53rd GST Council Meeting Overview

The 53rd GST Council met under the Chairpersonship of Union Minister for Finance & Corporate Affairs Smt. Nirmala Sitharaman in New Delhi. The meeting was attended by key officials, including Union Minister of State for Finance Shri Pankaj Chaudhary, Chief Ministers of Goa and Meghalaya, Deputy Chief Ministers of Bihar, Haryana, Madhya Pradesh, and Odisha, Finance Ministers of States & UTs (with legislature), and senior officers of the Ministry of Finance & States/ UTs.

Key Recommendations and Decisions

The GST Council made several recommendations concerning changes in GST tax rates, trade facilitation measures, and compliance streamlining in GST.

Changes in GST Tax Rates

GST Rates on Goods

• Uniform IGST Rate on Aircraft Parts: A uniform rate of 5% IGST will apply to imports of parts, components, testing equipment, tools, and tool-kits of aircrafts to boost MRO activities.
• Milk Cans GST Rate: All milk cans (steel, iron, aluminum) will attract a 12% GST rate.
• Paper Products GST Rate Reduction: The GST rate on carton, boxes, and cases of both corrugated and non-corrugated paper or paper-board has been reduced from 18% to 12%.
• Solar Cookers GST Rate: All solar cookers, whether single or dual energy source, will attract 12% GST.
• Poultry Keeping Machinery: The GST entry covering poultry keeping machinery attracting 12% GST has been amended to specifically incorporate “parts of poultry keeping machinery” and regularize past practice.
• Sprinklers GST Rate: All types of sprinklers, including fire water sprinklers, will attract 12% GST.
• Defence Forces IGST Exemption: The IGST exemption on imports of specified items for defence forces has been extended for five years till 30th June 2029.
• RAMA Programme IGST Exemption: IGST exemption on imports of research equipment/buoys under the RAMA programme has been extended subject to conditions.
• Compensation Cess on SEZ Imports: Compensation Cess on imports in SEZ by SEZ Unit/developers for authorized operations is exempted w.e.f. 01.07.2017.
• Miscellaneous Exemptions: Compensation Cess on supply of aerated beverages and energy drinks to authorized customers by Unit Run Canteens under Ministry of Defence and Adhoc IGST exemption on imports of technical documentation for AK-203 rifle kits for Indian Defence forces are also recommended.

GST Rates on Services

• Indian Railways Services Exemption: Services provided by Indian Railways to the general public, such as platform tickets, retiring rooms/waiting rooms, cloakroom services, and battery-operated car services, are exempt from GST.
• SPV Services Exemption: Services provided by Special Purpose Vehicles (SPV) to Indian Railways for infrastructure use during the concession period and maintenance services by Indian Railways to SPV are exempt.
• Accommodation Services Exemption: Accommodation services valued up to Rs. 20,000 per month per person supplied for a minimum continuous period of 90 days are exempt from GST.
• Co-insurance and Re-insurance Services: Co-insurance premium apportioned by lead insurer to the co-insurer and transactions of ceding commission/re-insurance commission between insurer and re-insurer are declared as no supply under Schedule III of the CGST Act.
• GST Liability on Reinsurance Services: GST liability on reinsurance services of specified insurance schemes will be regularized retrospectively.
• Retrocession Clarification: Retrocession, re-insurance of re-insurance, is eligible for exemption under Sl. No. 36A of notification No. 12/2017-CTR.
• RERA Statutory Collections: Statutory collections by Real Estate Regulatory Authority (RERA) are exempt from GST.
• Incentive Sharing under RuPay and BHIM-UPI: Further sharing of incentive under NPCI’s promotion scheme for RuPay Debit Cards and BHIM-UPI transactions is not taxable.

Measures for Facilitation of Trade

• Section 128A Insertion for Conditional Waiver: Section 128A will be inserted in CGST Act to provide conditional waiver of interest or penalty for demands raised under Section 73 for FY 2017-18 to FY 2019-20.
• Reduction of Government Litigation: Monetary limits for filing appeals in GST by the department before GST Appellate Tribunal, High Court, and Supreme Court are prescribed to reduce litigation.
• Pre-deposit Amount for Appeals: Pre-deposit amount for filing appeals under GST is reduced to ease cash flow for taxpayers.
• GST on Extra Neutral Alcohol (ENA): ENA used for manufacturing alcoholic liquor for human consumption is excluded from GST.
• TCS Rate Reduction for ECOs: TCS rate for supplies through Electronic Commerce Operators (ECOs) is reduced from 1% to 0.5%.
• Appeal Filing Time in GST Appellate Tribunal: The time for filing appeals in GST Appellate Tribunal is extended.
• Relaxation in Section 16(4): Section 16(4) of CGST Act is amended retrospectively for initial years to allow relaxation in availing input tax credit.
• GSTR-4 Due Date Extension: The due date for filing GSTR-4 for composition taxpayers is extended from 30th April to 30th June.
• Interest Calculation in Rule 88B: Amendment in rule 88B to exclude amounts in the Electronic Cash Ledger on due date from interest calculation for delayed return filing.
• Section 11A Insertion: Section 11A is inserted in CGST Act to regularize non-levy or short levy of GST due to common trade practices.
• Refund of Additional IGST on Export: A mechanism for claiming refund of additional IGST paid on upward revision in price of exported goods is prescribed.

Clarifications and Compliance Measures

• Valuation of Import of Services: Value of import of services by a related person, where the recipient is eligible for full input tax credit, is clarified.
• Input Tax Credit on Optical Fiber Cables: ITC is not restricted for ducts and manholes used in Optical Fiber Cable networks.
• Place of Supply for Custodial Services: Place of supply for custodial services provided by Indian Banks to Foreign Portfolio Investors is determined under Section 13(2) of the IGST Act.
• Valuation of Corporate Guarantees: Valuation of corporate guarantees between related persons is clarified, with amendments to rule 28(2) of CGST Rules.
• Reverse Charge Mechanism Invoices: The relevant financial year for availing ITC under RCM is the year the invoice is issued by the recipient.
• Miscellaneous Clarifications: Clarifications on various issues, including taxability of re-imbursement of securities, input tax credit reversals, and taxability of loans between related persons, are provided.

Additional Recommendations

• Transitional Credit for ISD: Amendment in section 140(7) of CGST Act to provide transitional credit for invoices before the appointed date.
• GSTR-1A Facility: A new optional facility in FORM GSTR-1A is provided for amending details before filing GSTR-3B.
• Annual Return Exemption: Filing of annual return in FORM GSTR-9/9A for FY 2023-24 is exempted for taxpayers with annual turnover up to two crore rupees.
• Section 122(1B) Amendment: Section 122(1B) of CGST Act is amended to clarify penal provisions for e-commerce operators.
• Rule 142 Amendment: Rule 142 of CGST Rules is amended for adjusting amounts paid against pre-deposit for appeals.

Biometric Aadhaar Authentication

• Pan-India Rollout: Biometric-based Aadhaar authentication for GST registration applicants is recommended on an All-India basis in a phased manner.

Common Time Limit for Demand Notices

• Amendments in Sections 73 and 74: Amendments to provide a common time limit for issuance of demand notices and orders for FY 2024-25 onwards.

Sunset Clause for Anti-Profiteering

• Amendments in Sections 171 and 109: Amendments to provide a sunset clause for anti-profiteering under GST and handling by GSTAT.

Export Duty and IGST Refunds

• Amendments in Section 16 of IGST Act and Section 54 of CGST Act: Refunds for goods subjected to export duty are restricted.

B2C Inter-State Supplies Reporting

• Threshold Reduction: The threshold for reporting B2C inter-State supplies in FORM GSTR-1 is reduced from Rs. 2.5 Lakh to Rs. 1 Lakh.

GSTR-7 Filing Requirements

• Monthly Filing: Registered persons required to deduct tax at source must file GSTR-7 monthly, even if no tax is deducted.

These comprehensive recommendations and clarifications from the 53rd GST Council meeting aim to streamline GST compliance, facilitate trade, and address various industry concerns.