Date: 22nd June 2024 Chairperson: Union Minister for Finance & Corporate Affairs, Smt. Nirmala Sitharaman
The 53rd GST Council meeting, chaired by the Union Minister for Finance, resulted in several important recommendations aimed at facilitating trade, streamlining compliance, and adjusting GST rates.
Here are the key highlights:
Tax Compliance and Filing
- Introduction of FORM GSTR-1A: A new optional facility, FORM GSTR-1A, will allow taxpayers to amend or add details in FORM GSTR-1 before filing returns in FORM GSTR-3B, ensuring accurate liability auto-population.
- Threshold for B2C Inter-State Supplies: The threshold for reporting B2C inter-State supplies invoice-wise in Table 5 of FORM GSTR-1 has been reduced from Rs 2.5 lakh to Rs 1 lakh.
- FORM GSTR-7 Filing Requirements: Taxpayers required to deduct tax at source must file FORM GSTR-7 monthly, regardless of tax deductions, and no late fees will be charged for delayed Nil returns. Invoice-wise details are now mandatory in FORM GSTR-7.
- Annual Return Exemption: Taxpayers with an annual turnover of up to Rs 2 crore are exempt from filing annual returns in FORM GSTR-9/9A for FY 2023-24.
Procedural Adjustments
- Sunset Clause for Anti-Profiteering Applications: New applications for anti-profiteering will not be accepted after April 1, 2025.
- Changes in Export Duty Refund: Refunds for goods subjected to export duty are restricted, affecting exports both with and without tax payments, and supplies to SEZ units or developers.
- Section 122(1B) of CGST Act: The amendment clarifies that the penal provision applies only to e-commerce operators required to collect tax under section 52 of the CGST Act.
- Bio-Metric Aadhaar Authentication: A phased roll-out of biometric-based Aadhaar authentication for registration applicants will help combat fraudulent input tax credit claims.
- Common Time Limit for Demand Notices: A common time limit for issuing demand notices and orders under Sections 73 and 74 of the CGST Act, irrespective of fraud, suppression, wilful misstatement etc, involvement. The time limit for availing reduced penalty benefits is extended to 60 days.
- Anti-Profiteering Provisions: Amendments to section 171 and section 109 of the CGST Act introduce a sunset clause for anti-profiteering and transfer cases to the GST Appellate Tribunal. New applications for anti-profiteering will not be accepted after April 1, 2025.
Changes in GST Tax Rates
- Goods:
- Aircraft Parts: Uniform 5% IGST on imports of parts, components, and tools for aircraft MRO activities.
- Milk Cans: 12% GST on all milk cans (steel, iron, aluminum).
- Paper Products: GST reduced from 18% to 12% on cartons, boxes, and cases of both corrugated and non-corrugated paper.
- Solar Cookers: 12% GST on all solar cookers.
- Sprinklers: Clarification that all types of sprinklers, including fire water sprinklers, attract 12% GST.
- Defence Imports: IGST exemption extended for specified defence imports till June 2029.
- SEZ Imports: Compensation Cess exemption on imports by SEZ units/developers effective from 1st July 2017.
- Services:
- Indian Railways: Exemption for services such as platform tickets, retiring rooms, and intra-railway transactions including services provided by special purpose vehicles (SPV) to Indian railway.
- Accommodation Services: Exemption for accommodation services valued up to Rs. 20,000 per month per person for a minimum continuous period of 90 days.
- Insurance Services: Co-insurance, ceding/re-insurance commission and reinsurance transactions, including retrocession, declared as no supply under Schedule III of CGST Act.
|
Measures for Trade Facilitation
|
|
|---|---|
|
Section 128A Waiver
|
The GST Council recommends the insertion of Section 128A in the CGST Act. This provision allows for a conditional waiver of interest or penalty (or both) for demands raised under Section 73. The waiver applies to fiscal years 2017-18, 2018-19, and 2019-20. Taxpayers who pay the full amount of tax demanded in the notice by March 31, 2025, will benefit C1from this waiver. However, it does not cover erroneous refund demands.
|
|
Reduction in Government Litigation
|
Prescribed monetary limits for filing appeals: Rs. 20 lakhs for GSTAT, Rs. 1 crore for High Court, and Rs. 2 crores for Supreme Court.
|
|
Pre-Deposit Reduction for Appeals
|
Recommended amendments to Sections 107 and 112 of the CGST Act to reduce the pre-deposit amount required for filing appeals under GST. Here are the key changes:
i) Appellate Authority: The maximum pre-deposit amount for filing an appeal with the appellate authority has been reduced from Rs. 25 crores CGST and Rs. 25 crores SGST to Rs. 20 crores CGST and Rs. 20 crores SGST. ii) Appellate Tribunal: The pre-deposit amount for filing an appeal with the Appellate Tribunal has been further reduced. It was previously 20% with a maximum of Rs. 50 crores CGST and Rs. 50 crores SGST, but now it is 10% with a maximum of Rs. 20 crores CGST and Rs. 20 crores SGST. |
|
ENA Taxation
|
Amendments to exclude Extra Neutral Alcohol (ENA) from levy of GST when used for manufacturing alcoholic beverages.
|
|
TCS Rate Reduction for ECOs
|
Under section 52(1) TCS rate reduced from 1% to 0.5% for supplies made through Electronic Commerce Operators.
|
|
GST Appellate Tribunal Appeals
|
Amending section 112 to allow a three-month period for filing appeals before the Appellate Tribunal from a date to be notified.
|
|
Input Tax Credit Relaxation
|
Retrospective amendment in section 16(4) to allow input tax credit for FY 2017-18 to 2020-21 through returns filed by 30th November 2021.
|
|
GSTR-4 Due Date Change
|
Recommended an amendment in clause (ii) of sub-rule (1) of Rule 62 of CGST Rules, 2017 for extension of the due date for composition taxpayers to file GSTR-4 from 30th April to 30th June for FY 2024-25 onwards.
|
|
Interest on Delayed Filing
|
Amendment to rule 88B specifies that where an amount is available in the Electronic Cash Ledger (ECL) on the due date of filing the FORM GSTR-3B return and is subsequently debited while filing the return, it will not be included in the calculation of interest under Section 50 of the CGST Act for delayed filing.
|
|
Powers to Waive Duties
|
Council has proposed the insertion of a new Section 11A in the CGST Act, states that if tax payments were inadvertently short-paid or not paid due to prevailing practices, this provision allows for regularization without imposing additional penalties.
|
|
Refund Mechanism for IGST
|
Mechanism for claiming refunds of additional IGST paid due to upward price revisions after export.
|
|
Valuation of Services
|
• Full Input Tax Credit (ITC): When a foreign affiliate provides services to a related domestic entity, and the recipient is eligible for full input tax credit, the value of such services declared in the invoice by the related domestic entity may be deemed as the open market value. This is in accordance with the second proviso to rule 28(1) of the CGST Rules.
• No Invoice Issued by Related Domestic Entity: If the related domestic entity does not issue an invoice for any service provided by the foreign affiliate, and the recipient is eligible for full input tax credit, the value of such services may be deemed as Nil. Again, this aligns with the second proviso to rule 28(1) of the CGST Rules. |
|
ITC on ducts and manholes used in network of Optical Fiber Cable (OFCs)
|
Council has clarified that input tax credit (ITC) is not restricted for ducts and manholes used in the network of optical fiber cables (OFCs). This clarification applies to both clause (c) and clause (d) of sub-section (5) of section 17 of the CGST Act.
|
|
Custodian services by banks
|
GST Council has clarified that the place of supply for custodial services provided by Indian banks to Foreign Portfolio Investors (FPIs) is determinable as per Section 13(2) of the IGST Act, 2017.
|
|
Valuation of corporate guarantee
|
• The amended rule will clarify that the valuation provisions under Rule 28(2) do not apply to the export of corporate guarantee services.
• It is also clarified that Rule 28(2) will not apply where the recipient of the corporate guarantee service is eligible for full input tax credit. |
|
Invoice by recipient under Reverse Charge Mechanism (RCM)
|
Council has clarified that when supplies are received from unregistered suppliers, and the recipient is liable to pay tax under the reverse charge mechanism (RCM), the relevant financial year for calculating the time limit to avail input tax credit (ITC) under Section 16(4) of the CGST Act is the year in which the recipient issues the invoice.
|