50th GST Council meeting was held on 11th July 2023 at Vigyan Bhawan, New Delhi. It marks the completion of 50 Council meetings since the inception of GST. Union FM Nirmala Sitharaman led the 50th GST Council meeting in the presence of ministers representating their states and Union Territories.
To mark the milestone of the 50th GST Council meeting, the Chairperson released a short video film titled ‘GST Council- 50 steps towards a journey’ in the presence of the Council members. The postal department also released the first set of a special cover and customised ‘My Stamp’, which were presented by the Chief Postmaster General, New Delhi, to the Chairperson and members of the Council. Read on to get all the updates from the 50th GST Council meeting.
Highlights of the 50th GST Council Meeting
The 50th GST Council meeting covered three important matters under the GST law. There were rate decisions taken on goods and services, as well as clarifications issued and rate regularisations undertaken. Secondly, the recommendations of various GoMs were discussed. The third matter involved clarifying that the compensation cess dues have been paid to the states that have submitted AG-certified claims, and the states yet to submit their AG certificates will also be settled on submission of the same.
1. Recommendations with regard to GST on goods
- The GST Council took a decision to reduce the GST rates on the following goods:
- Uncooked /unfried snack pellets reduced from 18% to 5%
- Fish soluble paste reduced from 18% to 5%
- Imitation zari threads/yarn reduced from 12% to 5%
- LD slag to be at par with blast furnace slag and fly ash and reduced from 18% to 5%
- There is an IGST exemption on Dinutuximab (Quarziba) medicine when imported for personal use, as well as medicines and Food for Special Medical Purposes (FSMP) used in the treatment of rare diseases, and FSMP when imported by Centres of Excellence for Rare Diseases or any person or institution on recommendation of any of the listed Centres of Excellence.
- It was clarified that the supply of raw cotton by agriculturists to cooperatives, including kala cotton, is taxable under reverse charge mechanism.
- It was further decided to regularise issues relating to past periods on an “as is basis” with regard to
- Raw cotton,
- Matters relating to trauma, spine and arthroplasty implants (for the period prior to 18.07.2022),
- Matters relating to dessicated coconut (for the period 1.7.2017 to 27.7.2017),
- GST on plates and cups made of areca leaves (prior to 01.10.2019), and
- GST on biomass briquettes (for the period 01.7.2017 to 12.10.2017)
- It was decided to amend Entry 52B in the compensation cess notification to include all utility vehicles, by whatever name called, provided they meet the following parameters-
- Length exceeding 4000 mm,
- Engine capacity exceeding 1500 cc, and
- A ground clearance of 170 mm and above (in an unladen condition)
- It was decided that on pan masala, tobacco products etc, where it is not legally required to declare the retail sale price, the ad valorem rate applicable on 31st March 2023 may be notified for the levy of compensation cess.
- It was decided to include RBL Bank and ICBC bank in the list of specified banks for which an IGST exemption is available on the imports of gold, silver, or platinum.
2. Recommendations with regard to GST on services
- It was decided that a GST exemption would be provided on satellite launch services supplied by ISRO, Antrix Corporation Limited and New Space India Limited (NSIL), and may be extended to such services supplied by other private organisations too.
- As a trade-friendly measure, GTAs will not be required to file a declaration for paying GST under forward charge every year. If the option has been exercised for a particular financial year, it will be deemed to have been exercised for the next and future financial years unless a declaration is filed to revert that decision. The deadline to exercise this option will now be 31st March of the preceding financial year instead of 15th March.
- It was clarified that services supplied by a director of a company to the company in their personal or private capacity will not be taxable under RCM.
- It was clarified that the supply of food and beverages in cinema halls is taxable as a restaurant service if they are supplied by way of or as part of a service and supplied independently of the cinema exhibition service. If clubbed together and the same satisfies the test of composite supply, the entire supply will attract GST at the rate applicable to the service of exhibition of cinema, the principal supply.
3. Group of Ministers (GoM) recommendation on casinos, race courses and online gaming
A Group of Ministers (GoM) was constituted last year to look into the issues relating to the taxation on casinos, horse racing and online gaming under GST. The GoM, in its second report, has recommended that in the absence of a consensus reached on whether online gaming, horse racing and casinos should be taxed at 28% on the full-face value of bets placed or on the GGR, the GST Council may decide.
The GST Council deliberated on the issue in the 50th GST Council meeting and recommended the following:
- That suitable amendments be made to the GST law to include online gaming and horse racing in Schedule III of the CGST Act as taxable actionable claims.
- That all three activities, namely casinos, horse racing and online gaming will be taxed at a uniform rate of 28%.
- That GST will apply on
- The face value of the chips purchased in the case of casinos,
- On the full value of the bets placed with the bookmaker/totalisator in the case of horse racing, and
- On the full value of the bets placed in case of online gaming
4. Measures for streamlining GST compliances
- In accordance with the GoM recommendation, the Council has recommended to insert Rule 138F in CGST Rules, 2017, as well as in SGST Rules, 2017 of the States, to mandate the requirement for e-way bill generation for the intra-state movement of gold and precious stones under Chapter 71.
- In accordance with the GoM recommendation on capacity-based taxation and the special composition scheme approved in the 49th Council meeting, the Council made the following recommendations:
- Issue of a notification under Section 148 of the CGST Act, 2017 prescribing the special procedure to be followed by the manufacturers of tobacco, pan masala and other similar items for registration and return filing.
- Insertion of Section 122A in the CGST Act, 2017 providing for a special penalty for non-registration of machines by such manufacturers.
- Provisions of Section 123 of Finance Act, 2021, amending Section 16 of the IGST Act, to be notified with effect from 1st October 2023 and a notification to be issued under Section 16(4) of the IGST Act, 2017 to provide for the restriction of the IGST refund route in respect of exports of tobacco, pan masala, mentha oil, and other similar items.
- Amendment to the CGST Rules, 2017 regarding GST registration:
- Amendment to Rule 10A to provide that the bank account details in the name and PAN of the registered person, is furnished within 30 days of grant of registration or before filing of Form GSTR-1/ IFF, whichever is earlier.
- Amendment in Rule 21A(2A) to provide for system-based suspension of GST registration in respect of taxpayers that do not furnish a valid bank account under Rule 10A within the time period prescribed above.
- Insertion of a third proviso in Rule 21A(4) to provide for the automatic revocation of such system-based suspension on compliance with the provisions of Rule 10A.
- Amendment to Rule 59(6) to provide that where a taxpayer has not furnished a valid bank account under Rule 10A, the said taxpayer cannot file their GSTR-1/IFF.
- Amendment to Rule 9 and Rule 25 to do away with the requirement of physical verification of business premises in the presence of the applicant and also provide for physical verification in high risk cases even if the Aadhaar has been authenticated.
- A pilot to be conducted in Puducherry for risk-based biometric-based Aadhaar authentication of registration applicants.
- Insertion of Rule 142B to the CGST Rules, 2017 and insertion of a Form GST DRC-01D to provide for manner of recovery of the tax and interest in respect of the amount intimated under rule 88C (in cases where the output tax liability in the GSTR-1 exceeds the liability reported in the GSTR-3B for the said month by a specified threshold).
- System-based intimation to taxpayers in respect of the excess ITC claims in the GSTR-3B vis a vis the ITC available in the GSTR-2B above a certain threshold. In this regard, Rule 88D and Form DRC-01C is to be inserted in the CGST Rules, 2017, along with an amendment to Rule 59(6) of the CGST Rules, 2017.
- Form GSTR-3A is to be amended to provide for the issuance of notices to taxpayers for failing to furnish their annual return in Form GSTR-9/9A by the due date.
- Rule 64 of the CGST Rules, 2017 and Form GSTR-5A is to be amended to require OIDAR service providers to provide details of supplies made to registered taxpayers in India in their Form GSTR-5A return to help the tracking of due payments of tax on reverse charge basis by such taxpayers on supplies received from OIDAR service providers.
- Explanation 3 is to be inserted after Rule 43 of the CGST Rules, 2017 to prescribe that the value of supply of goods from Duty Free shops at arrival terminals in international airports is to be included in the value of exempt supplies for the purpose of reversal of input tax credit.
- The Council has recommended the insertion of Rule 163 in the CGST Rules, 2017 to provide for the manner and conditions of consent-based sharing of information of taxpayers available on the common GST portal with other systems.
- A sub-rule (3A) to be inserted in Rule 162 of the CGST Rules, 2017 to prescribe for compounding amounts for various offences under Section 132 of CGST Act, 2017.
- The Council has recommended insertion of a clause (ca) in sub-section (1) of Section 10 of the IGST Act, 2017 to clarify the place of supply in respect of supply of goods to unregistered persons.
- The Council has recommended to form a state-level coordination Committee comprising GST officers from both Centre and state GST administrations for knowledge sharing on GST matters as well as coordinated efforts towards administrative and preventive measures.
- The 2nd interim GoM report on IT System Reforms was also discussed by the Council. The report recommended various measures to curb GST fraud.
5. Measures for facilitation of trade:
- The GST Council recommended the Rules governing the appointment and conditions of the President and members of the proposed GST Appellate Tribunals (GSTATs), which may be notified by the Centre with effect from 1st August 2023.
- The Council recommended that the relaxations provided in FY 2021-22 in respect of various tables of the Form GSTR-9 and 9C to be continued for FY 2022-23.
- The exemption from filing the GSTR-9/9A for small taxpayers (with an aggregate annual turnover up to Rs.2 crore) continues for FY 2022-23 as well.
- The Council has recommended that a Circular be issued to clarify that the Input Services Distributor (ISD) mechanism is not mandatory for the distribution of input tax credit (ITC) of common input services procured from third parties to distinct persons as per the present provisions of the GST law.
- The Council has recommended that a Circular be issued to clarify various issues pertaining to the GST liability as well as to reverse ITC in cases involving warranty replacement of parts and repair services during warranty period without any consideration from customers.
- A Circular will be issued to clarify various refund related issues:
- With effect from 1st January 2022, refund of accumulated ITC under Section 54(3) of the CGST Act, 2017 for a tax period is to be restricted to the ITC on inward supplies reflected in the GSTR-2B of the said tax period or any previous tax period.
- The value of export goods is to be included while calculating the “adjusted total turnover” in the formula under Rule 89(4), which will be determined as per the said explanation.
- A clarification regarding admissibility of refund in cases where the export of goods or the realisation of payment for the export of services, as the case may be, is made after the time limit provided under Rule 96A of the CGST Rules, 2017.
- A Circular is to be issued to provide clarity regarding the TCS liability under Section 52 of the CGST Act, 2017 in cases where multiple e-commerce operators (ECOs) are involved in a single transaction for the supply of goods or services or both.
- To ease the compliance burden on taxpayers, clause (f) of Rule 46 of CGST Rules, 2017 is to be amended to provide for the requirement of only the name of the state of the recipient, and not the name and full address of the recipient on tax invoices in cases of supply of taxable services by/through an ECO or OIDAR supplier to an unregistered recipient.
- Issuance of the following circulars:
- Clarifying the matter of generating e-invoices under Rule 48(4) of CGST Rules for supplies made to government departments.
- Clarifying issues regarding the manner of calculation of interest liable to be paid under Section 50(3) of the CGST Act, 2017 in respect of wrongly availed and utilised IGST credit.
- Clarifying that just holding securities of a subsidiary company by a holding company cannot be treated as a supply of services and taxed under GST.
- Issuance of a circular to provide for a procedure for verification of ITC in cases involving difference in ITC claimed in the GSTR-3B vis a vis the ITC available in the GSTR-2A during the period from 1st April 2019 to 31 December 2021.
- A special procedure is to be provided under Section 148 of the CGST Act, 2017 to enable the manual filing of appeals against orders passed by the proper officers in respect of TRAN-1/ TRAN-2 claims of taxpayers.
- Rule 108(1) and 109(1) of CGST Rules, 2017 are to be amended to provide for the manual filing of appeal under certain specified circumstances.
- Extending of the amnesty schemes with regard to non-filing of Forms GSTR-4, GSTR-9 and GSTR-10, revocation of cancellation of registration, and the deemed withdrawal of assessment orders issued under Section 62 of the CGST Act, 2017, until 31st August 2023.
- Extension of the due dates for filing of GSTR-1, GSTR-3B and GSTR-7 for April, May and June, 2023 for taxpayers in Manipur until 31st August 2023.
Press release of 50th GST Council meeting
Expectations from the 50th GST Council Meeting
A new rule on the cards for excess ITC claims
The GST Council is deliberating to introduce a new GST rule where businesses may have to provide the reasons for any excess Input Tax Credit (ITC) claims made or else should deposit such amount into the ledger.
Similar to DRC-01B where intimation is sent to taxpayers for mismatch in liability between GSTR-1/IFF and GSTR-3B/3BQ, the GST Council is looking at setting up a system for mismatches between GSTR-2B and GSTR-3B over a threshold limit or percentage. Where there is excess ITC claims over and above a defined percentage or amount, the taxpayer will be intimated asked to give reasons or else pay the excess ITC claimed with interest under Section 50.
The provision could be notified in law fixing the threshold difference to trigger such intimations as 20% and over Rs.25 lakh.
Setting up of the GST Appellate Tribunals (GSTATs)
Establishing GSTATs has now been a long-pending demand by taxpayers and is expected to reduce the burden on taxpayers and courts by streamlining and expediting indirect tax litigations. Hence, the 50th GST Council meeting might address this issue.
At present, taxpayers go down the long, expensive route of filing appeals in high courts or paying their GST demands under protest. If GSTATs were to be set up, they would be the second forum of appeal. They would also serve as a common forum for dispute resolution between the Centre and the states.
A group of industrialists urged the central government to adopt the temporary provision to accept the plea via accepting the half amount via assessee.
Further, in the last Council meeting, the Council adopted the Group of Ministers (GoM) report with certain modifications. The final draft amendments to the GST laws shall be circulated to Members for their comments. The Chairperson has been authorised to finalise the same.
GST on Casinos, Online Gaming, and Horse Racing
During the last year, Council set up a GoM to deliberate the taxation on online gaming, casinos, and horse racing. Currently, GST on online gaming is charged at 18% for skilled games without betting and 28% on games of chance, such as betting and gambling.
While the GoM decided on a 28% GST rate on all the earnings from all three, GoM is yet to reach a consensus on the base value for applying the tax rate. This could be why the GST Council had to table the discussion in the previous meeting held in February 2023. However, the next GST Council meeting could solve the problem surrounding this other long-pending issue.
Amendments to the GST Law to Factor in the Latest e-Invoicing Timelines
Last month, the 7-day time limit for reporting e-invoices on Invoice Registration Portal (IRP) surprised enterprises. Even though it’s been over two years since the implementation of e-invoicing, until now, there has been no time limit for generating e-invoices.
This created issues as taxpayers would consolidate and generate e-invoices for a week or even a month and sometimes backdate their e-invoices. The GST portal has announced that the seven-day limit will apply only to taxpayers with a turnover of Rs.100 crore and more.
However, the GST portal again issued an advisory postponing the time limit to report e-invoices by three months. The department is yet to announce the new implementation date. Hence, the Council may discuss it in the upcoming Council meeting and propose an amendment to the GST law.
Automation of GST Return Scrutiny and Expansion of the Taxpayer Base
The Finance Minister, Smt. Nirmala Sitharaman recently asked the department to automate the GST returns scrutiny process and implement a plan to increase the taxpayer base through the enhanced use of technology. After a review with senior officials, the FM directed the CBIC to study the cases already booked, form a comprehensive analysis, and come up with recommendations on tech-based solutions.
Some of the other matters discussed in the review covered grievance redressal, employee welfare and the improvement of taxpayer services. While the department is expected to take measures on this account, there is a chance that this could come up for discussion in the upcoming Council meeting, especially on the matter of return scrutiny and revenue augmentation.
The recent CBIC's drive against nabbing the fake GST registrants and larger measures towards GST revenue augmentation through increase in taxpayer base will also be taken up at the GST Council's meeting.
The GST Council may mandate the physical verification of the business premises of the 'high risk' GST registration applicants before granting the registration. It may reduce time for submitting PAN-linked bank account information on the GST system.
e-Way bill rules for transporting gold and precious metals
Those taxpayers under GST who transport gold and precious metals worth value of Rs.2 lakh or more inside the state may have to generate e-way bills. The state governments might be given liberty to set rules regarding the same. The threshold limit may vary too. This move can help states to keep a tab on the movement of gold and precious metals and prevents tax evasion.
Charge of TCS in case of transactions involving multiple e-commerce operators
With the advent of Open Network for Digital Commerce (ONDC) model initiated by the government, there have been rise in cases of transactions involving multiple e-commerce operators. The law is silent regarding the taxpayer on whom this liability is to be charged and hence the GST Council is expected to provide a clarification regarding this anomaly.
- A GST fitment panel now defines the variety of millet goods, cancer medicine and related rates. As per the sources, the fitment panel comprises authorities from the Centre and states who categorise the products where millets are critical.
- Whether or not GST compensation cess applies on Multi-Utility Vehicles (MUV) and the GST rate on sale of food and beverages at multiplexes are expected to be clarified.
- Further, the Council might discuss correcting the inverted tax structure in the textile sector.
- Pan masala producers may be asked to register their production capacity and machines in the GST portal to closely monitor their output. Ultimately, they may be required to provide quick response (QR) codes on the packages capturing details of the factory and so on.
- There is also an industry demand for reimbursing 100% Central GST and 50% Integrated GST fpr eleven hill states under the 'Scheme for Budgetary Support'.
The meeting will likely take place to discuss some pending matters and GST procedural changes. The 49th GST Council meeting was held on 18th February 2023 at New Delhi, where an amnesty scheme for delayed GST return filing was introduced, and late fee got reduced.