GST

50th GST Council Meeting Highlights

The President formed the GST Council in compliance with Article 279A (1) of the amended Constitution. The GST Appellate Tribunal, compensating cess, exemptions, revisions to GST rates, and rates for goods and services were among the five main issues on which this Council made significant decisions. The 50th Meeting of the GST Council was held in Vigyan Bhawan in New Delhi on July 11 and July 11, 2023. The President of the Central Board of Indirect Taxes and Customs (CBIC) and the Revenue Secretary both spoke at the Meeting, which was presided over by Union Finance Minister Nirmala Sitharaman.

Recommendations of GST Council in 50^th Meeting

• Casino, Horse racing and online gaming will all be subject to a standard 28% tax based on their total face value, according to the recommendation made by the GST Council.
• The Council further recommends that the centre establish a GST Appellate Tribunal beginning August 1, 2023.
• The Council has also recommended exempting cancer-related drugs and medications for rare diseases and food items for particular medical purposes from GST taxation to boost healthcare.
• The Council has also recommended lowering the tax rates for four products from 18% to 5%. The items are:
• Fish soluble paste
• Uncooked, unfried and extruded snack palettes
• LD slag is to be aligned with blast furnace slag
• Imitation zari thread
• Along with these recommendations, the GST council also recommended several initiatives to streamline GST compliance procedures.

Changes in GST tax rates

Changes in GST rates of goods

• Exemption from the Integrated Goods and Services Tax (IGST) for the treatment of rare diseases and Dinutuximab (Quarziba):
  Dinutuximab (Quarziba) for personal use, as well as certain medications and Food for Special Medical Purposes (FSMP) intended to treat rare diseases, is exempted from IGST. This exemption also applies to FSMP when Centers import it for rare diseases.

• Taxes on Raw Cotton supplied by agriculturists:
  The reverse charge mechanism charges taxes on the supply of raw cotton from farmers to co-operatives.
• Regularization of matter relating to:

• Entry 52B in the compensation cess notification was revised to include all varieties of utility vehicles, regardless of terminology, as long as they meet the following requirements And A compensation cess 225 will be attracted in all the cases mentioned below:
  • Having an engine more fabulous than 1500 cc,
  • Exceeding 4000 mm in length and
  • Having a ground clearance of at least 170 mm

• It was decided that the ad valorem rate in force on March 31, 2023, shall be officially declared to apply for the imposition of a compensating cess on things like Pan Masala and tobacco products, where there is no legal requirement to reveal the retail selling price.
• It was decided to include RBL Bank and ICBC Bank on the list of approved financial institutions free from IGST on importing silver, platinum, or gold.

Changes in GST rates of services

• Reverse Charge Mechanism (RCM) taxes are not applied to services rendered by a company director in their capacity for the firm, such as renting out property to the company. RCM taxation only applies to services rendered by a director when acting in that capacity for the company.
• When repairing components or providing warranty services to consumers without charge while the product is under warranty, manufacturers are not obligated to apply GST, and there is no need to reverse the Input Tax Credit (ITC) in such circumstances.
• A holding company’s simple possession of subsidiary company shares is not regarded as the provision of a service and is consequently exempt from GST taxes¹.
• A decision was made to exempt the satellite launch services provided by ISRO, New Space India Limited (NSIL) and Antrix Corporation Limited from the Goods and Services Tax (GST). This exemption can also be extended to include similar services that other private organisations provide.
• General Transit Account (GTA) operators would no longer be required to file an annual declaration for payment of GST using the forward charge system in a move intended to promote commerce. Unless they provide a declaration to the contrary, if they pick this option for a specific financial year, it will automatically apply for the following years. The decision-making deadline has been pushed back from the previous financial year’s date of March 15 to March 31.

GST Appellate Tribunals

• The Council has recommended that the appointment and conditions of service for the President and Members of the forthcoming GST Appellate Tribunal be governed by the Goods and Services Tax Appellate Tribunal (Appointment and Conditions of Service of President and Members) Rules, 2023.
• The GST Appellate Tribunal’s formation and functioning are intended to be made more accessible by this proposition.
• The Council has also suggested that the Finance Act of 2023’s provisions on the GST Appellate Tribunal be made public by the government as of August 1, 2023.
• In addition, the Council has proposed that, in accordance with Section 110(4) (b) (iii) of the CGST Act 2017, the Chief Secretary of Maharashtra be selected as a member of the search and selection committee.
• The choice has been taken to implement the State Benches progressively through several stages.
• This action is made to guarantee the quick start of its activities.

Initiatives for Streamlining GST Compliance

• Based on recommendations made by the Group of Ministers (GOM), the Council has taken the following measures:

The Council recommends introducing rule 138F to the CGST Rules, 2017 and SGST Rules, 2017, on the requirement of E-way bills for the transportation of gold and precious stones classified under Chapter 71. This will be applicable to states that decide to mandate the creation of e-way bills for the intrastate transportation of these particular commodities.

• The Council advises the following steps in accordance with the GoM’s recommendations regarding capacity-based taxes and the Special Composition Scheme:
• Proposing a designated process for makers of tobacco, pan masala, and related items in accordance with section 148 of the CGST Act, 2017. The filing of specialized monthly returns and machine registration is under the purview of this procedure.
• The addition of Section 122A to the CGST Act of 2017 to penalize manufacturers who fail to register their machines specifically.
• Activation of the Finance Act of 2021’s Section 123, which modifies Section 16 of the IGST Act. The new rule will go into force on October 1, 2023.
• A notification under section 16(4) of the IGST Act, 2017, will also be released, which would limit the method for IGST refunds for the export of tobacco, pan masala, related goods, and menthol oil.

Amendments in CGST Rules of 2017

To strengthen the registration procedure and to deal with fraudulent and fake registrations, the following amendments are recommended:

Rule 10A	According to section 37 of the CGST Act, individuals who have successfully registered must provide their bank account details within 30 days of getting registration approval or before submitting the outward supply statement (FORM GSTR-1/IFF).
Rule 21 A (2A)	If valid bank account information is not provided within the timeframe outlined in rule 10A, registered persons’ registration may be automatically suspended. As a result of the changes to rule 21A(2A), this suspension procedure is now system-based
3rd Proviso in Rule 21A (4)	A new condition (the third clause in rule 21A (4) has been added that permits the system-based suspension to be automatically lifted if the registered person satisfies the criteria listed in rule 10A.
Rule 59 (6)	According to a change in rule 59(6), those who haven’t provided accurate bank account information as required by rule 10A may not be allowed to submit outward supply data utilizing FORM GSTR-1 or IFF.
Rule 9 and Rule 25	Rule 9 and Rule 25 changes do away with the need for the applicant to be present during a physical inspection of the company premises. Furthermore, even when Aadhaar authentication is complete, a physical check can still be done, particularly in high-risk circumstances.

• The incorporation of Rule 142B and Form GST DRC-01D will make it possible to recover taxes and interest where the output tax shown in GSTR-1 exceeds the liability listed in GSTR-3B by a certain amount.
• In order to notify taxpayers when their claims for Input Tax Credit (ITC) in GSTR-3B exceed a specific threshold in comparison to GSTR-2B, modifications will be made to Rule 88D, Form DRC-01C, and Rule 59(6).
• Notices will be sent to taxpayers who miss the deadline for submitting their yearly returns (Form GSTR-9/9A) using a revised version of Form GSTR-3A.
• To make it possible for taxpayer data from the GST website to be voluntarily shared with other systems, Rule 163 will be put into place.
• Following Rule 43, a new Explanation 3 will be added that includes the value of products purchased from Duty-Free stores at foreign airports as part of the definition of exempt supply, resulting in the reversal of the input tax credit.
• To make it possible for taxpayer data from the GST site to be voluntarily shared with other systems, Rule 163 will be put into place.
• In order to handle compounding amounts for offences under Section 132 of the CGST Act of 2017, a new sub-rule (3A) will be added to Rule 162.
• There will be more clarity on the place of supply for products provided to unregistered individuals thanks to Section 10(1)(ca) of the IGST Act, 2017.

Measures for Facilitation of Trade

• Relaxations for Form GSTR-9 and 9C: The Council suggested that the relaxations offered in the Financial Year (FY) 2021-2022 for different tables of Form GSTR-9 and 9C should continue for the next year (FY) 2022-23. This indicates that specific reporting guidelines or processes relating to these forms will not change within the time frame.
• Exemption for Small Taxpayers: For FY 2022-23 as well, small taxpayers having combined annual revenue of up to Rs. 2 crores are free from submitting GSTR-9/9A (annual return forms). Consequently, these yearly reports are not required to be filed by qualified small enterprises.
• Rule 36(4) of the CGST Rules 2017: As of January 1, 2022, the Input Tax Credit (ITC) linked with inward supplies stated in FORM GSTR-2B for the present tax period or any prior tax period is the only ITC that may be reimbursed under Section 54(3) of the CGST Act for accumulated ITC.
• Explanation in CGST Rules 89(4): With regard to the CGST Rules, Rule 89(4), Notification No. 14/2022-CT, issued July 5, 2022, added a new statement. This claim has implications for calculating the “adjusted total turnover” under Rule 89(4), notably in relation to the inclusion of the value of exported items.
• Refund Admissibility: An explanation of how to be eligible for a refund when exporting goods or receiving payment for exporting services takes place beyond the deadline set out in Rule 96A of the CGST Rules.
• Section 52 CGST Act, 2017 TCS liability: To clarify the Tax Collection at Source (TCS) duty described in Section 52 of the Central Goods and Services Tax (CGST) Act of 2017, a directive is scheduled to be published. This relates to circumstances where several e-commerce operators (ECOs) are involved in one transaction for the provision of products, services, or both.
• Rule 46 clause (f) of CGST Rules, 2017: A change will be implemented in clause (f) of Rule 46 in the 2017 CGST Rules in order to streamline taxpayer duties and lessen their administrative burden. With this change, it will be necessary to list only the recipient’s state name on the tax invoice instead of the recipient’s full address when taxable services are provided through an ECO or an OIDAR supplier to an unregistered recipient.
• Section 148 of the CGST Act, 2017: According to Section 148 of the CGST Act, 2017, a new process will be implemented that will let people manually file appeals against decisions made by authorised authorities in connection to taxpayers’ TRAN-1/TRAN-2 claims.
• Rules 108(1) and 109(1) of the CGST Rules, 2017: These rules will be amended to provide provisions for the manual submission of appeals in certain situations.
• Up to August 31, 2023, the amnesty programmes for failing to submit Forms GSTR-4, GSTR-9, and GSTR-10, for reversing the termination of registration, and for automatically withdrawing assessment orders issued under Section 62 of the CGST Act, 2017 will remain in effect.
• Manipur Taxpayers’ Due Date: Only for taxpayers in Manipur the due dates for reporting GSTR-1, GSTR-3B, and GSTR-7 for the months of April, May, and June 2023 would be extended till August 31, 2023.

Conclusion

Significant tax problems were discussed at the 50^th GST Council meeting. The GSTN was included in the Prevention of Money Laundering Act, GST Appellate Tribunals, Reduced taxes on animated apple shows, taxation of refreshments in theatres, and the introduction of a 22% tax on multi-vehicles were all important topics of discussion. The discussion focused on improving the GST registration procedures, streamlining various GST rates, and looking into business claims for excessive input tax credits.

FAQs

1. https://www.gst.gov.in/