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48th GST Council Meeting

Updated on :  

08 min read.

The 48th GST Council meeting was held on 17th December 2022, Saturday, virtually from New Delhi. Smt Nirmala Sitharaman, the Union Finance Minister, chaired the meeting, along with the Finance Ministers of the states/Union Territories.

Since the 48th GST Council meeting was scheduled after a gap of 5-6 months, it had many items on its agenda. The 47th GST Council meeting happened in June 2022. Read on to learn about the highlights, live updates, and key expectations from the 48 GST Council meeting.

48th GST Council Meeting Highlights

Eight points out of 15 items on the Council’s agenda, including data-sharing matters, were discussed. The rest of the matters that could not be taken up refers to revenue augmentation matters, setting up of GST appellate tribunal and GST on Gutkha and pan masala. The meeting ended early due to time constraints expressed by most of the GST Council members.

Summary of Key Highlights of the 48th GST Council meeting are as follows-

  • Decriminalisation of three kinds of offences under GST- Obstruction of duties of an officer, the threshold amount of tax for launching criminal offence under GST increased from the current limit of Rs.1 crore to 2 crores, except where fake invoices are involved and to reduce the workload of courts decriminalised the compounding of offence up to a limit;
  • A few GST rate rationalisation matters were taken up – GST on pulse husks for cattle feed (including chilka and concentrates) was reduced to nil from 5%. Further, the concessional 5% GST on ethyl alcohol was extended to refineries for blending with petrol, which was earlier charged at 18%.
  • Clarifications were given on a few taxation matters, such as the GST on equipment used by petroleum companies for exploration and how to deal with mismatches of invoices in GSTR-1 vs GSTR-3B in the early years.
  • e-Commerce operators can allow the suppliers to be registered under the composition scheme and unregistered vendors, facilitating e-commerce for all the micro-enterprises.
  • The second report on casinos and online gaming was not circulated and hence not part of the 48th meeting agenda.
  • No decision has been taken on any GST rate hike.
  • Cess on SUV at 22% clarified- Applicable if meets 4 criteria-
    • Popularly known as SUV, 
    • The engine capacity of more than 1500 cc,
    • Length more than 4000 mm and
    • Ground clearance equal to or more than 170 mm
  • Further, Council clarified that no GST on insurance is levied on the No-claim bonus offered by insurance companies, so it is deductible from the premium without a GST charge.

The details of the above highlights are explained below-

Tax Rates Reduced and clarified

The GST rates on the following items were slashed with effect from 1st January 2023-

Item descriptionBefore After
Husk of pulses, along with chilka and concentrates, chuni or churi, and khanda used as cattle feed*5%Nil
Ethyl alcohol that is sold to refineries to blend it with the motor spirit or petrol18%5%
Sale of Mentha arvensis, similar to Mentha oilNo RCMUnder RCM

*Intervening period from 3rd August 2022, as per the Circular clarifying levy, is regularised.

Note: GST rate change notifications and circulars are issued by the CBIC on 26th and 27th December 2022. These changes will come into effect from the date of such notification, i.e., 1st January 2023 or the date of publishing the notification in the Official Gazette, i.e., 27th December 2022.

Clarifications on tax rates for supply of goods and services are as follows-

  • Rab, also called rab-salawat is categorised under HSN code 1702, and GST rate of 18% gets charged.
  • GST at 18% is charged on fryums made using extrusion, particularly covered under HSN code 19059030.
  • Cess on SUV at 22% clarified- Applicable if meets 4 criteria-
    • Popularly known as SUV, 
    • The engine capacity of more than 1500 cc,
    • Length more than 4000 mm and
    • Ground clearance equal to or more than 170 mm
  • 5% GST is charged on imported equipment or goods classified in the concessional 5% GST rate category for petroleum operations and 12% GST applies if the general rate is higher than 12%.
  • No GST is chargeable if the residential dwelling is rented to a GST-registered person in their personal capacity for their own use/account as a residence and not for business.
  • No GST on incentives paid to banks by the Central Government as a subsidy under the promotion of RuPay Debit Cards and low-value BHIM-UPI transaction schemes

GST amendments for ease of Trade and Business

(1) Decriminalisation under GST:

The Council has decided to decriminalise the following three offences under the GST law –

  • The tax threshold for launching prosecution under GST or taking criminal action is increased from Rs.1 crore to Rs.2 crore, except for fake invoices. In other words, offences pertaining to the issuance of invoices without the sale of goods or services or both or dealing with fake invoices continue to be prosecuted if the tax amount is more than Rs.1 crore.
  • Reduction in the compounding amount from the current tax range of 50%-150% to the range of 25%-100%
  • Certain offences under Section 132(1) clauses (g), (j) and (k) of the CGST Act, such as obstruction or restricting any officer from discharging their duties, intentional tempering of material evidence and failure to provide the information.

(2) Unregistered persons to get new GST refund rules:

Earlier, there was no defined process for refund claims for the buyers not registered under GST upon cancellation of the contract/ agreement for the sale of services such as flat/house construction and long-term insurance policy and upon the expiry of the time limit to issue credit note by the supplier.

The GST Council decided to amend the CGST Rules and directed CBIC to issue a Circular for the procedure to file a refund application by such unregistered buyers.

(3) Facilitate e-commerce for micro-enterprises from 1st October 2023:

From 1st October 2023, GST-unregistered suppliers, dealers and composition taxable persons can sell goods through e-commerce operators within the state, subject to some conditions.

CBIC and GSTN will make the necessary amendments to the Rules via notifications, an amendment to the Act and get the GST portal ready for the new functionality within the defined timeline.

(4) Clarifying the date of applicability for new entries in Schedule III under GST:

New entries were added in Schedule III (Items not covered under GST) from 1st February 2019, such as para 7 (sale from one non-taxable territory to another, such as high sea sales), para 8(a) (sale of warehoused goods before clearance for home consumption) and para 8(b) (Sale of goods by the consignee to any other person where goods are dispatched from the foreign port but before clearance for home consumption).

Confusion arose about their taxability from 1st July 2017 up to 31st January 2019, so the GST Council recommended giving effect to these additions from the inception of GST. However, no refund of tax already paid shall be granted.

(5) Reversal of Input Tax Credit (ITC) for non-payment of invoice within 180 days:

CGST Rule 37(1) will be amended retrospectively from 1st October 2022 for ITC reversal to provide for reversal of input tax credit as per the second proviso to Section 16 of CGST Act, only to the extent of the invoice amount unpaid to the supplier versus the value of the supply, along with tax payable.

(6) New CGST Rule 37A for ITC reversal where the supplier fails to deposit tax:

The GST Council decided to insert Rule 37A in CGST Rules that will define steps to reverse ITC claimed on taxes undeposited by the supplier within a specified date. Further, the process of re-availing such ITC where the supplier pays it subsequently will be provided.

It allows easy compliance with the condition for claiming an input tax credit as per Section 16(2)(c) of the CGST Act.

(7) Amendments for timely and easier GST appeal processing:

Changes in CGST Rules 108(3) and 109: More clarity for submission of a certified copy of the order against which the appeal is filed and the final acknowledgement issued by the appellate authority.

Change in CGST Rule 109C and insertion of new form GST APL-01/03 W: Gives facility for withdrawing an appeal application up to a certain defined stage, avoiding litigations at the level of appellate authorities.

(8) Insurance – No Claim Bonus (NCB) offered by insurance companies, especially in motor vehicle insurance, is allowed as a deduction from the taxable premium amount for valuation purposes.

(9) Fresh GST Circulars will be issued on the following issues:

  • Treatment of pending GST dues from bankrupt businesses where proceedings are filed under the Insolvency and Bankruptcy Code, 2016 (IBC). Rule 161 of CGST Rules and form DRC-25 will be amended accordingly.
  • Place of supply of mail/courier services for transportation of goods to places outside India under the proviso to Section 12(8) of the IGST Act and ITC availability to the recipient. The removal of that proviso from the law is further recommended by the Council.
  • Procedure for verification of ITC differences between GSTR-3B and GSTR-2A for FY 2017-18 and 2018-19. It would reduce the need for litigations and give much-needed clarity to taxpayers and officers.
  • Manner of demand re-determination as per Section 75(2) of the CGST Act. Suppose the tax officer claims there is a misstatement, suppression of returns, or fraud involving tax evasion but has not proved it. The taxes shall be recomputed under Section 73 and not as per Section 74.
  • Applicability of e-invoicing for a business entity. For instance, suppose the turnover during FY 2022-23 exceeds the threshold limit of Rs.10 crore, whether e-invoicing applies from the next financial year, i.e., 1st April 2023 or from the current year.

(10) Grant of GST registration to TDS deductor and TCS collectors:

CGST Rule 12(3) will be amended to introduce a facility to the GST-registered TDS deductor and TCS collectors for applying for the cancellation of GST registration.

Note: GST rate change notifications and circulars are issued by the CBIC on 26th and 27th December 2022. These changes will come into effect from the date of such notification, i.e., 1st January 2023 or the date of publishing the notification in the Official Gazette, i.e., 27th December 2022.

Streamlining GST Compliance

  1. Biometric-based Aadhaar authentication, as well as risk-based physical verification of GST registration applicants, is proposed in Gujarat on a pilot basis with amendments in CGST Rules 8 and rule 9 for curbing fake and fraudulent registrations.
  2. Form REG-01 will capture PAN-linked mobile numbers and e-mail IDs (from the CBDT database) with OTP verification to restrict misuse of the PAN of a person and to curb identity thefts/frauds.
  3. Amendment that will not allow the filing of all GST returns and statements, such as GSTR-1, GSTR-3B, GSTR-4, GSTR-9, GSTR-9C, etc., after a maximum of three years from the due date.
  4. Amendment to GSTR-1 for allowing e-commerce operators and sellers to report sales through e-commerce operators, covered under Sections 52 and 9(5) of the CGST Act.
  5. Insertion of CGST Rule 88C and form DRC-01B for intimation to the taxpayer, by the GST portal, for any tax liability differences between GSTR-1 and GSTR-3B for a tax period over a defined amount and/ or percentage, to either pay or explain the difference.
  6. Further, a new clause (d) will be inserted in CGST Rule 59(6) to restrict the filing of GSTR-1 for future tax periods if the taxpayer has not deposited the tax laid down in the intimation. Further, that restriction may apply if he has also not replied to such intimation giving reasons for the pending unpaid tax without the intervention of the tax officers.
  7. Amendment in the definition of “non-taxable online recipient” under section 2(16) of IGST Act, 2017 and definition of “Online Information and Database Access or Retrieval Services (OIDAR)” under section 2(17) of IGST Act, 2017 to reduce issues in interpretation and litigation on taxation of OIDAR Services.

Note: The above changes via notifications and circulars are yet to be issued by CBIC. The changes will come into effect from the date of such notification or the date mentioned in such notification.

The Honourable Union FM, Smt Nirmala Sitharaman and the Revenue Secretary, Shri Sanjay Malhotra, addressed the media on Saturday on the above outcomes. Further, they clarified that GST on online gaming, horse races, gambling, etc., will be taken up in the subsequent meetings since the matter or GoM report could not be circulated before Saturday.

The next 49th GST Council meeting may be scheduled in February 2022 to take up the GoM’s report on GSTAT as well as the taxation of online gaming.

Press release of 48th GST Council meeting

GST Council met on 17th December 2022 and announced its decisions through a press release over the PIB (Ministry of Finance).

> (opens in a new tab)”><<Click here for the detailed official Press Release>>

48th GST Council Meeting Live Updates

2:15 p.m.: The 48th GST Council meeting concludes; FM will address the media soon.
12:15 p.m.: The Union FM is expected to address the media/press with the outcomes of the meeting at 2 p.m. today (17th December 2022).
11:30 a.m.: 48th GST Council meeting begins with the arrival of Smt Nirmala Sitharaman, Union FM along with the Union Minister of State for Finance Shri M P Chaudhary, and Finance Ministers of States & UTs and Senior government officers.

48th gst council meeting

48th GST Council meeting Agenda

The following is the list of items on the 48th GST Council meeting agenda, scheduled to take place on 17th December 2022-

  • Certain offences under the GST law are set to be decriminalised.
  • GST on online gaming, casinos, gambling, and horse races is to be decided as the GoM fails to reach a consensus as per the second report submitted to the Union FM on 16th December 2022.
  • Setting up of GST appellate tribunal in 2023 and its powers.
  • Clarification on e-invoicing provisions for certain businesses, how to treat pending GST dues for bankrupt businesses in tribunals, an input tax credit for corporate social security-related expenses and exclusion of No-Claim Bonus (NCB) from taxability for all kinds of insurances.
  • GST rate on health insurance may be reduced from 18% to 12%.
  • Defining the scope of power of CCI acting as the Anti-profiteering Authority.
  • Applicability of the special composition scheme for selling brick kilns with 6% as GST levy without the input tax credit. Also, there may be a levy of 12% GST with an input tax credit if the business does not opt for the scheme.
  • Changing the GST valuation rules for GST on tobacco to capacity based.
  • The GST levy on Mentha may come under the reverse charge mechanism at the first stage of supply.
  • GST rate panel may clarify tax-related issues. SUV category of vehicles with an engine capacity of 1,500 cc, a ground capacity of more than 170 mm and a length of more than 4,000 mm could be levied a 22% compensation cess.
  • Carbonated fruit pulp/juice-based drinks may be levied a 28% GST.
  • Exemptions may be granted for incentives paid to banks for RuPay debit cards and BHIM-UPI transactions and viability gap funding subsidies payments made to airlines for the regional connectivity scheme.

Key expectations from the 48th GST Council meeting

The interim report by GoM on Capacity Based Taxation & Special Composition Scheme may be on the agenda

The Council may consider allowing a special composition scheme for taxpayers selling brick kilns with 6% GST on the condition of not claiming the input tax credit. GST rate on the sale of brick kilns may otherwise, outside the scheme, see a rise from 5% to 12% with ITC.

Further, the term granted to the Group of Ministers (GoM) formed for the valuation of the Tobacco or Pan Masala may be extended. This GoM was formed to evaluate the need for a capacity-based valuation for the purpose of GST levy. Also, the GST on Mentha may be put under the reverse charge mechanism at the first stage of supply.

Decriminalisation of offences under the GST law

The government had indicated in September 2022 that prosecution could be launched against the offenders under the GST law where the value of tax evasion or misuse of input tax credits exceeds Rs.5 crore. 

Hence, legal proceedings may be initiated against people contravening the GST law. Moreover, if their property value is less than the defined limit, it can never be attached for GST recovery. Now, a proposal will be tabled before the GST Council for a change in limit. It may be increased to Rs.20 crore. 

The GST Council may also remove such penal provisions already governed by the Indian Penal Code (IPC). It is understood that after that, one can find a reference to the IPC for levying penalties for a detailed list of offences under the GST law.

If the GST Council approves the decriminalisation of the GST law at the 48th GST Council meeting, then the CGST Act will be amended. These amendments will be tabled before the Parliament during the winter session in December 2022. After this, the Union Territories and states will incorporate these amendments into their respective SGST laws.

Taxing online gaming and casinos added to the agenda

The Group of Ministers (GoM), led by Shri Cornad Sangma, Convener of GoM, submitted the second report on imposing GST on online gaming on 16th December 2022 as they failed to arrive at a consensus.

So, the matter that was earlier speculated to be not tabled at the upcoming GST Council meeting is added to the agenda for Council’s decision on Saturday.

The GoM has proposed a special mechanism to create an Escrow account for race courses and any online gaming containing the prize money for paying out the winners. The move will remove cascading effect of taxes in allied sectors such as tourism in the larger interest of the economy. Further, it states that the money collected towards the commission or platform fee must be separated for easy tax administration.

In other words, the GoM has not decided whether it is apt to charge GST of 28% on the full value of bets or on the Gross Gaming Revenue (GGR) for gaming, gambling and horse racing.

Maharashtra FM asked for requisite abatement for arriving at a taxable value for the supply of actionable claims. On the other hand, Goa and Gujarat FMs claimed that the platform fee alone must be taxed. Goa also proposed 18% GST on platform fees or service fees, arguing that contributions for prize money must not be taxed.

West Bengal and Uttar Pradesh want these activities to be taxed as actionable claims without differentiating between the game of skill or chance. Further, these states expect to tax these activities at the full value of bets. Tamil Nadu is seeking a 28% GST on GGR basis if horse racing and online gaming are considered as a game of skill.

Recently, the GST Council member Shri Mauvin Godinho told the media that several issues on taxing online gaming still needed to be addressed.

Earlier, there were media reports that there was an in-principle agreement by the committee to levy a 28% GST rate on the gross gaming revenue. However, many industry stakeholders were apprehensive about the high GST rate. 

Setting up of an appellate tribunal

The Centre is having discussions and is planning to set up the Goods and Services Tax Appellate Tribunal (GSTAT) by December 2023. Hence, it needs a nod to proceed from the GST Council in the upcoming 48th GST Council meeting.

The GSTAT shall be set up in different states if the GST Council approves. The primary bench will be in New Delhi. These benches will hear GST disputes arising in the respective states as currently, the absence of it has put pressure on the local courts to deal with disputes.

The appellate tribunal will be headed by a Supreme Court judge or the Chief Justice of a High Court. Each state bench may have a judicial officer who can be a High Court judge. A senior tax officer who qualifies as a state or centre technical member must be appointed. 

Every state can have a maximum of five benches. Also, the state governments may be granted concessions while nominating the technical members, all of which need to be decided by the GST Council at the 48th GST Council meeting.

GST rate changes for taxing health insurance

The GST Council received a representation to reduce the GST rate on the sale of health insurance policies and renewals. Currently, it is taxed at 18%, and the new rate, if approved, could be 12%.

Further, the GST Council may also look into the report of the Group of ministers formed for rate rationalisation measures. Further, the GST rate panel may clarify tax-related issues. SUV category of vehicles with an engine capacity of 1,500 cc and length of more than 4,000 mm could be levied a 22% compensation cess.

Competition Commission of India as the anti-profiteering authority

The GST Council must consider what role the Competition Commission of India (CCI) plays or its powers as the anti-profiteering authority under GST. It will reduce any ambiguity currently being faced by businesses in the industry.

The CCI was given powers by the GST Council at the 45th GST Council meeting and was notified by the CBIC vide CGST notification number 23/2022 on 23rd November 2022. However, there are no industry-specific guidelines for calculating the price reduction extent warranted by the tax rate cuts. Thus, it will be challenging for the authority to ensure full compliance. Hence, GST Council’s intervention in this matter is essential at this point in time. 

Conclusion

The 48 GST Council meeting 2022 shall be the last one for this year and may also be the last one before the Budget 2023. Make sure to mark 17th December as the 48 GST council meeting date on your calendar, so you get all the important updates!

Also, stay tuned to this space for the highlights and updates on the 48th GST Council meeting press release and the 48th GST Council meeting notification.