GST Council met for 52nd time on 7th October, 2023 under the chairmanship of Hon’ble Finance and Corporate affair minister. GST Council discussed various aspects such as Amnesty Scheme for filing of GST Appeal, Clarification on applicability of GST on Guarantee services provided by director and company, changes in GST rates etc.
GST Council recommendations are categorized in following parts:
- Suggestions for facilitation of trade
- Changes in GST rates of goods and services;
- Recommendations to issue clarification
1. Suggestions for facilitation of trade
1.1 Amnesty scheme for filing of appeal
- As per Section 107(1) of CGST Act, any person aggrieved by order passed under GST Act may file an appeal within 3 months from date of communication of impugned order.
- In pursuance of power given under Section 148 of CGST Act, GST council recommended amnesty scheme for filing of GST appeal till 31st March, 2024.
- Benefit of such scheme shall be available for demand order issued under section 73 or 74 of CGST Act, 2017 till 31st day of March, 2023. Benefit of amnesty scheme can also be claimed in cases where appeal against the impugned order got rejected solely on the grounds of expiry of time period of filing appeal.
- In all such cases, appeal will be allowed against such orders upto 31st January 2024.
- However, the benefit of the amnesty scheme can be claimed subject to payment of an amount of pre-deposit of 12.5% of the tax under dispute, out of which at least 20% (i.e. 2.5% of the tax under dispute) should be paid through Electronic Cash Ledger.
- This scheme is recommended to help the taxpayers who could not file an appeal in the past within the specified time period.
- However, requirement of 2.5% pre-deposit through electronic cash ledger may cause liquidity crunches to the assessee.
1.2 Applicability of GST on personal guarantee provided by the Directors for the Loan sanctioned to the company
GST Council has recommended that:
- Where the company does not pay any consideration, directly or indirectly, to the director for providing personal guarantee to the bank/ financial institutes, the open market value of the said transaction shall be considered as Zero.
- Accordingly, no tax shall be payable on such supply.
1.3 Applicability of GST on corporate guarantee provided for related persons including for subsidiary company
- GST council has recommended to insert sub-rule (2) in Rule 28 of CGST Rules, 2017 for valuation of corporate guarantee provided to related persons.
- As per proposed sub-rule, value of supply of corporate guarantee shall be higher of the following amounts:
- 1% of the amount of such guarantee offered, or
- the actual consideration
- Also, such valuation rule of corporate guarantee shall apply irrespective of whether full ITC is available to the recipient of services or not.
1.4 Automatic restoration of attached properties after one year
- The Council has recommended that FORM GST DRC-22 will provide that the order for provisional attachment shall not be valid after expiry of 1 year from the date of the said order.
- Accordingly, provisionally attached properties will be released automatically after expiry of a period of 1 year and there will not be any need of separate specific written order from the Commissioner.
- This move will result in reduce in ligitation.
1.5 Allowing supplies to SEZ units/ developer for authorised operations for IGST refund route:
- In accordance with power given under Section 16(4), Government notification No. 01/2023- Integrated Tax dated 31st July, 2023 wherein all goods and services are notified for export on payment of IGST route expect certain category of goods such as:
- Pan Masala
- Unmanufactured tobacco (without lime tube) – bearing a brand name
- And similar products
- The Council has recommended to amend this notification so as to allow the suppliers to a Special Economic Zone developer or a Special Economic Zone unit for authorised operations to make supply on payment of integrated tax and claim the refund of tax so paid.
1.6 Amendment with respect to ISD as recommended in 50th GST Council meeting
- In 50th GST Council meeting, The GST Council recommended to make ISD (Input Service Distributor) procedure mandatory prospectively for distribution of ITC in respect of input services procured by Head Office (HO) from a third party but attributable to both HO and Branch Office (BO) or exclusively to one or more BOs.
- The Council has now recommended amendments in make corresponding amenmdne tin GST Law with respect of the same.
2. Changes in GST Rates of Goods and services
2.1 Change in GST rate of goods:
|Goods||HSN Code||Proposed Rate|
|Food preparation of millet flour in powder form, containing at least 70% millets by weight||1901||0%- if sold in other than pre-packaged and labelled form5%- if sold in pre-packaged and labelled form|
|Imitation zari thread or yarn made out of metallised polyester film /plastic film..||5605||5%- covered by the entry for imitation zari thread or yarn.|
However, no refund will be allowed on polyester film (metallised) /plastic film on account of inversion.
|Extra Neutral Alcohol (ENA), used for manufacture of alcoholic liquor for human consumption.||Kept outside GST ambit.|
This step is taken to increase liquidity with mills and enable faster clearance of cane dues to sugarcane farmers.
|Rectified spirit for industrial use.||18%|
2.2 Changes in GST rate of services
|Nature of service||Proposed/ Clarified GST Rate|
|water supply, public health, sanitation conservancy, solid waste management and slum improvement and upgradation supplied to Governmental Authorities.||Exempt (Proposed)|
|Job work services for processing of barley into malt||5% (Clarified)|
|bus transportation services supplied through Electronic Commerce Operators (ECOs)||With effect from 1st January 2022, liability to pay GST on bus transportation services through ECO has been placed on the ECO under section 9(5) of CGST Act, 2017. To arrive at a balance between the need of small operators for ease of doing business and the need of large organized players to take ITC, GST Council has recommended that bus operators organised as companies shall be excluded for section 9(5) of CGST Act, 2017. This would enable them to pay GST on their supplies using their ITC.|
2.3 Other recommendation
- District Mineral Foundations Trusts (DMFT), set up by the State Governments, in mineral mining areas are Governmental Authorities. Therefore, same is eligible for the same exemptions under GST as available to any other Governmental Authority.
- Supply of all goods and services by Indian Railways shall be taxed under Forward Charge Mechanism to enable them to avail ITC. This will reduce the cost for Indian Railways.
3. Recommendations to issue clarification
3.1 Clarification on various provisions related to Place of Supply
The GST Council has recommended to issue a Circular to clarify the place of supply for following supply of services:
- service of transportation of goods, including by mail or courier, in cases where the location of supplier or the location of recipient of services is outside India;
- Advertising services;
- Co-location services.
3.2 Issuance of clarification relating to export of services
The Council has recommended to issue a circular to clarify the admissibility of export remittances received in Special INR Vostro account to qualify supply of service as export of service.