In GST, Government makes laws on the recommendations of the GST council. For that reason, GST council meets on regular basis to monitor the requirements of the economy and propose changes in the laws or issue clarifications for better implementation of the laws. Today on 17th Dec. 2022, council met for the 48th time in the history of this law through video conferencing and proposed various measures to streamline the legal creases. Proposals made by council are to be given effect through various changes in the Act or issuance of notifications or clarificatory circulars. All changes proposed by the council shall come into force by way of separate enabling activities to be conducted by CBIC, Ministry of Finance. Therefore, regarding this meeting also, changes shall come in force by separate amendments in Act, issuance of notifications or issuance of circulars. Kindly stay in touch with our writings to know more in future.
PRESS RELEASE has been issued to circulate proposed changes
Total 25 changes or amendments or clarifications are proposed (out of this 6 are rate related and 19 others) in this council meet. For convenience, Ministry has divided these into various headings such as, changes relating to:
A. Tax Rates-6 Proposals
B. Measures for facilitation of trade-13 Proposals
C. Measures for streamlining compliances-GST 6 Proposals
A. Tax Rates 6 Proposals
1. The GST Council has, inter-alia, made following recommendations for changes in GST rates: Separate Notification shall be issued for this.
| Sr. No. | Description | From | To |
| Goods | |||
| 1. | Husk of pulses including chilka and concentrates including chuni/churi, khanda | 5% | Nil |
| 2. | Ethyl alcohol supplied to refineries for blending with motor spirit (petrol) | 18% | 5% |
2. It was also decided to include supply of Mentha arvensis under reverse charge mechanism as has been done for Mentha Oil. Separate Notification shall be issued for this.
3. It was decided to clarify that:
- Rab (rab-salawat) is classifiable under CTH 1702 which attracts GST at the rate of 18%.
- fryums manufactured using the process of extrusion is specifically covered under CTH 19059030 and attract GST at the rate of 18%.
- The higher rate of compensation cess of 22% is applicable to motor vehicle fulfilling all four conditions, namely, it is popularly known as SUV, has engine capacity exceeding 1500 cc, length exceeding 4000 mm and a ground clearance of 170 mm or above
- goods falling in lower rate category of 5% under schedule I of Notification No. 1/2017-CTR imported for petroleum operations will attract lower rate of 5% and the rate of 12% shall be applicable only if the general rate is more than 12%
4. As a relief measure, the Council decided to regularize the intervening period starting from the date of issuance of Circular (3.08.2022) in respect of GST on ‘husk of pulses including chilka and concentrates including chuni/churi, khanda’ on “as is basis” on account of genuine doubts. Separate Notification shall be issued for this.
5. No GST is payable where the residential dwelling is rented to a registered person if it is rented it in his/her personal capacity for use as his/her own residence and on his own account and not on account of his business. Separate Clarificatory Circular shall be issued for this.
6. Incentive paid to banks by Central Government under the scheme for promotion of RuPay Debit Cards and low value BHIM-UPI transactions are in the nature of subsidy and thus not taxable. Separate Clarificatory Circular shall be issued for this.
B. Measures for facilitation of trade-13 Proposals
1. Decriminalization under GST – Separate Notification shall be issued for this. The Council has recommended to –
- raise the minimum threshold of tax amount for launching prosecution under GST from Rs. One Crore to Rs. Two Crores, except for the offence of issuance of invoices without supply of goods or services or both;
- reduce the compounding amount from the present range of 50% to 150% of tax amount to the range of 25% to 100%;
- decriminalize certain offences specified under clause (g), (j) and (k) of sub-section (1) of section 132 of CGST Act, 2017, viz.-
- obstruction or preventing any officer in discharge of his duties;
- deliberate tempering of material evidence;
- failure to supply the information.
2. Refund to unregistered persons – There is no procedure for claim of refund of tax borne by the unregistered buyers in cases where the contract/ agreement for supply of services, like construction of flat/house and long-term insurance policy, is cancelled and the time period of issuance of credit note by the concerned supplier is over. The Council recommended amendment in CGST Rules, 2017, along with issuance of a circular, to prescribe the procedure for filing application of refund by the unregistered buyers in such cases. Separate Notification & Circular shall be issued for this.
3. Facilitate e-commerce for micro enterprises – GST Council in its 47th meeting had granted in-principle approval for allowing unregistered suppliers and composition taxpayers to make intra-state supply of goods through E-Commerce Operators (ECOs), subject to certain conditions. The Council approved the amendments in the GST Act and GST Rules, along with issuance of relevant notifications, to enable the same. Further, considering the time required for development of the requisite functionality on the portal as well as for providing sufficient time for preparedness by the ECOs, Council has recommended that the scheme may be implemented w.e.f. 01.10.2023. Separate Notification shall be issued for this.
4. Schedule-III items – Paras 7, 8(a) and 8(b) were inserted in Schedule III of CGST Act, 2017 with effect from 01.02.2019 to keep certain transactions/ activities, such as supplies of goods from a place outside the taxable territory to another place outside the taxable territory, high sea sales and supply of warehoused goods before their home clearance, outside the purview of GST. In order to remove the doubts and ambiguities regarding taxability of such transactions/ activities during the period 01.07.2017 to 31.01.2019, the Council has recommended to make the said paras effective from 01.07.2017. However, no refund of tax paid shall be available in cases where any tax has already been paid in respect of such transactions/ activities during the period 01.07.2017 to 31.01.2019. Separate Clarificatory Circular shall be issued for this.
5. Change in Clause of Payment to be made in 180 days – The Council has recommended to amend sub-rule (1) of rule 37 of CGST Rules, 2017 retrospectively with effect from 01.10.2022 to provide for reversal of input tax credit, in terms of second proviso to section 16 of CGST Act, only proportionate to the amount not paid to the supplier vis a vis the value of the supply, including tax payable. Separate Notification shall be issued for this.
6. Change in Clause of Payment to be made in 180 days – The Council recommended to insert Rule 37A in CGST Rules, 2017 to prescribe the mechanism for reversal of input tax credit by a registered person in the event of non-payment of tax by the supplier by a specified date and mechanism for re-availment of such credit, if the supplier pays tax subsequently. This would ease the process for complying with the condition for availment of input tax credit under section 16(2)(c) of CGST Act, 2017. Separate Notification shall be issued for this.
7. Change in appeal filing procedure – Sub-rule (3) of rule 108 and rule 109 of the CGST Rules, 2017 to be amended to provide clarity on the requirement of submission of certified copy of the order appealed against and the issuance of final acknowledgment by the appellate authority. This would facilitate timely processing of appeals and ease the compliance burden for the appellants. Separate Notification shall be issued for this.
8. Changes in appeal filing procedure – Rule 109C and FORM GST APL-01/03 W to be inserted in the CGST Rules, 2017 to provide the facility for withdrawal of an application of appeal up to certain specified stage. This would help in reducing litigations at the level of appellate authorities. Separate Notification shall be issued for this.
9. Clarification about Valuation of Insurance Services – Circular to be issued to clarify that No Claim Bonus offered by the insurance companies to the insured is an admissible deduction for valuation of insurance services. Separate Clarificatory Circular shall be issued for this.
10. Clarification about IBC – Circular to be issued for clarifying the issue of treatment of statutory dues under GST law in respect of the taxpayers for whom the proceedings have been finalised under Insolvency and Bankruptcy Code, 2016. Rule 161 of CGST Rules, 2017 and FORM GST DRC-25 also to be amended for facilitating the same. Separate Clarificatory Circular & Notification shall be issued for this.
11. Facility to ECO for cancellation of registration – Sub-rule (3) of rule 12 of CGST Rules, 2017 to be amended to provide for facility to the registered persons, who are required to collect tax at source under section 52 or deduct tax at source under section 51 of CGST Act, 2017, for cancellation of their registration on their request. Separate Notification shall be issued for this.
12. Important change in place of supply for Transportation of goods to outside India- Will clear the mist regarding availability of ITC in case where goods have been exported outside India but place of supply earlier to be reported as other territory, now with this clarification that anomaly shall be removed, welcome step.– Circular to be issued for clarifying the issues pertaining to the place of supply of services of transportation of goods in terms of the proviso to sub-section (8) of section 12 of the IGST Act, 2017 and availability of input tax credit to the recipient of such supply. It has also been recommended that proviso to sub-section (8) of section 12 of the IGST Act, 2017 may be omitted. Separate Clarificatory Circular & Notification shall be issued for this.
13. Separate Clarificatory Circular shall be issued for this – In orderto remove ambiguity and legal disputes on various issues, thus benefiting taxpayers at large:
a. Procedure for verification of input tax credit in cases involving difference in input tax credit availed in FORM GSTR-3B vis a vis that available as per FORM GSTR-2A during FY 2017-18 and 2018-19. This would be a larger relief to the taxpayer if designed and implemented in true sense to the benefit of the taxpayer.
b. Clarifying the manner of re-determination of demand in terms of sub-section (2) of section 75 of CGST Act, 2017. If Proper Officer alleges willful misstatement or suppression or fraud with the intent to evade taxes and these allegations are not been able to be proved by Proper Officer, then Proper Officer shall re-determine the taxes as if there were no such allegations as per Section 74 but would be as per Section 73.
c. Clarification in respect of applicability of e-invoicing with respect to an entity. There are multiple confusions with regard to applicability, for instance if in FY 22-23, Aggregate turnover exceeds 10 Crore then whether E-invoicing applicable from FY 22-23 itself or w.e.f. 01-04-2023. Let’s see what all is clarified by the circular.
C. Measures for streamlining compliances in GST-6 Proposals
1. More effective mechanism for Registration – Proposal to conduct a pilot in State of Gujarat for Biometric-based Aadhaar authentication and risk-based physical verification of registration applicants. Amendment in rule 8 and rule 9 of CGST Rules, 2017 to be made to facilitate the same. This will help in tackling the menace of fake and fraudulent registrations. Separate Notification shall be issued for this.
2. To Curb Frauds in Registration-effective measure – PAN-linked mobile number and e-mail address (fetched from CBDT database) to be captured and recorded in FORM GST REG-01 and OTP-based verification to be conducted at the time of registration on such PAN-linked mobile number and email address to restrict misuse of PAN of a person by unscrupulous elements without knowledge of the said PAN-holder. Separate Notification shall be issued for this.
3. Restriction imposed to file GSTR-1/ GSTR-3B/ GSTR-9/ GSTR-9C after three years from due date – Section 37, 39, 44 and 52 of CGST Act, 2017 to be amended to restrict filing of returns/ statements to a maximum period of three years from the due date of filing of the relevant return / statement. Separate Notification shall be issued for this.
4. Amendment in FORM GSTR-1 – FORM GSTR-1 to be amended to provide for reporting of details of supplies made through ECOs, covered under section 52 and section 9(5) of CGST Act, 2017, by the supplier and reporting by the ECO in respect of supplies made under section 9(5) of CGST Act, 2017. Separate Notification shall be issued for this.
5. Another automation introduced to recover self-assessed tax – Rule 88C and FORM GST DRC-01B to be inserted in CGST Rules, 2017 for intimation to the taxpayer, by the common portal, about the difference between liability reported by the taxpayer in FORM GSTR-1 and in FORM GSTR-3B for a tax period, where such difference exceeds a specified amount and/ or percentage, for enabling the taxpayer to either pay the differential liability or explain the difference. Further, clause (d) to be inserted in sub-rule (6) of rule 59 of CGST Rules, 2017 to restrict furnishing of FORM GSTR-1 for a subsequent tax period if the taxpayer has neither deposited the amount specified in the intimation nor has furnished a reply explaining the reasons for the amount remaining unpaid. This would facilitate taxpayers to pay/ explain the reason for the difference in such liabilities reported by them, without intervention of the tax officers. Separate Notification shall be issued for this.
6. Amendment in definition of “non-taxable online recipient” – Amendment in definition of “non-taxable online recipient” under section 2(16) of IGST Act, 2017 and definition of “Online Information and Database Access or Retrieval Services (OIDAR)” under section 2(17) of IGST Act, 2017 so as to reduce interpretation issues and litigation on taxation of OIDAR Services. Separate Notification shall be issued for this.
All changes relating to rules may be clubbed together and brought in through single notification. Clarificatory matters also can be clubbed together depending upon the correlation and issued through single circular. But separate circulars can be issued for independent or detailed matters. Changes in Act shall be carried through upcoming budget proposals and amendment act may be set in times to come.
Council has taken the cognizance of various representations made by the stake holders and ironed out the creases in the implementation of the statue. Few aspects which were expected to be announced are formation of country vide Tribunals and rationalization of taxability of gaming services. These matters not considered in this meet, expecting the apex policy making body to soon pave the way for formation of tribunals so as to provide constitutional right of early and not so expensive justice to the tax payers. Jai Bharat, Happy GST.
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