GST Proposed Amendments and Clarifications by 53rd Council Meeting

The 53rd GST Council Meeting, held on June 22, 2024, introduced several significant amendments and clarifications to enhance compliance and streamline regulations for taxpayers. These measures aim to reduce government litigation, adjust tax rates, and clarify various aspects of GST to facilitate a smoother operational framework for businesses.

The Key Proposed Amendments are:

1. Reduction of Government Litigation by Fixing Monetary Limits for Filing Appeals under GST:

• Monetary Limits: GST Tribunal- Rs.20Lakhs, High Court- Rs.1Crore and Supreme Court- Rs.2Crore

2. Reduction of Rate of TCS by E-Commerce Operators:

• Proposed Reduction: To be Lowered by 0.5% i.e. 0.25% CGST+0.25% SGST/UTGST or 0.5% IGST.

3. Taxation of Extra Neutral Alcohol under GST:

• Amendment is proposed under Section 9(1) of The CGST Act, 2017.

4. Inclusion of New Section 128A for Waiving of Interest and Penalty for FY 2017-18, 2018-19 and 2019-20:

• The Section 128A will be providing conditional waiver of interest and penalties under Section 73.

5. Filing Appeals in GST Appellate Tribunal Time Period:

• Three month period for filing appeals start from a Government notified date, as an amendment to Section 112.

6. Due Date for Filing GSTR-4 for Composition Taxpayers:

• The due date is proposed to be June 30^th from Financial Year 2024-25.

7. Proposed reduction in Pre-Deposit Amount for GST Appeals:

• The maximum amount is proposed to be reduced to 20 Crores CGST and SGST.

8. Applicability of Section 16(4) for the Reverse Charge Mechanism Invoices:

• The clarification is provided for the Financial Year for ITC limit under Section 16(4) is the year when the invoice is issued by the recipient.

9. Inclusion of Section 11A in the Act:

• The Government under the new provision empowers to regularize situations where GST was not levied due to the common trade practices.

10. Amendment in Interest on delayed filings under Rule 88B of the CGST Rules,2017:

• The Electronic Credit Ledger balance is proposed to be excluded from the interest calculation for delayed filings.

11. Valuation of Imported Services by Related Persons:

• The Value declared in the invoice by domestic entity will be deemed as open market value eligible for full ITC.

12. Refund of the Additional IGST paid on upward price revision Post-Export:

• A mechanism is proposed to be set up for claiming the refunds of additional IGST paid on price revision post-exports.

13. Amendment to Rule 28(2)- Valuation of Corporate Guarantee between Related Person:

• Retrospective Amendment is proposed w.e.f. 26^th October, 2023 to clarify valuation issues for corporate guarantees.

14. Determination of POS (Place Of Supply) for Custodial Services by Banks:

• The POS to FPI (Foreign Portfolio Investors) determined according to Section 13(2) of The IGST Act, 2017.

The Clarifications provided are:

1. The taxpayers with Turnover up to Rs. 2 Crore are exempt from Filing Annual Returns (Form GSTR-9/9A) for the Financial Year 2023-24.

2. The Threshold for reporting the B2C Inter-State Supplies have been reduced from Rs. 2.5 Lakhs to Rs. 1 Lakhs.

3. The Form GSTR-7 is to be mandatorily filed monthly in which the invoice wise details will be required and there will be no late fee for Nil Returns.

4. Restriction on the refund on Goods subject to export duty as per Section 16 of The IGST Act, 2017 and Section 54 of The CGST Act, 2017.

5. Under Section 73 and Section 74 of The CGST Act, 2017 there will be common time limit for issuing orders and demand notices from the Financial Year 2024-2025.

6. Form GSTR-1A to be introduced as an optional facility for taxpayers to amend or add the details before the filing of the GSTR-3B.

7. The Bio-Metric Based Aadhaar Authentication to be applicable nation-wide to strengthen the GST Registration procedure.

8. ITC shall be available on repair expenses for motor vehicle insurance claims by the Insurance Companies.

Conclusion: The proposed amendments and clarifications from the 53rd GST Council Meeting reflect a concerted effort to refine the GST framework, making it more taxpayer-friendly. By addressing issues such as litigation limits, tax rates, and compliance procedures, the Council aims to create a more efficient and transparent tax environment. These changes are expected to significantly ease the burden on taxpayers and promote better adherence to GST regulations.