The GST Council’s 45th meeting was held on 17th September, 2021 in Lucknow under the chairmanship of FM Smt. Nirmala Sitharaman. The GST Council has inter-alia made the following recommendations relating to changes in GST rates on supply of goods and services and changes related to GST law and procedure:

Recommendations relating to GST rates on goods and services

1. COVID-19 relief measure in form of GST rate concessions

i. Extension of existing concessional GST rates (currently valid till 30th September, 2021) on Covid-19 treatment drugs, up to 31st December, 2021

ii. Reduction of GST rate to 5% on more Covid-19 treatment drugs, up to 31st December, 2021

2. Major recommendations on GST rate changes in relation to Goods [w.e.f 1.10.2021 unless otherwise stated]

3d illustration Business Network with gst

3. Other changes relating to GST rates on goods

i. Supply of mentha oil from URP to has been brought under RCM. Further, Council has also recommended that exports of Mentha oil should be allowed only against LUT and consequential refund of ITC.

ii. Brick kilns would be brought under special composition scheme with threshold limit of Rs. 20 lakhs, with effect from 1.4.2022. Bricks would attract GST at the rate of 6% without ITC under the scheme. GST rate of 12% with ITC would otherwise apply to bricks.

4. Correction in Inverted Duty structure in Footwear and Textiles sector will be implemented with effect from 01.01.2022.

5. In terms of the recent directions of the Hon’ble High Court of Kerala, the issue of whether specified petroleum products should be brought within the ambit of GST was placed for consideration before the Council. After due deliberation, the Council was of the view that it is not appropriate to do so at this stage.

6. Major GST changes in relation to rates and scope of exemption on Services [w.e.f 1.10.2021 unless otherwise stated]

7. Clarification in relation to GST rate on Goods

8. Clarification in relation to GST rate on services

Discussion on Compensation Scenario

Recommendations relating to GST law and procedure

A. Measures for Trade facilitation:

1. Relaxation in the requirement of filing FORM GST ITC-04:

  • Taxpayers whose ATO in preceding FY < 5 Crores, shall furnish ITC-04 once in six months
  • Taxpayers whose ATO in preceding FY is upto 5 Crores, shall furnish ITC-04 annually.

2. Section 50(3) of the CGST Act to be amended retrospectively, w.e.f. 01.07.2017, to provide that interest is to be paid by a taxpayer on “ineligible ITC availed and utilized” and not on “ineligible ITC availed”.

3. Unutilized balance in CGST and IGST cash ledger may be allowed to be transferred between distinct persons

4. Issuance of Circular on various issues to remove ambiguity and legal disputes

  • Clarification on scope of “intermediary services”;
  • Clarification relating to interpretation of the term “merely establishment of distinct person” in condition (v) of the Section 2 (6) of the IGST Act 2017 for export of services.
  • Clarification in respect of certain GST related issues:

i. W.e.f. 01.01.2021, the date of issuance of debit note (and not the date of underlying invoice) shall determine the relevant financial year for the purpose of section 16(4) of CGST Act, 2017

ii. No need to carry the physical copy of tax invoice in case of E-Invoice

iii. Only those goods which are actually subjected to export duty i.e., on which some export duty has to be paid at the time of export, will be covered under the restriction imposed under section 54(3) of CGST Act, 2017 from availment of refund of accumulated ITC.

5. Provision to be incorporated in in CGST Rules, 2017 for removing ambiguity regarding procedure and time limit for filing refund of tax wrongfully paid as specified in section 77(1) of the CGST/SGST Act and section 19(1) of the IGST Act.

B. Measures for streamlining compliances in GST

1. Aadhaar authentication mandatory for filing refund claim and application for revocation of cancellation of registration.

2. Late fee for FORM GSTR-1 to be auto-populated and collected in next open return in FORM GSTR-3B.

3. Refund to be disbursed in the bank account, which is linked with same PAN

4. Rule 59(6) to be amended w.e.f. 01.01.2022 to provide that a RP shall not be allowed to furnish FORM GSTR-1, if he has not furnished the return in FORM GSTR-3B for the preceding month.

5. Rule 36(4) of to be amended, once the proposed clause (aa) of section 16(2) is notified to restrict availment of ITC, to the extent, invoices/debit notes are furnished by the supplier in FORM GSTR-1/IFF and are communicated to the RP in FORM GSTR-2B.

C. GST Council has also recommended amendments in certain provisions of the Act and Rules.

Note: The recommendations of the GST Council have been presented in this release containing major item of decisions in simple language for information of all stakeholders. The same would be given effect through relevant Circulars/ Notifications/ Law amendments which alone shall have the force of law.

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DISCLAIMER: This publication is merely a general guide meant for knowledge purposes only. All the references or content are for educational purposes only and do not constitute a legal advice. We do not accept any liabilities whatsoever for any losses caused directly or indirectly by the use/reliance of any information or conclusion contained in this publication. Prior to acting upon this publication, you’re suggested to seek the advice. This work is entirely in the interest of profession and to contribute into my beloved subject of GST.

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