Changes in GSST after GST Council Meeting held on 22nd of June, 2024

GST Council meeting has been held on 22nd of June, 2024 at New Delhi. Council has been given so many recommendations and given the clarifications in favour of public interest. GST tax payer expected so many changes reliefs from GST Council’s meeting and accordingly GST Council has been addressed taxpayer’s problems and try to resolved them. We are discussing of important recommendations, changes and clarifications  which are done by GST Council.

1. Conditional waiver of interest or penalty or both, relating to demands raised under section 73:

• Considering the difficulties faced by the taxpayers, during the initial years of implementation of GST, the GST Council recommended, waiving interest and penalties of demand notices issued under Section 73 of the CGST Act for the fiscal years 2017-18, 2018-19 and 2019-20, in case where the taxpayer pays the full amount of ax demanded in the notice upto 31.03.2025
• Waiver not involving fraud, suppression or wilful misstatement and erroneous refund etc.
• GST Council recommended insertion of section 128A in CGST Act for implement above waiver.

2. Relief in condition of section 16 (4) of the CGST Act:

• In respect of initial 4 years of implementation of GST: The GST Council recommended that the time limit to avail input tax credit regards of invoices or debit notes under Section 16 (4) of CGST Act, through any return of Form GSTR 3B Filed upto 30^th November, 2021 for the financial year 2017-18, 2018-19, 2019-20 and 2020-21. For the same, requisite amendment in section 16 (4) of CGST Act, Retrospectively, w.e.f. 01.07.2017, has been recommended by the GST Council.
• With Respect to case of returns have been filed after Revocation: The GST Council recommended retrospective amendment in section 16 (4) of CGST Act, to be made effective from July 1^st, 2017 to conditionally relax the provisions of section 16 (4) of CGST Act in case where returns for the period from the date of cancellation of registration/ effective date of cancellation of registration till the date of revocation of cancellation of the registration, are filed by the registered person within thirty das of the order of revocation.

3. Reduction of Government Litigation by Fixing monetary Limit for filling appeals under GST: Circular no. 207/1/2024-GST 26.06.2024

The Council recommended to prescribed monetary limits, subject to certain exclusions, for filing of appeals in GST by the department before GST Appellate Tribunal, High Court and Supreme Court, to reduce government litigation. Monetary limits recommended by the council is given below:

GST TAT: Rs.20L

Hight Court: 1 Crore

Supreme Court: 2 Crore

4. GST Council has recommended reduction of the quantum of pre-deposit required to be paid for filing of appeals under GST: GST council recommended amendment in Section 107 and section 112 of CGST Act for reducing the amount of pre-deposit required to be paid for filing of appeals under GST to ease cash flow and working capital blockage for the taxpayers. The maximum amount for filing appeal with the appellate authority has been reduced from Rs.25 crore CGST and Rs.25 Crore for SGST to Rs. 20 Crore CGST and Rs.20 Crore SGST. Further, the amount of pre-deposit for filing appeal with the Appellate Tribunal has been reduced from 20% to 10% and maximum amount 50 crore to 40 crore (equal divided in CGST and SGST).

5. Time for Filing appeals in GST Appellate Tribunal: The GST Council recommended amending section 112 of the CGST Act, 2017to allow the three month period for filing appeals before the Appellate Tribunal to start from a date to be notified by the Government in respect of appeal/revision order passed before the date of said notification. This will give sufficient time to the taxpayers to file appeal before the Appellate Tribunal in the pending case.

6. Recommendation for amendment of Rule 88B of CGST Rules, 2017 in respect of interest under Section 50 of CGST Act on delay filing of Returns, in case where the credit is available in Electronic Cash Ledger (ECL) on the due date of filing the said Return: The GST council recommended amendment in rule 88B of CGST Rules to provide that an amount, which is available in the Electronic Cash Ledger on the due date of filing of return in Form GSTR-3B, and is debited while filing the said return, shall not included while calculating interest under section 50 of the CGST Act in respect of delayed filing of the said return.

GST Council recommends sunset clause from April 1^st 2025 for receipt of any new application for Anti-profiteering

GST Council recommends exemption from Compensation Cess leviable on the imports in SEZ by SEZ Unit/Developers for authorized operations from 1^st July, 2017.

Applicability of Goods and Services Tax on Extra Neutral Alcohol (ENA) Taxation of ENA under GST: The GST Council, in its 52^ndmeeting, had recommended to amend GST law to explicitly exclude rectified spirit/Extra Neutral Alcohol (ENA) from the scope of CGT when supplied for manufacturing alcoholic liquors for human consumption. The GST Council now recommended amendment in sub-section 9 of the CGST Act, 2017 for not levying GST on Extra Natural Alcohol used for manufacture of alcoholic liquor for human consumption.

7. Reduction in rate of TCS to be collected by the ECOs for supplies being made through them: Electronic Commer Operator (ECOs) are required to collect Tax Collected at Source (TCS) on net taxable supplies under Section 52 (1) CGST Act. The GST Council has recommended to reduce the TCS Rate from present 1% (0.5% CGST+05% SGST/UGST for 1% IGST) to 0.5% (0.25% CGST+0.25%SGST/UGST or 0.5% IGST), to ease the financial burden on the suppliers’ making supplies through such ECOs.

8. Change in due date for filing o return inn Form GSTR-4 for composition taxpayers from 30^thApril to 30^th June: The GST Council recommended an amendment in in clause (ii) of sub rule (1) of Rule 62 of CGST Rule, 2017 and Form GSTR-4 to extend the due date for filing of return in Form GSTR-4 for composition taxpayers from 30^th April to 30^th June following the end of the financial years. This will apply for returns for the financial year 2024-25 onwards. They would give more time to the taxpayers who opt to pay tax under composition levy to furnish the said returns.

Insertion of Section 11 A in CGST Act for granting power not to recover duties not levied or short-levied as a result of general practice under GST Acts: The GST Council recommended inserting a new section 11A CGST Act to give powers to the Government, on the recommendations of the Council, to allow regularization of non-levy or short ley of GST, where tax was being short paid or not paid due to common trade practices.

9. Refund of additional Integrated Tax (IGST) paid on account of upward revision in price of the goods subsequent to export: The GST Council recommended to prescribe a mechanism for claiming refund of additional IGST paid on account of upwards revision in price of the goods subsequent to their export. This will facilitate a large number of taxpayers, who are required to pay additional IGST on account of upwards revision in price of the goods subsequent to export in clearing refund of such additional IGST.

The Council recommended amendment in section 140 (7) of CGST Act retrospectively w.e.f. 01.07.20217 to provide for transitional credit in respect of invoice pertaining to service provided before appointed date, and where invoices were received by Input Service Distributor (ISD) before the appointed date.

The Council recommended providing an new optional facility by way of Form GSTR-1A to facilitate the taxpayers to amend the details in Form GSTR-1 for a tax period and /or to declare additional details, if any, before filing of return in Form GSTR-3B for the said tax period. This will facilitate taxpayer to add any particulars of supply of the current tax period missed out in reporting in Form GSTR-1 of the current tax period (including those declared in IFF, for the first and second month of a quarter, if any, for quarterly taxpayers), to ensure that correct liability is auto-populated in Form GSTR-3B.

The Council recommended that filing of annual return in Form GSTR-9/9A for the FY 2023-24 may be exempted for taxpayers having aggregate annual turnover upto two crore rupees.

The Council recommended amendment in rule 142 of CGST Rules and issuance of a circular to prescribe a mechanism for adjustment of an amount paid in respect of a demand through Form GST DRC-03 against the amount to be paid as pre-deposit for filing appeal.

10. Rolling out of bio-Metric based Aadhaar authentication on All-India basis: The GST Council recommended to roll-out the biometric-based Aadhaar authentication of registration applicants on pan-India basis in a phased manner. This will strengthen the registration process in GST and will help in combating fraudulent input tax credit (ITC) claims made through fake invoices.

11. Amendments in Section 73 and Section 74 of CGST Act, 2017 and insertion of a new Section 74A in CGST Act, to provide for common time limit for issuance of demand notices and orders irrespective of whether case involves fraud, suppression, willful misstatement etc. or not: Presently, there is different time limit for issuing demand notices and demand orders, in case where charges of fraud, suppression, willful misstatement etc, are not involved, and in case where those charges are involved. In order to simplify the implementation of those provisions, the GST Council recommended to provide for a common time limit for issuance of demand notices and orders in respect of demands for FY 2024-25 onwards, in case involving chares of fraud of willful misstatement and not involving the charges of fraud or willful misstatement etc. Also the time limit for the taxpayers to avail the benefit of reduced penalty, by paying the tax demanded along with interest, has been recommended to be increased from 30 days to 60 days.

The threshold for reporting of B2C inter-State supplies invoice-wise in Table 5 of Form GSTR-1 was recommended to be reduced from Rs.2.5 Lakh to 1 Lakh.

The Council recommended that return in Form GSTR-7, to be filed by the registered persons who are required to deduct tax at source under section 51of CGST Act, is to be filed every month irrespective of whether any tax has been deducted during the said month or not. It has also been recommended that no late fee may be payable for delayed filing of NIL Form GSTR-7 return. Further, It has been recommended that invoice-wise details may be required to be furnished in the said Form GSTR-7.

12. Amendment in Section 16 of IGST Act and section 54 of CGST Act to Curtail refund of IGST in cases where export duty is payable: The Council recommended amendments in section 16 of IGST Act and section 54 of CGST Act to provide that the refund in respect of goods, which are subjected to export duty, is restricted, irrespective of whether the said goods are exported without payment of taxes or with payments of taxes and such restrictions should also be applicable, if such goods are supplied to SEZ to developer or a SEZ unit for authorized operation.

13. Change in GST Rate:

I Recommendations relating to GST rates on Goods

• 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 conditions.
• All milk cans (of steel, iron and aluminum) irrespective of their use will attract 12% GST.
• GST rate on carton, boxes and cases of both corrugated and non-corrugated and non-corrugated paper or paper board (HS4819 10, 4819 20) to be reduced 18% to 12%.
• All Solar Cookers whether single or dual energy source, will attract 12% GST.
• Poulatry keeping Machinery attracting 12 GST.
• To Clarify that all types of sprinklers including fire water sprinkler will attract GST @12%.
• To extend IGST exception imports of specified items for defence forces for a further period of five years till 30^thJune, 2029.
• To extend IGST exemption on imports of research equipment/buoys imported under the Reseach Moored Array for African-Asian-australian Monsoon Analysis and Prediction programme subject to specified conditions.
• To exempt Compensation Cess on the imports in SEZ by SEZ unit/Developers for authorized operations w.e.f. 01.07.2017.

Other Misc. Changes

• To Exempt Compensation cess on supply of aerated beverages and energy drinks to authorised customers by Unit Run Canteens under Ministry of Defense.
• To Provie Adhoc IGST exemption on imports of technical documentation for AK-203 rifle kits imported for Indian Defense Force.

14. Recommendations relating to GST Rate on Services

(i) To exempt the services provided y Indian Railways to general public, namely, sale of platform tickets, facility of retiring rooms/waiting rooms, cloak room services and battery-operated car service and to also exempt the intra-railway transactions. The issue for the past period will be regularized from 20.10.2013 to the date of issue of exemption notification in this regards.

(ii) To Exempt GST on the services provided by Special Purpose Vehicles (SPV) to Indian Railway by way of allowing Indian Railway to use infrastructure built & owned by SPV During the concession period and maintenance service supplied by Indian Railways to SPV. The issue for the past will be regularized on as is basis for the period from 01.07.2017 to till the date of issue of exemption notification in this regards.

(iii) To create a separate entry in notification No. 12/2017-CTR 28.06.2017 under heading 9963 to exempt accommodation services having value of supply of accommodation service is supplied for a minimum continuous period of 90 days. To extend similar benefit for past cases.

Other Changes related to services

(i) Co – insurance premium apportioned by lead insurer to the co-insurer for the supply of insurance service by lead and co-insurer to the insured in coinsurance agreements, may be declared as no supply under Schedule III of CGST Act, 2017 and past case may be regularized on as is where is basis.

(ii) Transaction of ceding commission/re-insurance commission between insurer and re-insurer may be declared as no supply under Schedule III of CGST Act, 2017 and past cases may be regularized on as is where is basis.

(iii) To issue clarification that statutory collections made by Real Estate Regulatory Authority (RERA) are exempt from GST as they fall within the scope of entry 4 of no. 12/2017- CTR dated 28.06.2017.

Clarification:

1. Valuation for supply of import of services by a related person where recipient is legible to full input tax credit. Circular no. 210/4/2024-GST 26.06.2024

2. Clarification regarding availability of Input Tax Credit (ITC) on ducts and manholes used in the network of Optical Fiber Cables (OFCs)

3. Clarification on the place of supply applicable for custodial services provided by Bank: Circular No. 220/14/2024-GST 26.06.2024

4. Clarification on the place of supply applicable for custodial services provided by banks.

5. Clarification on valuation of corporate guarantee provided between related persons after insertion of Rule (28)2  of CGST Rules 2017.

6. Clarification regarding applicability of provisions of Section  16 (4) of CGST Act, 2017, in respect of invoices issued by the recipient under Reverse Charge Mechanism (RCM)-Circular No. 211/5/2024-GST 26.06.2024

7. Clarification on following issues to provide clarity to trade and tax officer and to reduce litigation:

• Clarification on taxability of re-imbursement of securities/shares as ESOP/ESPP/RSU provided by company to its employees-213/07/2024-GST Dt. 26.06.2024
• Clarification on requirements of reversal of input tax credit in respect of amount of premium in Life insurance services, which is not included in the taxable value as per Rule 32 (4) of CGST Rules. Circular No. 214/8/2024-GST 26.06.2024
• Clarification on taxability of wreck and salvage values in motor insurance claims- Circular No. 215/9/2024-GST 26.06.2024
• Clarification in respect of warranty/extended warranty provided by Manufactures to the end customers. Circular No. 216/10/2024-GST 26.06.2024
• Clarification regarding availability of input tax credit on repair expenses incurred by the insurance companies in case of reimbursement mode of settlement of motor vehicle insurance claims. – Circular No. 217/11/2024-GST 26.06.2024
• Clarification on taxability of loans granted between related person or between group companies. Circular No. 218/12/2024-GST 26.06.2024
• Clarification on time of supply on Annuity payments under HAM Projects. Circular No. 221/15/2024-GST 26.06.2024
• Clarification regarding time of supply in respect of allotment of Spectrum to Telecom companies in case where payment of licence fee and Spectrum usage charges is to be made in installments. Circular No. 222/16/2024-GST 26.06.2024
• Clarification relating to place of supply of goods supplied to unregistered person, where delivery address is different from the billing address. Circular No. 209/3/2024-GST 26.06.2024
• Clarification on mechanism for providing evidence by the suppliers for compliance of the conditions of Section 15 (3) (b) (ii) GST  Act, 2017, in respect of post-sale discounts, to the effect that input tax credit has been reversed by the recipient on the said amount. Circular No. 212/6/2024-GST
• Clarification on various issues pertaining to special procedure for the manufacturers of the specified commodities, like pan masala, tobacoo etc.

Conclusion: The GST Council’s latest meeting has ushered in crucial amendments and clarifications, reflecting a keen understanding of taxpayer challenges. These changes, including waivers, reduced litigation thresholds, and revised GST rates, are designed to enhance compliance ease and financial relief. As these recommendations take effect, they promise to streamline processes and alleviate the tax burden on businesses, contributing to a more efficient GST regime.