GST Council’s 53rd meeting took important decisions held on 22/06/2024

GST Council’s 53rd meeting took important decisions

The 53^rd GST Council Meeting, chaired by Finance Minister Smt. Nirmala Sitharaman, made several recommendations aimed at simplifying GST regulations, reducing taxpayer burden, and streamlining trade and compliance processes.

• Waiver of Interest and Penalties: The GST Council has decided to exempt interest and penalties for demand notices issued under section 73 of CGST for the fiscal years 2017-18, 2018-19, and 2019-20, provided that the cases do not involve fraud, suppression, or misstatement. This exemption applies to situations where the taxpayer settles the full amount mentioned in the notice by March 31, 2025.

• Relaxation in condition of section 16(4) of the CGST Act: The time limit for claiming Input Tax Credit (ITC) on invoices or debit notes in any GSTR-3B filed up to November 30, 2021 (for the fiscal years 2017-18, 2018-19, 2019-20, and 2020-21), may now be deemed to be November 30, 2021.

Additionally, provisions of section 16(4) will be relaxed for returns filed by the registered person within thirty days of the order of revocation, covering the period from the date of cancellation of registration to the date of revocation of cancellation of registration.

• Reduction of Government Litigation by Fixing monetary limits for filing appeals under GST: The department is advised to adhere to the prescribed monetary thresholds when submitting appeals before the respective legal bodies. These thresholds are set at Rs.20 lakh for the GST Appellate Tribunal, Rs.1 crore for the High Court, and Rs.2 crore for the Supreme Court.

• Amendment in Section 107 and Section 112 of CGST Act for reducing the amount of pre-deposit: The pre-deposit limit for filing an appeal before appellate authorities will be decreased from Rs.25 crore under CGST and SGST each to Rs.20 crore for each. Additionally, the pre-deposit amount for appealing before the GST Appellate Tribunal has been reduced from 20% with a maximum of Rs.50 crores under CGST and SGST each to 10% with a maximum of Rs.20 crores under CGST and SGST each.

• Tax Rate Changes: Various goods and services see tax rate changes, including a uniform 5% IGST rate on aircraft parts and a 12% GST rate on milk cans and solar cookers.

• Exemptions: To grant an exemption for the services offered by Indian Railways to the public, such as the sale of platform tickets, provision of retiring rooms/waiting rooms, cloak room services, and battery-operated car services, as well as to exempt the Intra-Railway transactions, the regularization of the issue from 20.10.2023 until the issuance of the exemption notification will be implemented.

• Rolling out of bio-metric based Aadhaar authentication on All-India basis: Biometric based Aadhaar authentication conducted at the GST Suvidha Kendra will be rolled out for GST registration on all-India basis in a phased manner.

• Sunset Clause to amend Sections 109 & 171: A sunset clause will be introduced for unresolved anti-profiteering cases, and the hearing panel will be relocated from CCI to the principal bench of GSTAT. The GST Council has also proposed a deadline of 1st April 2025 for the submission of new applications concerning anti-profiteering.

• Compensation Cess Exemption: GST Council recommends exemption from Compensation Cess leviable on the imports in SEZ, by SEZ Unit/developer for authorized operations from 1st July 2017.

• Reduction in rate of TCS to be collected by the ECOs: Earlier, E-Commerce Operators (ECOs) were required to gather Tax Collected at Source (TCS) at a rate of 1% (0.5% for both CGST and SGST/1% for IGST) on net taxable supplies as per Section 52(1) of the CGST Act.

It is now recommended to reduce this to 0.5% (0.25% for CGST and 0.25% for SGST/UTGST/0.5% for IGST).

• Time limit for filing appeals in GST Appellate Tribunal: The GST Council has proposed an amendment to Section 112, allowing a 3-month window for filing appeals before the GST Appellate Tribunal. The commencement date for this provision is expected to be announced by the Government, with a high probability of being revealed by August 5, 2024, which is the deadline.

• Change in due date for filing of return in Form GSTR-4: The deadline for filing GSTR-4 by composition taxable persons has been extended from the current date of April 30th to June 30th, 2024, starting from the financial year 2024-25.

• Amendment of Rule 88B of CGST Rules, 2017: The GST Council has proposed waiving off interest charges on the funds available in the electronic cash ledger on the due date for filing GSTR-3B, which are utilized during the filing process of the return in case of late filing of GSTR-3B.

• Insertion of Section 11A: The new provision allows regularization of non-levy or short levy of GST, where tax was being underpaid or unpaid due to common trade practices.

• Refund of additional IGST paid on account of upward revision in the price of goods subsequent to export: A mechanism is being implemented to facilitate the refund process for taxpayers who have paid extra IGST as a result of a price increase in exported goods, allowing them to claim refunds for the additional amount paid.

• Valuation of Import Services: The Council has clarified that if a foreign affiliate provides services to a related domestic entity that is eligible for full input tax credit, the value of the services declared in the invoice can be considered open market value under the second proviso to rule 28(1) of the CGST Rules. If the invoice is not issued, the value of the services may be declared as Nil and may be deemed as open market value under the second proviso to rule 28(1) of the CGST Rules.

• ITC on Ducts and Manholes: The Council recommended to clarify that input tax credit is not restricted in respect of ducts and manhole used in network of optical fiber cables (OFCs), under clause (c) or under clause (d) of sub-section (5) of section 17 of CGST Act.

• Valuation of Corporate Guarantees: GST Council recommended amendment of rule 28(2) of CGST Rules retrospectively with effect from 26.10.2023 and issuance of a circular to clarify various issues regarding valuation of services of providing corporate guarantees between related parties. It is inter alia clarified that valuation under rule 28(2) of CGST Rules would not be applicable in case of export of such services and where the recipient is eligible for full input tax credit.

• RCM Invoicing: The Council recommended to clarify that in cases of supplies received from unregistered suppliers, where tax has to be paid by the recipient under reverse charge mechanism (RCM) and invoice is to be issued by the recipient only, the relevant financial year for calculation of time limit for availment of input tax credit under the provisions of section 16(4) of CGST Act is the financial year in which the invoice has been issued by the recipient.

• New form GSTR-1A: The implementation of a new form GSTR-1A, which enables taxpayers to include or modify details of GSTR-1 for the current tax period or IFF for the first and second month of the quarter, has been approved by the GST Council. This functionality is particularly useful for rectifying any additions/omissions made before filing GSTR-3B.

• Annual Return turnover limit: Taxpayers with an aggregate annual turnover of up to Rs.2 crore will be exempted from filing the annual return in GSTR-9/9A for FY 2023-24.

• Section 122(1B) to be amended: The amendment will take effect retrospectively from October 1, 2023, to make it clear that the penal provision applies exclusively to ECOs obligated to collect TCS under section 52, and not to other ECOs.

• Pre-deposit amount paid through DRC-03 can be settled against demand: A circular will be issued to establish a procedure for adjustment of an amount paid in respect of a demand through Form GST DRC-03 against the amount to be paid as pre-deposit for filing appeal.

• Amendments in Section 73 and 74: Both provisions will now have a uniform time limit for issuing demand notices and orders, regardless of whether the cases are classified as fraud or non-fraud. Taxpayers will also have an extended period of 60 days, instead of the previous 30 days, to claim the benefit of reduced penalty by paying the tax demanded along with interest.

• Restriction on IGST Refund: The Council, vide amendments in section 16 of IGST Act and section 54 of CGST Act, recommended that the refund of IGST will not be granted in cases where export duty is payable. This rule is applicable to both exports and supplies made to SEZ unit/developer, regardless of whether tax is paid or not.

• Reporting requirement in GSTR-1: The reporting threshold for interstate supplies made to consumers (B2C) will be lowered from Rs.2.5 lakh to Rs.1 lakh in Table 5 of GSTR-1.

• Mandatory filing of GSTR 7: It is now compulsory to file GSTR-7 even in cases where no TDS has been deducted, with a requirement to report invoices individually, and no penalty will be imposed for non-filing when there are no transactions to report.

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