The 52nd GST Council meeting took place under the leadership of Union Minister for Finance & Corporate Affairs, Smt. Nirmala Sitharaman. The meeting covered various important decisions and recommendations related to changes in GST tax rates, trade facilitation measures, and compliance streamlining.
Recommendations on GST Rates for Goods and Services
I. Changes in GST Rates for Goods
1. Food Preparation of Millet Flour:
- The GST rates for food preparations made from millet flour have been adjusted.
- If sold loose, it will have a 0% GST rate, and if sold pre-packaged, it will have a 5% GST rate.
2. Imitation Zari Thread:
- Imitation zari threads made from metallized polyester or plastic film will be taxed at a 5% GST rate.
- However, there will be no refund on the polyester/plastic film used.3
3. Foreign Going Vessels:
- Foreign going vessels converting to coastal runs will be subject to 5% IGST.
- Conditional IGST exemption is recommended for these vessels, provided they reconvert to foreign going vessels within six months.
II. Other Changes Related to Goods:
4. Extra Neutral Alcohol (ENA):
- ENA used for manufacturing alcoholic liquor for human consumption will be excluded from GST.
5. Molasses:
- The GST rate on molasses will be reduced from 28% to 5%.
- This will help mills have more liquidity for clearing cane dues to sugarcane farmers and reduce cattle feed manufacturing costs.
6. Rectified Spirit for Industrial Use:
- A new 8-digit HS code will be created for rectified spirit used for industrial purposes, with an 18% GST rate.
III. Changes in GST Rates for Services:
7. Exemptions for Government Services:
- Services provided to Central/State/UT governments, local authorities, and services like water supply, public health, sanitation, conservancy, solid waste management, slum improvement, and upgradation supplied to Governmental Authorities will be exempt from GST.
8. Job Work Services for Barley Processing:
- Job work services for processing barley into malt will have a 5% GST rate, similar to job work related to food and food products.
9. GST on Bus Transportation Services via ECOs:
- Bus operators organized as companies may be excluded from paying GST under section 9(5) of the CGST Act, 2017, for bus transportation services via Electronic Commerce Operators (ECOs).
10. District Mineral Foundations Trusts (DMFT):
- DMFTs set up by State Governments will be considered Governmental Authorities and eligible for GST exemptions.
11. GST on Indian Railways:
- All goods and services supplied by Indian Railways will be taxed under Forward Charge Mechanism to allow them to avail Input Tax Credit (ITC).
Trade Facilitation Measures
i) Amnesty Scheme for Filing Appeals:
- An amnesty scheme will be introduced for taxable persons who couldn’t file appeals against demand orders within the allowable time frame.
- They can now file appeals against such orders until January 31, 2024, by paying 12.5% of the disputed tax, with at least 20% being debited from their Electronic Cash Ledger.
ii) Clarifications on Taxability of Personal Guarantees:
- Clarifications will be provided regarding the taxability of personal guarantees offered by directors to banks and corporate guarantees provided for related persons, including those by holding companies to subsidiaries.
iii) Automatic Restoration of Provisionally Attached Property:
- Properties provisionally attached will be automatically released after one year, eliminating the need for a separate order from the Commissioner.
iv) Clarifications on Place of Supply:
- A circular will be issued to clarify the place of supply for various services, including transportation of goods, advertising services, and co-location services.
v) Clarification on Export of Services:
- A circular will be issued to clarify the admissibility of export remittances received in Special INR Vostro accounts for the consideration of supply of services to qualify as export of services.
vi) Supplies to SEZ Units/Developers:
- Amendments will be made to allow suppliers to Special Economic Zone (SEZ) developers or units to supply goods or services to them on payment of integrated tax, with a refund route.
Other Measures Related to Law and Procedures:
i) Alignment of CGST Act with Tribunal Reforms Act:
- Amendments will be made to the CGST Act to align the provisions with the Tribunal Reforms Act, including eligibility criteria and age limits for the appointment of judicial members and Presidents.
ii) Amendment in ISD Procedure:
- The Input Service Distributor (ISD) procedure will be made mandatory for distributing Input Tax Credit (ITC) in certain cases. Rules will be amended accordingly.
iii) Automatic Restoration of Provisionally Attached Property:
- After one year, properties provisionally attached will be automatically released without the need for a separate order from the Commissioner.
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