Highlights of the 53rd GST Council Meeting

The 53rd Goods and Services Tax (GST) Council meeting headed by Union Minister  Nirmala Sitharaman, Ministry of Finance (MoF) and Ministry of Corporate Affairs(MoCA) was held on 22nd June 2024 in New Delhi, Delhi.

• In the exercise of the powers conferred by section 164 of the Central Goods and Services Tax (CGST) Act, 2017 (12 of 2017), the Government of India (GoI) amended the CGST Rules, 2017 which will now be called CGST (fifth amendment) Rules, 2024.

Key People: Pankaj Chaudhary, Minister of State for MoF, Pramod Sawant, Chief Minister(CM) of Goa, Conrad Sangma, CM of Meghalaya,  Deputy CMs of Bihar, Haryana, Madhya Pradesh, and Odisha, Finance Ministers of States & Union Territories (UTs) (with legislature) attended the meeting.

Recommendations relating to GST rates on Goods

Govt Implements Uniform IGST Rate Of 5 % On All Aircraft & Aircraft Engine Parts

The GST council informed that a uniform rate of 5% Integrated Goods and Services Tax (IGST) will be implemented for imports of all ‘Parts, components, testing equipment, tools and toolkits of aircraft.

• The IGST will be implemented irrespective of their Harmonized System (HS) classification.

Points to note:

i.The varying GST rates of 5%, 12%, 18% and 28% on aircraft components created challenges, including an inverted duty structure and GST accumulation in Maintenance, Repair, and Overhaul (MRO) accounts.

ii.The new policy eliminates these challenges and simply the tax structure.

iii.This aims to reduce operational costs, resolve tax credit issues, and attract investment.

list of Goods with Revised GST Rates:

Key Recommendations:

i.To extend the IGST exemption on imports of specified items for defence forces for a further period of five years till 30th June 2029.

ii.To extend IGST exemption on imports of research equipment/buoys imported under the Research Moored Array for the African-Asian-Australian Monsoon Analysis and Prediction (RAMA) programme subject to specified conditions.

iii.To exempt Compensation Cess on the imports in Special Economic Zones (SEZ) by SEZ Unit/developers for authorised operations with effect from 1st July 2017.

Other Miscellaneous Changes:

i.To exempt Compensation cess on the supply of aerated beverages and energy drinks to authorised customers by Unit Run Canteens under the Ministry of Defence(MoD).

ii.To provide Adhoc IGST exemption on imports of technical documentation for AK-203 rifle kits imported for Indian Defence forces.

Recommendations relating to GST rates on services

i.GST rates are exempted for services provided by Indian Railways to the general public.

• The services include the sale of platform tickets, facility of retiring rooms/waiting rooms, cloakroom services, battery-operated car services and Intra-Rail transactions.

ii.GST rates are exempted for services provided by Special Purpose Vehicles (SPV) to Indian Railway.

iii.GST rates are exempted for students and working professionals paying Rs 20,000 per month for hostel accommodation outside educational institutions.

• This exemption applies only if the student or professional stays in the hostel for up to 90 days.

Other Noted Changes Related to Services:

i.Co-insurance premiums between lead insurer and co-insurer and e-insurance commission transaction between insurer and re-insurer may be declared as no supply under Schedule III of Central Goods and Services Tax (CGST) Act, 2017.

ii.GST liability on reinsurance services of specified insurance schemes may be regularised on ‘as is where is’ basis for the period from 1st June 2017 to 24th January 2018.

iii.The retrocession is  ‘re-insurance of re-insurance’  and will be excluded from GST.

iv.The statutory collections made by the Real Estate Regulatory Authority (RERA) are excluded from GST.

v.Clarify non-taxability of further sharing of incentives under specific RuPay Debit Cards and  Bharat Interface for Money (BHIM)- Unified Payment Interface (UPI) schemes, defined by NPCI in consultation with participating banks.

Measures for facilitation of trade:

i.Insertion of Section 128A in CGST Act, to provide for conditional waiver of interest or penalty or both, relating to demands raised under Section 73, for FY 2017-18 to FY 2019-20. The waiver does not cover the demand of an erroneous refund.

ii.Amendment in sub-section (1) of Section 9 of the CGST Act, 2017 for not levying GST on Extra Neutral Alcohol used for the manufacture of alcoholic liquor for human consumption.

iii.Electronic Commerce Operators (ECOs) are required to collect Tax Collected at Source (TCS) on net taxable supplies under Section 52(1) of the CGST Act.

• The council has recommended reducing the TCS rate from the present 1% (0.5% CGST + 0.5% SGST/ UTGST, or 1% IGST) to 0.5 % (0.25% CGST + 0.25% SGST/UTGST, or 0.5% IGST), to ease the financial burden on the suppliers making supplies through such ECOs.

iv.Amendment in clause (ii) of subrule (1) of Rule 62 of CGST Rules, 2017 and FORM GSTR-4 to extend the due date for filing of return in FORM GSTR-4 for composition taxpayers from 30th April to 30th June following the end of the financial year.

v.Amendment of Rule 88B of CGST Rules, 2017 in respect of interest under Section 50 of CGST Act on delayed filing of returns, in cases where the credit is available in Electronic Cash Ledger (ECL) on the due date of filing the said return.

vi.Insertion of new Section 11A in CGST Act to grant power to the government to allow regularisation of non-levy or short levy of GST.

vii.The council recommended prescribing a mechanism for claiming a refund of additional IGST paid on account of upward revision in the price of the goods subsequent to their export.

Highlights:

i.Council recommended prescribing monetary limits, subject to certain exclusions, for filing of appeals in GST by the department before GST Appellate Tribunal, High Court, and Supreme Court, to reduce government litigation. the recommended monetary limits are,

• GSTAT: Rs. 20 lakhs
• High Court: Rs. 1 crore
• Supreme Court: Rs. 2 crores

ii.The council recommended the Amendment in Section 107 and Section 112 of CGST Act for reducing the amount of pre-deposit required to be paid for filing of appeals under GST.

• The maximum amount for filing an appeal with the appellate authority: Reduced from Rs. 25 crores CGST to Rs. 20 crores CGST and Rs. 25 crores State Goods and Services Tax (SGST) to Rs. 20 crores SGST.
• The amount of pre-deposit for filing an appeal with the Appellate Tribunal:  Reduced from 20% with a maximum amount of Rs. 50 crores CGST and Rs. 50 crores SGST to 10 % with a maximum of Rs. 20 crores CGST and Rs. 20 crores SGST.

iii.The council recommended amending Section 112 of the CGST Act, 2017 to allow the 3 months for filing appeals before the Appellate Tribunal starting from a date given by the Government in respect of appeal/ revision orders passed.

iv.The Council has recommended extending the deadline for availing input tax credit (ITC) on any invoice or debit note under Section 16(4) of the CGST Act. This extension applies to any GSTR 3B return filed for the financial years 2017-18, 2018-19, 2019-20, and 2020-21, with the new deadline deemed to be 30th November 2021.

• To facilitate this extension, the Council also recommended a retrospective amendment to Section 16(4) of the CGST Act, effective from 1st July 2017.

v.The council recommended amendment in section 140(7) of CGST Act w.e.f 1st July 2017 to provide for transitional credit in respect of invoices related to services provided before the appointed date, and where invoices were received by the Input Service Distributor (ISD) before the appointed date.

vi.The council recommended providing an optional facility by way of FORM GSTR-1A will be provided to facilitate the taxpayers to change the details in FORM GSTR-1 for a tax period and/ or to declare additional details, if any, before filing of return in FORM GSTR-3B for the said tax period.

vii.The council recommended excluding the taxpayers having aggregate annual turnover up to Rs. 2 crores from filing of annual returns in FORM GSTR-9/9A for the FY 2023-24.

viii.The council recommended amendment in section 122(1B) of the CGST Act with effect from 1st October 2023 to clarify that the penal provision is applicable only for those e-commerce operators, who are required to collect tax under section 52 of CGST Act, and not for other e-commerce operators.

ix.The council recommended amendment in rule 142 of CGST Rules and issued a circular to prescribe a mechanism to adjust the amount paid in respect of demand through FORM GST Demand and Recovery Certificate (DRC)-03 against the amount to be paid as pre-deposit for filing appeal.

Other measures pertaining to Law and Procedures

i.The council has recommended rolling out biometric-based Aadhaar authentication on an all-India basis in a phased manner.

• This aims to enhance the GST registration process and eliminate fraudulent Input Tax Credit (ITC) claims made using fake invoices.
• According to the provisions of Sub-rule 4A of Rule 8 of the CGST Rules, 2017, applicants for GST registration must now undergo biometric authentication.

ii.The council recommended the amendments in Section 73 and Section 74 of CGST Act, 2017 and the insertion of a new Section 74A in the CGST Act, to provide for a common time limit for the issuance of demand notices and orders irrespective of whether the case involves fraud, suppression, willful misstatement etc., or not.

• The time limit for the taxpayers to avail the benefit of reduced penalty, by paying the tax demanded along with interest, has been recommended to be increased from 30 days to 60 days.

iii.The council recommended the amendment in section 171 and section 109 of CGST Act, 2017 to provide a sunset clause for anti-profiteering under GST and for the handling of anti-profiteering cases by the Principal bench of GST Appellate Tribunal (GSTAT).

• It has also recommended the sun-set date of 1st April 2025 for receipt of any new application regarding anti-profiteering.

iv.The council has recommended amendment in Section 16 of the IGST Act and section 54 of the CGST Act to curtail refund of IGST in cases where export duty is payable.

v.The threshold to report Business to Consumer (B2C) inter-state supplies invoice-wise in Table 5 of FORM GSTR-1 was advised to be reduced from Rs 2.5 Lakh to Rs 1 Lakh.

vi. The Council recommended that return in FORM GSTR-7, to be filed by the registered persons who are required to deduct tax at source under section 51 of CGST Act, is to be filed every month irrespective of whether any tax has been deducted during the said month or not.

• It has also been recommended that no late fee may be payable for delayed filing of the Nil FORM GSTR-7 return.

About Ministry of Finance
Union Minister– Nirmala Sitharaman (Rajya Sabha- Karnataka)
Minister of State (MoS)- Pankaj Chaudhary (Constituency- Maharajganj, Uttar Pradesh)