47th GST Council Meeting Updates Summary

This article highlights the major decisions taken at the 47th GST Council Meeting held on 28-29 June 2022

A) GST Refund rules

1) Inverted Duty Structure: –

Change in formula for calculation of refund under rule 89(5)

The formula shall include Utilization of ITC on account of inputs and input services for payment of output tax on inverted rated supplies in the same ratio in which ITC has been availed on inputs and input services during the said tax period. Clarification would be provided to remove ambiguity and legal disputes .

Earlier formula

{(Turnover of inverted rated supply of goods and services) x Net ITC ÷ Adjusted Total Turnover} – tax payable on such inverted rated supply of goods and services.

2) Duty Free Shops: –

Earlier as per Explanation 1 after rule 43 of CGST Rules: –

Now no reversal of input tax credit will be required for exempted supply of Duty Credit Scrips by the exporters.

Thus, Amendment to Explanation 1 after rule 43 of CGST Rules (Reversal of ITC) to be provided

Supplies from Duty Free Shops (DFS) at international terminal to outgoing international passengers to be treated as exports by DFS and consequential refund benefit to be available to them on such supplies. Rule 95A of the CGST Rules, Circular No. 106/25/2019-GST dated 29.06.2019 and related notifications to be withdrawn accordingly.

3) Exporters of electricity: –

Amendment in CGST Rules to provide for refund of unutilized Input Tax Credit on account of Export of Electricity. This would facilitate the exporters of electricity in claiming refund of utilized ITC on zero rated supplies

4) Pending IGST Refund Claims: –

Where the exporter is identified as risky exporter requiring verification by GST officers, or where there is a violation of provisions of Customs Act, the refund claims in respect of export of goods are suspended/withheld, the council has recommended for Amendment in rule 96 of the CGST Rules to provide for transmission of such IGST refund claims on the portal in a system generated FORM GST RFD-01 to the jurisdictional GST authorities for processing. This would result in expeditious disposal of such IGST refund claims, after due verification by GST officers, thus benefitting such exporters.

5) Re-credit of amount in electronic credit ledger:-

♦ Where erroneous refund amount sanctioned to a taxpayer on account of accumulated ITC or on account of IGST paid on zero rated supply of goods or services, in contravention of rule 96(10) of the CGST Rules

AND

♦ The erroneous refund is deposited by him along with interest and penalty, wherever applicable then the taxpayers shall be eligible re-credit of the amount of erroneous refund, paid back by them, in their electronic credit ledger.

♦ A new FORM GST PMT-03A is introduced for the same.

6) GST Export benefits

• Exemption of IGST on import of goods under AA/EPCG/EOU scheme to be continued which was Earlier extended upto 30.06.2022

• E-wallet scheme: -Based on the tax record or the past performance on exports, a notional   credit i.e., virtual currency will be credited to the exporter’s account by the DGFT. This in-turn can be used to pay GST on inputs, raw materials, or goods procured for export purposes so that their funds are not blocked. The restriction of this scheme is that the advance amount cannot be encased thus limiting its usage only for the GST tax payment.In the council meeting it has been decided that the E-wallet scheme would not to be pursued further

B) GST Returns:-

• FORM GSTR-9/9A for FY 2021-22– Exemption from filing annual return to taxpayers having Annual Average Turnover upto Rs. 2 crores.
• Waiver of late fee for delay in filing FORM GSTR-4 for FY 2021-22 if return filed by 07.22. The issue of negative balance in Electronic Cash Ledger to be resolved.
• FORM GST CMP-08 for the 1st quarter of FY 2022-23 filing due date extended from 18.07.2022 to 31.07.2022.

C) Electronic commerce Operators Supplies

Earlier relaxation was given only for Supplies of services subject to turnover limit irrespective of place of supply but now

♦ Waiver of Mandatory GST Registration for Supplies of goods through E- Commerce Operators (ECOs) under section 24(ix) of CGST Act subject to below conditions

1. Aggregate turnover on all India basis does not exceed the turnover specified under sub-section (1) of section 22 of the CGST Act: –

Every supplier shall be liable to be registered under this Act in the State or Union territory, other than special category States, from where he makes a taxable supply of goods or services or both, if his aggregate turnover in a financial year exceeds forty lakh rupees

Provided that where such person makes taxable supplies of goods or services or both from any of the special category States, he shall be liable to be registered if his aggregate turnover in a financial year exceeds ten lakh rupees

AND

2.Supplies through ECO is only Intra state i.e., within state

♦ Composition scheme is going to be introduced for ECO subject to: –

1. Supplies are only Intra State

2. Complies with the scheme implemented by Law Committee of Council

3. The scheme would be tentatively implemented with effect from 01.01.2023, subject to preparedness on the portal as well as by ECOs.

D) Miscellaneous

♦ Retrospective amendment in section 50(3) of CGST Act, with effect from 01.07.2017: -Interest will be payable on the wrongly availed ITC only when the same is utilized

♦ Amendment in sub-section (10) of section 49 of CGST Act: -To allow transfer of balance in Electronic Cash ledger of a registered person to electronic cash ledger of a distinct person. (Applicable to Multiple GSTIN under same PAN)

♦ UPI & IMPS to be provided as an additional mode for payment of Tax under Rule 87(3) of CGST Rules.

♦ Issuance of the following circulars

1. Issues relating to applicability of demand and penalty provisions under the CGST Act in respect of transactions involving fake invoices.
2. Mandatory furnishing of correct and proper information of inter-State supplies and amount of ineligible/blocked Input Tax Credit and reversal thereof in return in FORM GSTR-3B.
3. Refund claimed by the recipients of supplies regarded as deemed export
4. Relating to interpretation of section 17(5) of the CGST Act
5. Issue of perquisites provided by employer to the employees as per contractual agreement;
6. Utilization of the amounts available in the electronic credit ledger and the electronic cash ledger for payment of tax and other liabilities.

E) GST Rates changes