Key Highlights and Recommendations of 53rd GST Council Meeting

Introduction

The 53rd GST Council meeting, chaired by the Finance Minister, brought forth several significant recommendations aimed at enhancing the efficiency of GST administration, simplifying compliance, and providing relief to taxpayers. These recommendations cover changes in GST tax rates on goods and services, measures to facilitate trade, and steps to streamline compliance processes.

Key Highlights

Changes in GST Tax Rates on Goods

1. Uniform IGST Rate on Aircraft Components

• New Rate: A uniform rate of 5% IGST will apply to imports of parts, components, testing equipment, tools, and toolkits of aircraft, irrespective of their HS classification.
• Objective: This change aims to boost Maintenance, Repair, and Overhaul (MRO) activities by providing cost relief, subject to specified conditions.

2. Tax Rate Adjustments on Various Goods

• Milk Cans: All steel, iron, and aluminum milk cans will attract 12% GST.
• Carton, Boxes, and Cases: The GST rate on cartons, boxes, and cases of both corrugated and non-corrugated paper or paperboard (HS 4819 10; 4819 20) will be reduced from 18% to 12%.
• Solar Cookers: All types of solar cookers, whether single or dual energy source, will attract 12% GST.

Specific Clarifications and Exemptions

• Poultry Keeping Machinery: The entry covering Poultry keeping Machinery attracting 12% GST will be amended to specifically incorporate “parts of Poultry keeping Machinery” and to regularize past practices.
• Sprinklers: All types of sprinklers, including fire water sprinklers, will attract 12% GST.
• Defence Forces: IGST exemption on imports of specified items for defense forces will be extended for another five years till June 30, 2029.
• Research Equipment: IGST exemption on imports of research equipment under the Research Moored Array for African-Asian-Australian Monsoon Analysis and Prediction (RAMA) program will be continued subject to specified conditions.
• Compensation Cess: Exemption on imports in SEZ by SEZ Unit/developers for authorized operations will be effective from July 1, 2017.

Miscellaneous Exemptions

• Unit Run Canteens: Exempt Compensation Cess on the supply of aerated beverages and energy drinks to authorized customers by Unit Run Canteens under the Ministry of Defence.
• Technical Documentation: Adhoc IGST exemption on imports of technical documentation for AK-203 rifle kits for the Indian Defence forces.

Changes in GST Rates on Services

Exemptions for Indian Railways

• Services to General Public: Services such as sale of platform tickets, retiring rooms, waiting rooms, cloakroom services, and battery-operated car services provided by Indian Railways to the general public will be exempt from GST.
• Intra-Railway Transactions: Intra-Railway transactions will also be exempted, with issues for the past period regularized from October 20, 2023, to the date of issue of the exemption notification.

Special Purpose Vehicles (SPV)

• Infrastructure Use: Services provided by SPVs to Indian Railways, allowing the use of infrastructure built and owned by SPVs during the concession period, will be exempt from GST.
• Maintenance Services: Maintenance services supplied by Indian Railways to SPVs will also be exempt, with past issues regularized on an ‘as is where is’ basis from July 1, 2017.

Accommodation Services

• New Entry: A separate entry under notification No. 12/2017-CTR will exempt accommodation services valued up to Rs. 20,000 per month per person, provided for a minimum continuous period of 90 days.
• Past Cases: Similar benefits will be extended for past cases.

Insurance Services

• Co-insurance: Premium apportioned by the lead insurer to the co-insurer in co-insurance agreements will be declared as no supply under Schedule III of the CGST Act, 2017.
• Reinsurance: Transactions of ceding commission/re-insurance commission between insurer and re-insurer will be declared as no supply, with past cases regularized.

Statutory Collections

• RERA Collections: Statutory collections made by the Real Estate Regulatory Authority (RERA) will be exempt from GST, falling within the scope of entry 4 of No. 12/2017-CTR.

Measures for Facilitation of Trade

Conditional Waiver of Interest or Penalty

• New Section 128A: The insertion of Section 128A in the CGST Act will provide for the conditional waiver of interest or penalty for demands raised under Section 73 for FY 2017-18 to FY 2019-20, given that the taxpayer pays the full tax amount demanded by March 31, 2025. This waiver excludes demands for erroneous refunds.

Reduction of Government Litigation

• Monetary Limits for Appeals: To reduce government litigation, the Council recommended monetary limits for filing appeals under GST:
  • GSTAT: Rs. 20 lakhs
  • High Court: Rs. 1 crore
  • Supreme Court: Rs. 2 crores

Amendments to Ease Cash Flow

• Pre-deposit Amounts: Amendments in Sections 107 and 112 of the CGST Act will reduce the pre-deposit amounts required for filing appeals, easing cash flow for taxpayers:
• For appellate authority: Reduced from Rs. 25 crores CGST and Rs. 25 crores SGST to Rs. 20 crores CGST and Rs. 20 crores SGST.
• For Appellate Tribunal: Reduced from 20% with a maximum amount of Rs. 50 crores CGST and Rs. 50 crores SGST to 10% with a maximum of Rs. 20 crores CGST and Rs. 20 crores SGST.

Taxation of Extra Neutral Alcohol (ENA)

• ENA for Alcoholic Liquors: The Council recommended amending the GST Law to explicitly exclude rectified spirit/ENA from the scope of GST when supplied for manufacturing alcoholic liquors for human consumption.

Additional Measures

Time for Filing Appeals

• GST Appellate Tribunal: The Council recommended amending Section 112 of the CGST Act to allow the three-month period for filing appeals before the Appellate Tribunal to start from a date notified by the Government.

Relaxation in Input Tax Credit Provisions

• Section 16(4) Relaxation: Recommendations include retrospective amendments to conditionally relax provisions of Section 16(4) of the CGST Act for initial years and in cases where returns are filed post revocation.

Due Date Changes for Composition Taxpayers

• GSTR-4 Returns: The due date for filing returns in FORM GSTR-4 for composition taxpayers will be extended from April 30 to June 30 following the end of the financial year, applicable from FY 2024-25 onwards.

Interest on Delayed Filing

• Rule 88B Amendment: The Council recommended amendments to rule 88B of CGST Rules to exclude amounts available in the Electronic Cash Ledger on the due date of filing returns from the calculation of interest on delayed filing.

New Section for Duty Non-Recovery

• Section 11A: A new Section 11A in the CGST Act will grant the Government power to regularize non-levy or short levy of GST due to common trade practices.

Refund Mechanism for Export Price Revisions

• Additional IGST Refunds: The Council recommended establishing a mechanism for claiming refunds of additional IGST paid due to upward price revisions post-export.

In conclusion, the 53rd GST Council meeting has introduced several impactful recommendations aimed at improving GST administration and compliance. By adjusting GST tax rates on various goods and services, facilitating trade, and implementing measures to streamline compliance processes, the Council aims to create a more efficient and taxpayer-friendly GST regime. These changes reflect the government’s commitment to addressing industry concerns, reducing litigation, and promoting economic growth. The implementation of these recommendations is expected to enhance the overall effectiveness of the GST system, providing significant relief and benefits to taxpayers across the country.