The 53rd GST Council meeting, chaired by Union Finance Minister Smt. Nirmala Sitharaman, was recently held to address critical issues and streamline the Goods and Services Tax (GST) framework. Here are the significant recommendations and decisions from the meeting.
Changes in GST Tax Rates
GST Rates on Goods
Uniform 5% IGST on Aircraft Parts
To boost Maintenance, Repair, and Overhaul (MRO) activities, a uniform rate of 5% IGST will apply to imports of parts, components, testing equipment, tools, and tool-kits of aircraft, irrespective of their HS classification, subject to specified conditions.
12% GST on Milk Cans
All milk cans (steel, iron, aluminum) will now attract a 12% GST.
Reduced GST on Paper Products
GST on cartons, boxes, and cases of both corrugated and non-corrugated paper or paper-board has been reduced from 18% to 12%.
12% GST on Solar Cookers
All solar cookers, whether single or dual energy source, will attract 12% GST.
Poultry Machinery Parts
The GST rate on parts of poultry keeping machinery has been clarified and regularized at 12%.
12% GST on Sprinklers
All types of sprinklers, including fire water sprinklers, will attract 12% GST.
IGST Exemption for Defense Imports
IGST exemption on specified items for defense forces extended for five years till June 30, 2029.
Exemption on Research Equipment
IGST exemption on imports of research equipment under the RAMA program extended, subject to specified conditions.
Compensation Cess Exemption for SEZ Imports
Compensation Cess exempted on imports by SEZ units/developers for authorized operations from July 1, 2017.
Ad-hoc IGST Exemption for Defense Documentation
Exemption granted for technical documentation imports for AK-203 rifle kits.
Exemption on Beverages for Defense Canteens
Compensation Cess exempted on the supply of aerated beverages and energy drinks to authorized customers by Unit Run Canteens under the Ministry of Defence.
GST Rates on Services
Railway Services Exemptions
GST exempted on services provided by Indian Railways to the general public, including platform tickets, retiring rooms, waiting rooms, cloak room services, and intra-railway transactions. This exemption will be regularized from October 20, 2023, to the date of the exemption notification.
Exemption for SPV Services to Railways
Services provided by Special Purpose Vehicles (SPV) to Indian Railways, allowing the use of infrastructure built and owned by SPV during the concession period, will be GST exempt.
Accommodation Services
Accommodation services with a value of up to Rs. 20,000 per month per person, provided for a minimum continuous period of 90 days, will be GST exempt.
Co-insurance and Re-insurance Services
Co-insurance premiums apportioned by lead insurers to co-insurers, and re-insurance commissions, declared as no supply under Schedule III of the CGST Act, regularizing past practices.
Exemption for Certain Insurance Schemes
GST liability on reinsurance services of specified insurance schemes covered by notification No. 12/2017-CT (Rate) regularized for the period from July 1, 2017, to January 24, 2018.
Statutory Collections by RERA
Statutory collections by the Real Estate Regulatory Authority (RERA) are exempt from GST.
Incentives for RuPay and BHIM-UPI Transactions
Clarification issued that further sharing of incentives by acquiring banks with other stakeholders under the promotion scheme for RuPay Debit Cards and low-value BHIM-UPI transactions is not taxable.
Measures for Facilitation of Trade
Waiver of Interest and Penalties
Interest and penalties for demand notices issued under Section 73 of the CGST Act for fiscal years 2017-18, 2018-19, and 2019-20 are waived if the full tax demanded is paid by March 31, 2025. This waiver excludes erroneous refunds and will be implemented through the insertion of Section 128A in the CGST Act.
Reduction in Government Litigation
The Council recommended monetary limits for filing appeals: Rs. 20 lakh for GST Appellate Tribunal, Rs. 1 crore for High Court, and Rs. 2 crore for Supreme Court to reduce government litigation.
Reduced Pre-deposit for Appeals
The pre-deposit amount for filing appeals has been reduced, easing cash flow and working capital blockage for taxpayers. For appeals with the appellate authority, the maximum pre-deposit amount is reduced to Rs. 20 crores CGST and Rs. 20 crores SGST.
GST on ENA
Amendments recommended to exclude rectified spirit/Extra Neutral Alcohol (ENA) from GST when supplied for manufacturing alcoholic liquors for human consumption.
Reduced TCS Rate for ECOs
The TCS rate for Electronic Commerce Operators reduced from 1% to 0.5% to ease the financial burden on suppliers.
Extended Time for Filing Appeals
The three-month period for filing appeals before the Appellate Tribunal will start from a government-notified date, giving taxpayers sufficient time to file appeals in pending cases.
Relaxation in Input Tax Credit Time Limit
The time limit to avail input tax credit for initial years (2017-18 to 2020-21) extended retrospectively to November 30, 2021.
Extended Due Date for GSTR-4
The due date for filing GSTR-4 for composition taxpayers extended from April 30 to June 30 following the end of the financial year, starting from FY 2024-25.
Interest on Delayed Filing
Amendment in Rule 88B to provide that amounts available in the Electronic Cash Ledger on the due date of filing GSTR-3B, debited while filing the return, will not attract interest under Section 50 for delayed filing.
New Section 11A in CGST Act
Insertion of Section 11A to allow the government to regularize non-levy or short levy of GST due to common trade practices.
Refund for Additional IGST on Exports
Mechanism prescribed for claiming a refund of additional IGST paid due to upward price revisions of exported goods.
Valuation of Import of Services
Clarification on the valuation of services provided by foreign affiliates to related domestic entities for full input tax credit eligibility.
Input Tax Credit on OFC Network
Clarification that input tax credit is not restricted for ducts and manholes used in the network of optical fiber cables.
Place of Supply for Custodial Services
Place of supply for custodial services provided by Indian banks to Foreign Portfolio Investors is determined as per Section 13(2) of the IGST Act.
Corporate Guarantee Valuation
Clarification on the valuation of corporate guarantees provided between related parties, with retrospective amendments in Rule 28(2) of the CGST Rules.
Provisions for RCM
Clarification on the time limit for availing input tax credit for supplies received from unregistered suppliers under reverse charge mechanism.
Clarifications to Reduce Litigation
Multiple clarifications issued to reduce litigation and provide clarity on taxability, input tax credit, and compliance requirements for various transactions.
Transitional Credit for Services
Amendment in Section 140(7) of the CGST Act to provide transitional credit for invoices pertaining to services provided before the appointed date.
GSTR-1A Facility
New optional facility by way of FORM GSTR-1A to amend or declare additional details before filing GSTR-3B.
Exemption from Annual Return
Exemption from filing annual return in FORM GSTR-9/9A for FY 2023-24 for taxpayers with an aggregate annual turnover up to Rs. 2 crore.
Penal Provisions for E-commerce Operators
Amendment in Section 122(1B) of the CGST Act to clarify that penal provisions apply only to those required to collect tax under Section 52.
Adjustment of Amounts Paid
Mechanism prescribed for adjusting amounts paid against demands through FORM GST DRC-03 for pre-deposit for filing appeals.
Aadhaar Authentication
Biometric-based Aadhaar authentication for GST registration applicants to be rolled out pan-India in phases.
Common Time Limit for Demand Notices
Common time limit for issuing demand notices and orders for cases involving fraud and non-fraud charges.
Sunset Clause for Anti-profiteering
Sunset clause for anti-profiteering applications set for April 1, 2025.
Refund Restrictions for Export Duty Goods
Amendments to restrict IGST refunds for goods subjected to export duty, including those supplied to SEZ units.
Reduced Reporting Threshold for B2C Supplies
Threshold for invoice-wise reporting of B2C inter-State supplies in GSTR-1 reduced from Rs. 2.5 lakh to Rs. 1 lakh.
Nil Returns for GSTR-7
No late fee for delayed filing of Nil GSTR-7 returns, with invoice-wise details required for each month.
Conclusion
The 53rd GST Council meeting’s recommendations reflect a comprehensive approach to addressing taxpayer concerns, simplifying compliance, and reducing litigation. These measures, once implemented through relevant notifications and law amendments, will significantly ease the GST compliance burden and provide clarity on various aspects of the GST framework.
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