The 49th GST Council meeting took place on Saturday, 18th February 2023, in New Delhi. It is the next GST Council meeting held after two months since the last one happened on 17th December 2022.
Union FM Nirmala Sitharaman was the chairperson, and this meeting was the first one soon after the presentation of the Budget 2023. The 49th GST Council meeting was the third meeting to occur almost immediately in the same month as the Budget presentation. The years 2017 and 2019 saw similar meetings where crucial decisions were taken.
FM began briefing the media on the outcomes at 5 p.m. on 18th February 2023.
For the complete press release by the Ministry of Finance, click on the below link -
3:15 p.m.: Sources: Matter on setting up of the GST appellate tribunal pushed to the next Council meeting to allow time to refine the recommendations of the GoM’s reports by incorporating suggestions from some states.
2:37 p.m.: Sources: GST Council to reassemble after a lunch break and continue its discussion on the GoM's report on GST appellate tribunal.
2:30 p.m.: Sources: GoM report on setting up of appellate tribunal taken up today for discussion. Reports suggest that the 14-15 states have voted against the recommendations of the GoM on the manner of setting up GST appellate tribunals.
2:15 p.m.: The Union FM is expected to address the media/press with the outcomes of the meeting at 4:15 p.m. today (18th February 2022).
11:15 a.m.: 49th GST Council meeting began with the arrival of the Union FM, Smt Nirmala Sitharaman at Vigyan Bhavan, New Delhi, along with the Union Minister of State for Finance Shri M P Chaudhary, and Finance Ministers of States & UTs and Senior government officers.
The 49th GST Council meeting date is 18th February 2023, and the 49th GST Council meeting place is in New Delhi. Here are some of the expectations from the next GST Council meeting.
The Group of Ministers (GoMs) may table its report on taxation of 'Gutkha/chewing tobacco' and 'Pan Masala' businesses at this Council meeting. The ‘GST on Pan Masala’ report could not be taken up, although it was on the agenda of the 48th GST Council meeting.
The GoM on Pan masala was formed to assess the requirement and benefits of imposing a capacity-based valuation system for the levy of GST on pan masala and similar products. Further, the refund of the accumulated Input Tax Credit (ITC) for exports of these products shall be approved against the letter of undertaking.
Moreover, the GST Council may take measures for imposing mandatory registration of machines, specific monthly GST returns having details of the machine, clearance, inputs, special compliance rules such as compulsory e-invoicing, e-way bill, GPS installation or FAST tag, unique identification marking, CCTV camera installation and a hefty penalty for non-compliance.
The latest media reports indicate that the decision to set up the Goods and Services Tax Appellate Tribunals (GSTAT) based on the GoM report, may no longer be on the agenda.
It has been a long-standing demand of the taxpayers to have a fully functional GST Appellate Tribunal.
The report by the Head of the GOM, Haryana Deputy CM Dushyant Chautala, was submitted to the Council in the latter half of 2022 and was expected to be taken up at the 48th GST Council meeting. However, it required an elaborate discussion and hence, was postponed to the upcoming Council meetings.
The GST Council had to deliberate the taxation of online gaming, horse racing, and casinos under GST at the upcoming GST Council meeting which seems to not take place as per the latest media reports.
The GoM led by the Meghalaya Chief Minister Conrad Sangma had to table the final report on GST on online gaming at the upcoming meeting.
There have been differences amongst the members of the GoM in concluding the base value for tax applicability.
The latest report issued towards the end of 2022 is most likely like the first report, submitted earlier that year, except for the divergent opinions explained above.
The committee recommended a fixed 28% GST rate on horse racing, casinos and online gaming in its first report. The report also mentioned the base value for taxation.
Presently, online gaming is imposed two different GST rates, 18% on skilled games without betting and 28% on games of chance, such as betting and gambling.
However, the issue persisting is the base value for computing GST, which did not get consensus within the committee. Yet, the GST Council may not take a call at the upcoming Council meeting.
The Central and state governments aim to widen the taxpayer net at every GST taxation stage. They intend to generate a higher tax mop-up. Presently, the monthly GST collections work to an average of about Rs.1.4 lakh crore, while there are 1.40 crore taxpayers registered under GST.
It is to be seen how the Council will balance the expectations of states/UTs and the taxpayers at the 49th GST Council Meeting.
IGST Act may be amended for redefining place of supply for goods transportation
As per the latest media reports, the GST Council may also discuss on creating parity in the manner of taxing Indian and foreign shipping lines for Indian exporters. It could revise the Integrated Goods and Services Tax (IGST) Act to amend the place of supply provision involving goods transportation to the ‘location of the recipient’ rather than the current ‘destination of goods’.
Presently, Indian exporters pay GST on freight for exporting goods as billed by the Indian shipping lines. In contrast, they don’t have to pay tax on the charges made by the foreign shipping lines. The amendment allows identical taxability for both foreign and Indian shipping lines for exempting or taxing IGST on the transportation of goods by shipping vessels into or out of India.
Before the Budget 2023, several industrial associations called on the Finance Minister to cut tax rates on several items. One of the popular products is the input used in Electric Vehicles (EV), whose input is lithium-ion battery cells and packs, and the industry expects a rate cut on it to 5% from the present rate of 18%. The move will encourage domestic EV manufacturing in India and higher consumption.
The previous media reports of a GST rate cut on cement in line with the industry demand may not be decided but the fitment committee may bring up the matter before the GST Council.
The rate cuts on millet-based health products with more than 70% millet content could be another item on the agenda. The fitment committee has suggested a nil rate where millet-based health products are supplied in loose form, whereas a 5% when supplied in pre-packaged and labelled form.
The increase in the GST rate on pencil sharpeners earlier done to address the inverted tax structure may be re-visited at this Council meeting as school children mostly use it. It may be brought down to 12% from 18%.
Also, the textile industry continues to face an irrational inverted tax structure that hurts business. The fabric attracts 5% GST, whereas the yarn is taxed at 12% and the polyester chip at 18%. Experts opine that the government must fix a uniform tax rate for the entire textile product range.
Another popular one is the GST on health insurance and certain life insurance products, which must be reduced from 18% per many insurers' demands. It reduces the premium cost and makes it affordable for policy buyers to purchase health insurance.
Demand from the hospitality industry this Budget 2023 was to tax all rooms at 12%. Currently, the government levies a GST of 12% on hotel rooms with a room tariff of up to Rs.7,500 and 18% for hotel rooms priced above Rs.7,500. Further, the hospitality industry wants a full input tax credit claim in line with global standards. Currently, the input tax credit can be availed only if the hotel booking is in the same state as the GST-registered state of the business.
The 48th GST Council meeting was held on 17th December 2022. Meanwhile, watch this space for the 49th GST Council meeting live updates, 49th GST council meeting PDF, 49th GST Council meeting press release, 49th GST council meeting outcome or the 49th GST Council meeting highlights, February 18 GST Council meeting updates, and the latest GST Council meeting news.