On July 11, 2023, the 50th meeting of the Goods and Services Tax (GST) Council was held in New Delhi, Delhi under the chairpersonship of Union Minister Nirmala Sitharaman, Ministry of Finance.
Matters Covered during the 50th GST Council meeting
i.Rate decisions taken on goods and services, as well as clarifications issued and rate regularizations undertaken.
ii.Recommendations of various Group of Ministers (GoMs) were discussed.
iii.Clarification on compensation cess dues have been paid to the states that have submitted AG-certified claims, and the states yet to submit their AG certificates will also be settled on submission of the same.
GST Council Meeting: The 50th milestone
i.To mark the milestone of 50th meeting of the GST Council, Union Minister Nirmala Sitharaman(Chairperson) released a short video film titled ‘GST Council- 50 steps towards a journey’ in the presence of the Members of the Council.
- The film showcases the evolution of the GST Council and is available in Hindi, English, and 11 regional languages.
ii.To commemorate this milestone, the Chief Post Master General (CPMG), Delhi, presented the Chairperson and Members of the Council with a Special Cover and customised ‘My Stamp’.
Recommendations- The Key Part
The following are the recommendations relating to changes in GST tax rates, measures for facilitation of trade and measures for streamlining compliances in GST were made:
Changes in GST Tax Rates:
I.Recommendations relating to GST rates on Goods
A.Changes in GST Rates of Goods:
The GST on snack pellets, the semi-finished ingredient that is used to manufacture snacking products is decreased to 5% from 18%. This includes uncooked, unfried and extruded snack palettes.
- There will regularize payment of GST on uncooked /unfried snack pellets during the past period on ‘as is basis’.
B.Others Changes related to Goods:
i.Integrated Goods and Services Tax (IGST) exemption on imported Dinutuximab (Quarziba), a rare cancer drug, for personal use.
ii.IGST exemption on medicines and Food for Special Medical Purposes (FSMP) for rare diseases enlisted under the National Policy for Rare Diseases, 2021 when imported for personal use or by Centers of Excellence.
iii.Taxable reverse charge mechanism for supply of raw cotton by agriculturists to cooperatives.
iv.GST reduction on imitation zari thread or yarn from 12% to 5% and regularization of past GST payments on ‘as is basis’.
v.Inclusion of utility vehicles meeting specified parameters in compensation cess notification by amending its entry 52B.
- These parameters are Length exceeding 4000 mm, Engine capacity exceeding 1500 cc and having Ground Clearance of 170 mm & above and to clarify by way of explanation that ‘Ground clearance’ means Ground Clearance in un-laden condition.
vi.GST rate reduction on LD (Linz-Donawitz) slag from 18% to 5% for better utilization and environmental protection.
vii.Regularization of trauma, spine, and arthroplasty implant matters prior to July 18, 2022 on ‘as is basis’.
viii.GST reduction on fish soluble paste from 18% to 5% and regularization of past GST payments on ‘as is basis.
ix.Regularization of dessicated coconut matters from July 1, 2017 to July 27, 2017 on ‘as is basis’.
x.Notification of earlier ad valorem rate for pan masala, tobacco products, etc., for levy of Compensation Cess.
xi.Inclusion of RBL Bank and ICBC Bank in the list of specified banks for IGST exemption on gold, silver, or platinum imports.
- Updation of the list of banks /entities eligible for such IGST exemption as per Annexure 4B (HBP) of Foreign Trade Policy 2023.
xii.Consequential changes in notifications as per new Foreign Trade Policy 2023.
xiii.Regularization of GST issues on plates and cups made of areca leaves prior to October 1, 2019.
xiv.Regularization of GST issues on biomass briquettes from July 1, 2017 to October 12, 2017.
II.Recommendations relating to GST rates on Services
A.Changes in GST rates of services
GST exemption on satellite launch services supplied by Indian Space Research Organisation (ISRO), Antrix Corporation Limited and New Space India Limited (NSIL) may be extended to similar services supplied by organizations in the private sector.
B.Other changes relating to Services
i.Goods Transport Agencies (GTA) no longer need to file annual declarations for paying GST under forward charge. If they choose this option for a specific financial year, it will automatically apply for future years unless they choose to revert to reverse charge mechanism (RCM).
ii.The deadline for GTAs to exercise the option for paying GST under forward charge is moved to 31st March of the previous financial year, starting from 1st January of the same year.
iii.Services provided by a director to a company in their personal capacity, like renting immovable property, are not taxable under RCM.
iv.Food and beverages supplied in cinema halls are taxed as restaurant services if they are provided as part of a service and separately from the cinema exhibition service.
- When cinema tickets and food/beverages are bundled as a composite supply, the entire supply is taxed at the rate applicable to the cinema exhibition service.
III.Second Report of Group of Ministers (GoM) on Casinos, Race Courses and Online Gaming
According to the GST council, a uniform tax rate of 28% will be applied to Casino, Horse Racing, and Online gaming. The tax will be based on the face value of purchased chips for casinos, on the full value of bets placed with bookmakers/totalisators for horse racing, and on the full value of bets placed for online gaming.
Background:
A GoM was formed to address taxation on casinos, horse racing, and online gaming. They submitted two reports (initial report in June 2022 during the 47th GST Council meeting and secondly before 50th GST meet), but no consensus was reached on tax rates. Then the final decision of 28% tax rate was made by the GST Council.
Measures for Facilitation of Trade:
i.Goods and Services Tax Appellate Tribunal (Appointment and Conditions of Service of President and Members) Rules, 2023:Â
- The Council recommended the rules for appointing the President and Members of the proposed GST Appellate Tribunal to ensure its smooth establishment and functioning.
- Notification of Finance Act, 2023: The Council suggested that the provisions related to the GST Appellate Tribunal in the Finance Act, 2023 be notified by the Centre, w.e.f. August 1, 2023, allowing for the Tribunal’s prompt implementation.
- Nomination of Chief Secretary of Maharashtra: The Council recommended the nomination of the Chief Secretary of Maharashtra as a member of the Search cum Selection committee, as per Section 110(4)(b)(iii) of the CGST Act, 2017.
- Phased Establishment of State Benches: The Council decided to establish State Benches of the GST Appellate Tribunal gradually, in a phased manner.
ii.Annual Returns for FY 2022-23: The Council recommended continuing the relaxations provided in FY 2021-22 for various tables of FORM GSTR-9 and FORM GSTR-9C. Additionally, to ease compliance for smaller taxpayers, the exemption from filing annual returns (FORM GSTR-9/9A) will be extended for FY 2022-23 for taxpayers with an aggregate annual turnover up to Rs 2 crore.
iii.To ease compliance burden of the taxpayers, clause (f) of rule 46 of CGST Rules, 2017 amended to provide for requirement of only name of the State of the recipient, and not the name and full address of the recipient, on the tax invoice in cases of supply of taxable services by or through an Electronic Commerce Operator (ECO) or by a supplier of OIDAR (Online Information Database Access and Retrieval) services to an unregistered recipient.
iv.Special procedure to be provided under section 148 of CGST Act, 2017 to enable manual filing of appeal against the orders passed by proper officers in respect of TRAN-1/ TRAN-2 claims of the registered persons, filed in pursuance of the directions of Hon’ble Supreme Court in case of the Union of India v/s Filco Trade Centre Pvt. Ltd.
- Rule 108(1) and rule 109(1) of CGST Rules, 2017 to be amended to provide for manual filing of appeal under certain specified circumstances.
v.Council recommended to extend the amnesty schemes regarding non-filers of FORM GSTR-4, FORM GSTR-9 & FORM GSTR-10 returns, revocation of cancellation of registration and deemed withdrawal of assessment orders issued under Section 62 of CGST Act, 2017, till August 31, 2023.
vi.ISD Mechanism Clarification: The Council recommended clarifying the Input Service Distributor (ISD) mechanism. It proposed that the distribution of input tax credit for common input services from third parties to distinct entities should not be mandatory as per current GST provisions. However, a prospective amendment to the GST law may be introduced to make the ISD mechanism mandatory for such common input services.
Measures for streamlining compliances in GST:
i.The Council has recommended to insert rule 138F in CGST Rules, 2017, as well as in SGST Rules, 2017 of the States, who want to mandate the requirement of generation of e-way bills for intra-State movement of gold and precious stones under Chapter 71 within their States.
ii.There will be issuance of notification under section 148 of CGST Act, 2017 prescribing a special procedure to be followed by the manufacturers of tobacco, pan masala & other similar items inter alia for registration of machines and for filing of special monthly returns;
iii.There will be insertion of section 122A in CGST Act, 2017 providing for special penalty for non-registration of machines by such manufacturers;
iv.Provisions of section 123 of Finance Act, 2021, amending section 16 of IGST Act, to be notified with effect from October 1, 2023.
v.Notification to be issued under section 16(4) of IGST Act. 2017 to provide for restriction of IGST refund route in respect of exports of tobacco, pan masala & other similar items, and mentha oil.
vi.The Council amendments in CGST Rules, 2017 to strengthen the registration process and to effectively deal with the menace of fake and fraudulent registrations in GST.
vii.Mechanism for ITC Differences (FORM GSTR-2B and FORM GSTR-3B): The Council recommended a system-based intimation to taxpayers regarding excess ITC claimed in FORM GSTR-3B compared to FORM GSTR-2B above a specified threshold.
- Taxpayers will have an auto-compliance procedure to explain the reasons or rectify the difference. Rule 88D and FORM DRC-01C will be added to the CGST Rules, 2017, along with an amendment in rule 59(6) to minimize ITC mismatches and prevent misuse of the ITC facility in GST.
vii.Pilot to be conducted in Puducherry for risk-based biometric-based Aadhaar authentication of registration applicants. Following the system’s readiness test in Gujarat and Puducherry, Andhra Pradesh is set to join the pilot.
viii.The GST Council has recommended to form a State level coordination Committee comprising of GST officers from both State and Central GST administrations for knowledge sharing on GST matters and coordinated efforts towards administrative and preventive measures.
ix.The council also discussed about the 2nd interim report of the Group of Ministers (GoM) on IT System Reforms.
- GoM has recommended the measures to reduce frauds in GST through System based measures for strengthening registration process in GST, more use of third-party data for risk management and controlling flow of fake Input Tax Credit down the supply chain.
