons:
• Clarification on considering open market value for services provided by foreign affiliates to related domestic entities eligible for full input tax credit.
Input Tax Credit on Ducts and Manholes for OFCs:
• Confirmation that input tax credit on ducts and manholes used in optical fiber cable networks is not restricted under specific clauses of section 17 of CGST Act.
Amendment in Section 140(7) for Transitional Credit:
• Retrospective amendment to allow transitional credit for services invoices received by Input Service Distributors before the appointed date.
OTHER UPDATE
Biometric Aadhaar Authentication for GST Registration:
• Phased nationwide rollout recommended to strengthen GST registration process and counter fraudulent ITC claims through fake invoices.
ENA and Alcohol Sector GST Amendment:
• Exemption from GST on Extra Neutral Alcohol used in manufacture of alcoholic liquor for human consumption.
Place of Supply for Custodial Services by Banks to FPIs:
• Determination of place of supply as per Section 13(2) of IGST Act for custodial services provided by Indian banks to Foreign Portfolio Investors.
Valuation of Corporate Guarantees between Related Parties:
• Retrospective amendment of Rule 28(2) of CGST Rules to clarify valuation of corporate guarantees, exempting exports and cases eligible for full input tax credit.
Applicability of Section 16(4) of CGST Act for RCM Invoices:
• Clarification on financial year for availing input tax credit under section 16(4) for supplies under reverse charge mechanism from unregistered suppliers.
Reduction in Rate of TCS for E-commerce Operators:
• Reduction in TCS rate from 1% to 0.5% (0.25% CGST and 0.25% SGST/UTGST, or 0.5% IGST) for supplies through E-commerce Operators.
Clarification on following issues to provide clarity to trade and tax officers and to reduce litigation:
• Clarification on taxability of reimbursement of securities/shares as ESOP/ESPP/RSU provided by a company to its employees.
• Clarification on requirement of reversal of input tax credit in respect of amount of premium in life insurance services, which is not included in the taxable value as per Rule 32(4) of CGST Rules.
• Clarification on taxability of wreck and salvage values in motor insurance claims.
• Clarification in respect of warranty/extended warranty provided by manufacturers to the end customers.
• Clarification regarding availability of input tax credit on repair expenses incurred by the insurance companies in case of reimbursement mode of settlement of motor vehicle insurance claims.
• Clarification on taxability of loans granted between related persons or between group companies.
• Clarification on time of supply on annuity payments under HAM Projects.
• Clarification regarding time of supply in respect of allotment of spectrum to telecom companies in cases where payment of licence fee and spectrum usage charges is to be made in instalments.
• Clarification relating to place of supply of goods supplied to unregistered persons, where delivery address is different from the billing address.
• Clarification on mechanism for providing evidence by the suppliers for compliance of the conditions of Section 15(3)(b)(ii) of CGST Act, 2017 in respect of post-sale discounts, to the effect that input tax credit has been reversed by the recipient on the said amount.
• Clarifications on various issues pertaining to special procedure for the manufacturers of specified commodities like pan masala, tobacco, etc.
Access press release of above recommendation from https://pib.gov.in/PressReleasePage.aspx?PRID=2027982
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