Key Recommendations from 53rd GST Council Meeting (22 June 2024)

At the 53rd  GST Council meeting convened recently, several key recommendations were put forth to address current tax policies and regulatory frameworks. These recommendations aim to streamline processes, clarify taxation issues, and promote smoother compliance for businesses and taxpayers across India.

1. The government has announced a waiver of interest and penalties on demand notices issued under section 73 for the fiscal years 2017-18, 2018-19, and 2019-20. This waiver is applicable to cases where the entire outstanding tax amount is paid by March 2025. Taxpayers who settle their dues within this period will not incur additional financial burdens, facilitating smoother compliance and resolution of outstanding tax liabilities. This measure aims to provide relief to taxpayers, encourage timely tax payments, and improve the overall tax compliance environment. The initiative reflects the government’s commitment to supporting taxpayers in meeting their obligations without incurring further penalties.
2. The time limit to avail Input Tax Credit (ITC) under section 16(4) for invoices or debit notes pertaining to the financial year up to March 2021 is up to the due date for filing the GST return for the month of November 2021, which is 30th November 2021. Taxpayers must ensure that all eligible ITC claims for that period are made by this deadline to comply with GST regulations.
3. The tax department has established specific monetary limits for filing appeals to streamline the litigation process and focus on significant cases. For appeals to the Tribunal, the monetary limit is set at 20 lakh rupees. For appeals to the High Court, the limit is 1 crore rupees. For appeals to the Supreme Court, the limit is 2 crore rupees. These thresholds aim to reduce the number of minor cases reaching higher judicial forums, ensuring that only substantial and impactful cases are pursued further. This measure is intended to optimize resource utilization within the tax department and enhance the efficiency of tax administration and adjudication.
4. The maximum amount of pre-deposit required for filing an appeal before the appellate authority has been reduced. Previously set at 25 crore rupees for each CGST and SGST, the limit has now been lowered to 20 crore rupees each. This reduction aims to ease the financial burden on taxpayers seeking to appeal decisions. By lowering the pre-deposit requirement, the government intends to make the appellate process more accessible and encourage taxpayers to pursue legitimate disputes without the deterrent of high pre-deposit costs. This change reflects the government’s commitment to fostering a fairer and more taxpayer-friendly dispute resolution system within the GST framework.
5. The pre-deposit requirement for filing an appeal before the Tribunal has been revised. Previously higher, the pre-deposit amount is now set at 20% of the disputed tax amount, with a cap of 20 crore rupees each for CGST and SGST. This change aims to alleviate the financial strain on taxpayers contesting tax assessments, ensuring that the appeal process is more accessible. By capping the pre-deposit at a reasonable level, the government seeks to encourage the resolution of disputes without imposing prohibitive costs. This measure demonstrates the government’s commitment to enhancing fairness and efficiency in the tax appeals process.
6. An amendment in the law has been introduced to specify that the time limit for filing an appeal before the Tribunal will commence from the date the government issues a notification. This change aims to provide clarity and uniformity regarding the appeal process, ensuring that taxpayers and authorities have a definitive timeline to adhere to once the notification is published. By standardizing the start date for the appeal period, the government seeks to eliminate ambiguity and facilitate a smoother, more predictable appeals process. This amendment reflects the government’s effort to improve the legal framework and enhance administrative efficiency within the tax system.
7. The government has extended the time limit for filing GSTR-4, the annual return for composition taxpayers, until 30th June. This extension provides additional time for eligible taxpayers to comply with their GST filing obligations without incurring late fees or penalties. The decision aims to offer relief to small taxpayers, ensuring they have sufficient time to accurately complete and submit their returns. By extending the deadline, the government demonstrates its commitment to supporting taxpayers and facilitating compliance. This measure is part of broader efforts to streamline tax processes and provide flexibility within the GST framework.
8. The government has announced that interest will not be charged on the amount available in the cash ledger at the time of filing GSTR-3B. This means that if taxpayers have sufficient funds in their cash ledger to cover their tax liability when they file their GSTR-3B return, they will not incur interest on that amount, even if there are delays. This policy aims to reduce the financial burden on taxpayers and encourage timely filing and payment. By implementing this measure, the government seeks to make the GST compliance process more taxpayer-friendly and supportive of businesses’ cash flow management.
9. The government has introduced a new form, GSTR-1A, to allow corrections in GSTR-1. Taxpayers can now rectify any errors or omissions in their GSTR-1 before filing GSTR-3B. This new form aims to provide a more flexible and accurate reporting process, ensuring that any discrepancies are addressed promptly. By allowing corrections before the final return filing, the government seeks to minimize errors and improve the overall accuracy of GST returns. This initiative demonstrates a commitment to easing the compliance burden on taxpayers and enhancing the reliability of the GST system.
10. The government is implementing biometric-based Aadhaar authentication nationwide in phases. This initiative aims to enhance security and streamline processes, ensuring efficient verification of identities for various services across India.
11. The government has issued clarifications on several important topics concerning GST. It has confirmed a 12% tax rate for milk cans and a uniform GST rate of 12% on all carton boxes. Additionally, clarification has been provided that all types of sprinklers will attract a 12% tax rate, maintaining past practices. Furthermore, a consistent 12% rate has been affirmed for all solar-related cases. In terms of services, the clarification specifies that services provided by railways, platform tickets, and other related services are exempt from GST. Moreover, the service of hostel accommodation outside educational institutions has been made exempt, subject to certain conditions. These clarifications aim to provide clear guidelines for businesses and taxpayers, ensuring uniformity and compliance within the GST framework. They address specific industry concerns and streamline tax implications, thereby supporting smoother operations and enhancing clarity in GST administration across various sectors.