July 17, 2023

Key Highlights from 50th GST Council Meeting

GST Council meetings have completed its half century with 50th GST Council meeting held on 11th July 2023 at New Delhi under chairmanship of Hon’ble Union Finance & Corporate Affairs Minister. 50th GST Council meeting concluded providing suggestions on:

Changes in GST rates of various goods and services;
Relaxation in filing of GSTR-9 and GSTR-9C for FY 2022-23;
Clarification on issues raised by industries such as distribution of ITC, supplies to government departments etc.

Changes recommended in 50th GST Council meeting is as follows:

1. Changes in GST rates of Goods and other recommendations related to goods

a. Changes in GST Rates

GST Council has recommended the following changes in GST Rates:

Goods	Existing Rate	Proposed Rate
Uncooked/unfried snack pellets	18%	5%
Imitation Zari thread or yarn	12%	5%
LD slag	18%	5%
Fish soluble paste	18%	5%

b. Other recommendations related to goods

GST council has recommended following other changes in rates in different scenarios:

IGST on import of Dinutuximab (Quarziba) medicine shall be exempted if import is done for personal use.
IGST on import of medicines and Food for Special Medical Purposes (FSMP) used in the treatment of rare diseases shall be exempted if import is made for personal use subject to existing conditions.
Entry No. 52B of Compensation cess notification shall include all utility vehicles. Accordingly, compensation cess will be levied on all utility vehicles provided they meet the parameters of Length, Engine capacity and Ground Clearance given under Entry No. 52B.
IGST Exemption on import of gold, silver or platinum will be applicable to RBL Bank and ICBC bank as well.

2. Recommendation on GST Rates of services and other changes related to services

a. Changes in GST Rate

GST Exemption on satellite Launch services is extended to services supplied by private entities to encourage start-ups.

GST on Casino, Race Courses and Online Gaming

After considering recommendation of Group of Ministers (GoM), GST Council has recommended that:

Online gaming and horse racing shall be included in schedule III as taxable actionable claims.
All three namely Casino, Horse Racing and Online gaming to be taxed at the uniform rate of 28%.
Tax will be applicable on the face value of the chips purchased in the case of casinos, on the full value of the bets placed in the case of Horse Racing and on the full value of the bets placed in the case of Online Gaming.

b. Other changes related to service

Option of Pay GST under forward charge by GTA:
- GST on GTA services is payable under reverse charge mechanism @ 5%. However, GTA has an option to pay GST under forward charge @ 12%.
- GTA can exercise this option by filing a declaration by 15th March of the preceding Financial year. Declaration is required to be filed every year.
- GST Council has recommended that GTA will not be required to file declaration every year. Option once exercise shall remain valid for future financial years unless a declaration is filed that GTA wants to revert to reverse charge mechanism (RCM).
- Also, the last date of exercising the option will be 31st March of the preceding Financial Year instead of 15th March. Declaration can be filed from 1st January onwards of the preceding financial year.

GST council has clarified that GST under RCM on directors services shall not apply on services supplied by a director to the company in his private or personal capacity such as renting of immovable property. Only services provided by directors in the capacity of director shall be taxable under RCM.
GST on supply of food and beverages in cinema halls is taxable as restaurant service if they are supplied independently of the cinema exhibition service. Where the sale of cinema ticket and supply of food and beverages are clubbed together, it will be considered as composite supply and the entire supply will attract the GST of cinema ticket, the principal supply.

3. Other measures for facilitation of trade

GST Council has recommended Goods and Services Tax Appellate Tribunal (Appointment and Conditions of Service of President and Members) Rules, 2023. Further, provisions of rules related to GST Appellate Tribunal (GSTATs) may get notified from 1st August 2023, for disposal of GST related matters

Relaxation in Annual Returns for FY 2022-23
- The council recommended Relaxation provided in F.Y. 2021-22 in respect of various tables of FORM GSTR-9 and FORM GSTR-9C to be continued for F.Y. 2022-23.
- Taxpayers with an annual turnover of up to Rs. 2 crore are not required to file the annual return in FORM GSTR-9/9A.

Input Service distributor(ISD) mechanism is not mandatory :
- GST Council has recommended to clarify that Input Services Distributor (ISD) mechanism is not mandatory for distribution of ITC of common input services procured from third parties to the distinct persons as per the present provisions of GST law.
- Further, clarification shall also be provided on taxability of internally generated services provided by one distinct person to another distinct person.
- Also, amendment may be made in GST law to make ISD mechanism mandatory prospectively for distribution of input tax credit of such common input services procured from third parties.

No Reversal of ITC is required on material supplied under replacement and warranty
- GST Council has recommended to clarify the issue of reveral of ITC for warranty replacement of parts and repair services during warranty period without any consideration from the customers.
- Clarification shall be provided that no GST is chargeable by the manufacturer on such replacement of parts or repair service and also, no reversal of input tax credit is required to be made by the manufacturer.

Clarification on refund related issues:

GST Council has recommended that clarification will be issued on following refund related issues:

Due to amendment of Rule 36(4) of CGST Rules, refund of accumulated input tax credit (ITC) under Section 54(3) of CGST Act, 2017 shall be restricted to ITC on inward supplies reflected in FORM GSTR-2B of the said tax period or any previous tax period.
Consequent to Explanation inserted in rule 89(4) of CGST Rules, the value of export goods, to be included while calculating “adjusted total turnover” for computing refund amount admissible, will be determined as per the said explanation. Therefore, value of export while computing “Adjusted Total Turnover, shall be taken as lower of Invoice Value or FOB Value.
Clarification regarding admissibility of refund in cases where export of goods or the realization of payment for export of services is made after the time limit provided under rule 96A of CGST Rules, 2017.

Clarification on other Issues

GST Council has recommended to issue clarification on following issues:

TCS Liability in cases where multiple e-commerce operators (ECOs) are involved in a single transaction.
Registered persons, who are required to generate e-invoice, are required to issue e-invoices for the supplies made to Government Departments or establishments / Government agencies / local authorities / PSUs, etc., registered solely for the purpose of TDS.
While calculating interest in respect of wrongly availed and utilized IGST credit, the balance of input tax credit (ITC) lying in electronic credit ledger under head IGST, CGST and SGST shall be taken together while computing interest liability as per rule 88B of CGST Rules, 2017.
Mere holding of securities of a subsidiary company by a holding company cannot be treated as a supply of services and therefore, cannot be taxed under GST.

Verification of ITC appearing in GSTR-2A and claimed in GSTR-3B for April, 19 to December, 2021

CBIC has clarified the manner of dealing difference in ITC availed in GSTR-3B and ITC available as per GSTR-2A vide Circular No. 183/15/2022-GST dated 27th December, 2022. Such circular was issued for FY 2017-18 and 2018-19.
GST council has recommended to issue further circular to provide for a similar procedure for verification of input tax credit during the period 01.04.2019 to 31.12.2021.

Extension of due date of Amnesty Scheme:

Council has recommended to extend the amnesty schemes regarding non-filers of FORM GSTR-4, FORM GSTR-9 & FORM GSTR-10 returns, revocation of cancellation of registration and deemed withdrawal of assessment orders from 30th June, 2023 till 31.08.2023.

Other Recommendations:
- Special procedure to be provided for manual filing of appeal against the orders passed in respect of TRAN-1/ TRAN-2 claims of the registered persons, filed in pursuance of the directions of Hon’ble Supreme Court in case of the Union of India v/s Filco Trade Centre Pvt. Ltd.
- In view of the prevailing law and order situation in the State of Manipur, due date of filing of GSTR-1, GSTR-3B and GSTR-7 for the months of April, May and June, 2023 is recommended to extend till 31.07.2023.
- To ease the compliance burden of the taxpayers, in case of supply of taxable service through an ECO or by a supplier of OIDAR service to an unregistered recipient, the supplier is required to mention only the name of the State of the recipient, and not the name and full address of the recipient.

4. Measures for streamlining Compliances under GST

GST Council has recommended to insert Rule 138F of CGST Rules, 2017 to implement e-waybill for movement of Gold/ Precious stones. This rule can be inserted in SGST Rules, 2017 of the States, who want to mandate the requirement of generation of e-way bills for intra-State movement of gold and precious stones within their States.

GST Council has recommended to:

Issue notification under section 148 of CGST Act, 2017 prescribing a special procedure to be followed by the manufacturers of tobacco, pan masala & other similar items inter alia for registration of machines and for filing of special monthly returns;
Insert section 122A in CGST Act, 2017 for special penalty for non-registration of machines by such manufacturers;
Notify provisions of section 123 of Finance Act, 2021 with effect from 01.10.2023, amending section 16 of IGST Act, and notification to be issued under section 16(4) of IGST Act. 2017 to provide for restriction of IGST refund route in respect of exports of tobacco, pan masala & other similar items as well as mentha oil.

GST council has recommended following amendments in CGST Rules, 2017 to strengthen the registration process and to effectively deal with the menace of fake and fraudulent registrations in GST:

Details of Bank Account, in name and PAN of registered person, should be furnished within 30 days of grant of registration or before filing of GSTR-1/IFF, whichever is earlier.
If Bank account details are not updated within prescribed time, then GST will be suspended through system-based suspension.

Such suspension shall auto-revoke on updation of Bank Account details.
Filing of GSTR-1 or IFF shall not be allowed for a registered person who has not furnished details of a valid bank account under rule 10A.
Further, do away with the requirement of physical verification of business premises to be conducted in the presence of the applicant and also to provide for physical verification in high risk cases even where Aadhaar has been authenticated.

Procedure for Recovery of Tax and Interest in terms of Rule 88C(3):
- Rule 88C was inserted on recommendations of the GST Council made in 48th meeting, to intimate the interest and tax liability where output tax liability reported FORM GSTR-1 exceeds the output tax liability in form GSTR-3B.
- GST council has now recommended insertion of Rule 142B in the CGST Rules, 2017 and insertion of a FORM GST DRC-01D to provide for the manner of recovery of amount intimated in Rule 88C where no satisfactory explanation has been furnished by the registered person.

Manner of dealing with differences in ITC between FORM GSTR-2B and FORM GSTR-3B:
- The Council has recommended a mechanism for system-based intimation to the taxpayers where excess ITC is claimed in GSTR-3B as compared to ITC appearing in Form GSTR-2B above a certain threshold, along with the procedure of auto-compliance on the part of the taxpayers, to explain the reasons for the said difference or take remedial action in respect of such difference.
- For this purpose, rule 88D and FORM DRC-01C to be inserted in CGST Rules, 2017.
- This will help in reducing ITC mismatches and misuse of ITC facility in GST.

Rule 64 and FORM GSTR-5A of CGST Rules, 2017 to be amended to require OIDAR service providers to provide the details of supplies made to registered persons in India. This information will help in tracking whether the recipient has paid the tax under on RCM basis for such service.

value of supply of goods from Duty Free Shops at arrival terminal in international airports to the incoming passengers to be included in the value of exempt supplies for the purpose of reversal of input tax credit.

DISCLAIMER: The views expressed are strictly of the author and VJM & Associates LLP. The contents of this article are solely for informational purpose. It does not constitute professional advice or recommendation of firm. Neither the author nor firm and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any information in this article nor for any actions taken in reliance thereon.

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