53rd GST Council Meeting: Amendments & GST Rate Changes

The 53rd  GST Council meeting, conducted on June 22, 2024, brought forward several key recommendations aimed at refining the Goods and Services Tax (GST) framework in India. This article summarizes the significant changes and recommendations made during this meeting, focusing on legal amendments and GST rate changes.

Legal Amendments

1. Waiver of Penalties and Interest: Taxpayers facing GST demands for FY 2017-18 to FY 2019-20 can avail a waiver on penalties and interest if they pay the complete tax amount by March 31, 2025, excluding cases of erroneous refunds (Section 128A).
2. Extension of Input Tax Credit Time Limit: The deadline to claim input tax credit on invoices and debit notes from FY 2017-18 to 2020-21 has been extended to November 30, 2021, through FORM GSTR 3B filings (Section 16(4) of CGST Act).
3. Reduction in TCS Rate: The rate of Tax Collected at Source (TCS) by Electronic Commerce Operators (ECOs) on supplies has been reduced from 1% to 0.50%.
4. No Interest on Electronic Credit Ledger: No interest will be levied under Section 50 of CGST Act on amounts available in the Electronic Credit Ledger on the due date of filing FORM GSTR-3B.
5. Relaxation in Section 16(4) Provisions: Conditional relaxation provided for filing returns during the period of cancellation of registration until revocation, if filed within thirty days of revocation.
6. Clarification on ITC Time Limit: A circular will clarify that the financial year for ITC time limits under Section 16(4) applies to RCM invoices issued by recipients.
7. Maximum Pre-deposit for filing of appeal is being reduced to 40 Crores instead of 50 Crores for filing of appeal before the Commissioner (Appeals).
8. Decrease in the payment of pre-deposit for filing appeal with the Appellate Tribunal has from 20% with a maximum amount of Rs. 100 crores to 10 % with a maximum of 40 Crores.
9. GST Council recommended excluding Extra Neutral Alcohol (ENA) from GST when used to make alcoholic drinks for human consumption, amending Section 9(1) of CGST Act, 2017.
10. The time period of 3 months for filing of Appeal before the GST Appellate Tribunal will start from the date notified by the Government
11. The time limit for filing the GSTR-4 from the FY 2024-25 has been increased from 30th April to 30th of June.
12. Amend CGST Rules rule 28(2) retrospectively to clarify corporate guarantee valuations between related parties, excluding exports and cases with full ITC.
13. Establish a mechanism for refunding additional IGST paid due to post-export price increases, aiding taxpayers in reclaiming excess IGST.
14. No Filing of appeal by the department if the demand is upto Rs. 20 lakhs under GSTAT, upto Rs. 1 crore High Court & upto 2Crores in Supreme Court
15. To issue to a circular to clarify, that the value of imported services from a related foreign affiliate, with full ITC available, is deemed as the invoice value or Nil if no invoice is issued, as per CGST Rules.
16. To issue to a circular to clarify, that ITC is not restricted for ducts and manholes used in optical fiber cable networks under CGST Act section 17(5).
17. To issue to a circular to clarify, that the place of supply for custodial services by Indian banks to Foreign Portfolio Investors is determined by IGST Act section 13(2).
18. Amend section 140(7) of CGST Act retrospectively to allow transitional credit for invoices received by ISD before the appointed date.
19. Introduce FORM GSTR-1A to enable taxpayers to amend or add details in FORM GSTR-1 before filing FORM GSTR-3B for the same period.
20. Exempt taxpayers with annual turnover up to Rs. 2 crore from filing FORM GSTR-9/9A for FY 2023-24.
21. Amend section 122(1B) of CGST Act retrospectively to clarify it applies only to e-commerce operators required to collect tax under section 52.
22. Amend rule 142 of CGST Rules to allow adjustment of payments made via FORM GST DRC-03 against pre-deposit amounts for appeals.
23. Implement biometric-based Aadhaar authentication for GST registration applicants across India to combat fraudulent ITC claims.
24. Amend sections 73 and 74 of CGST Act and introduce section 74A to establish a common time limit for demand notices and orders, and extend the reduced penalty payment period to 60 days.
25. Amend sections 171 and 109 of CGST Act to add a sunset clause for anti-profiteering and handle cases through the Principal bench of GSTAT, effective 01.04.2025.
26. Amend section 16 of IGST Act and section 54 of CGST Act to restrict IGST refunds for goods subject to export duty, including those supplied to SEZ units for authorized operations.
27. Reduce the reporting threshold for B2C inter-State supplies in Table 5 of FORM GSTR-1 from Rs. 2.5 lakh to Rs. 1 lakh.
28. Require monthly filing of FORM GSTR-7 by tax deductors under section 51 of CGST Act, with no late fee for delayed Nil returns and mandate invoice-wise details.
29. Provide clarifications on various trade and tax issues to reduce litigation:

• Taxability of reimbursed securities/shares (ESOP/ESPP/RSU) provided to employees.
• Requirement of ITC reversal for life insurance premiums excluded from taxable value per Rule 32(4).
• Taxability of wreck and salvage values in motor insurance claims.
• Taxability of manufacturer-provided warranty/extended warranty to end customers.
• ITC availability on repair expenses for motor vehicle insurance claims reimbursed by insurance companies.
• Taxability of loans between related persons or group companies.
• Time of supply for annuity payments under HAM Projects.
• Time of supply for spectrum allotment to telecom companies with installment payments.
• Place of supply for goods delivered to a different address than the billing address for unregistered persons.
• Mechanism for suppliers to provide evidence of post-sale discount conditions compliance under Section 15(3)(b)(ii).
• Various issues regarding special procedures for manufacturers of specified commodities like pan masala and tobacco.

GST Rate Changes

a. Related to Goods

1. A uniform rate of 5% IGST will apply to imports of ‘Parts, components, testing equipment, tools and tool-kits of aircrafts, irrespective of their HS classification to provide a fillip to MRO activities subject to specified conditions.
2. All milk cans (of steel, iron and aluminium) irrespective of their use will attract 12% GST.
3. GST rate on ‘carton, boxes and cases of both corrugated and non-corrugated paper or paper-board’ (HS 4819 10; 4819 20) to be reduced from 18% to 12%.
4. All solar cookers whether single or dual energy source, will attract 12% GST.
5. To amend existing entry covering Poultry keeping Machinery attracting 12% GST to specifically incorporate “parts of Poultry keeping Machinery” and to regularise past practice on ‘as is where is’ basis in view of genuine interpretational issues.
6. To clarify that all types of sprinklers including fire water sprinklers will attract 12% GST and to regularise the past practice on ‘as is where is’ basis in view of genuine interpretational issues.
7. To extend IGST exemption on imports of specified items for defence forces for a further period of five years till 30th June, 2029.
8. To extend IGST exemption on imports of research equipment/buoys imported under the Research Moored Array for African-Asian-Australian Monsoon Analysis and Prediction (RAMA) programme subject to specified conditions.
9. To exempt Compensation Cess on the imports in SEZ by SEZ Unit/developers for authorised operations w.e.f. 01.07.2017.
10. To exempt Compensation cess on supply of aerated beverages and energy drinks to authorised customers by Unit Run Canteens under Ministry of Defence.
11. To provide Adhoc IGST exemption on imports of technical documentation for AK-203 rifle kits imported for  Indian Defence forces.

b. Related to Services

1. Exempt GST on Indian Railways services to the public and intra-railway transactions, with past issues regularized from 20.10.2023.
2. Exempt GST on services by Special Purpose Vehicles to Indian Railways and maintenance services by Indian Railways to SPVs, regularized from 01.07.2017.
3. Separate GST exemption for accommodation services up to Rs. 20,000 per month per person for stays of at least 90 days, with past cases also covered.
4. Co-insurance premiums apportioned by lead insurers to co-insurers are declared as no supply under Schedule III of the CGST Act, 2017, with past cases regularized.
5. Transactions of ceding/re-insurance commissions between insurer and re-insurer declared as no supply under Schedule III of CGST Act, 2017, with past cases regularized.
6. GST liability on reinsurance services of specified insurance schemes under Sr. Nos. 35 & 36 of notification No. 12/2017-CT (Rate) regularized from 01.07.2017 to 24.01.2018.
7. GST liability on reinsurance services for government-paid premium insurance schemes under Sr. No. 40 of notification No. 12/2017-CTR regularized from 01.07.2017 to 26.07.2018.
8. Clarify that retrocession is ‘re-insurance of re-insurance’ and eligible for exemption under Sl. No. 36A of notification No. 12/2017-CTR.
9. Clarify that statutory collections by RERA are exempt from GST under entry 4 of notification No. 12/2017-CTR.
10. Clarify that incentive sharing by acquiring banks under RuPay and BHIM-UPI promotion schemes is not taxable.

Conclusion

The recommendations from the 53rd GST Council meeting aim to simplify compliance, reduce litigation, and streamline the GST framework. These changes are expected to benefit businesses by enhancing ease of doing business and promoting economic growth. Stay informed to adapt to these reforms effectively in your business operations.