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World Bank has forecast India’s economic growth @ 6.9% for the financial year 2023, up from 6.5% and expects India to remain one of the fastest growing major economies in the world.  Similarly, Fitch has maintained its growth forecast @ 7%. In fact many believe that Indian economy is resilient despite a stiff external environment. Growth being so, tax revenue will also grow. On the other hand, Reserve Bank of India has lowered its GDP forecast to 6.8% from 7% earlier. RBI takes inflation as a major challenge.

GDP growth in Q2 of current fiscal has been 6.3% on YoY basis. Service sector grew by 9% but agriculture rose by 4.6% and industry @ -3.1%. According to CEA, Indian economy may grow @ over 6.8% in current fiscal.

According to RBI sources, domestic economic activity has remained resilient in November and early December, 2022 and so is the near term growth outlook. However, emerging market economies appear to be more vulnerable.

The exercise of preparing Union Budget for financial year 2023-24 is already on. Finance Minister has stated that the said budget will be set on the template that will prepare India for next 25 years.

GST Council’s 48th meeting was held in virtual mode on 17.12.2022 wherein various decisions were taken which inter alia, include changes in tax rates of few goods, measures for trade facilitation, streamlining of compliances, decriminalization of GST offences, certain clarifications on taxability & exemptions, e-commerce for micro enterprises, changes in ITC related rules etc. The recommendations of GST Council will be implemented in due course by way of Notifications and Circulars.

The Group of Ministers (GoM) on GST on online gaming, casino and horse racing had submitted  its report but same could not be deliberated in the GST council. It may be now be taken up in next meeting in February, 2023. It is learnt that GoM was not unanimous on GST rate of 28%. There was no consensus on the GST rate and valuation for levying tax.

Recent Updates In GST till 21st December 2022

CBIC issued Notification No. 25/2022-Central Tax dated 13.12.2022 for selective extension of due date of GSTR-1 in few districts of Tamil Nadu.

Tax authorities have been carrying out audit of GST assessee for mainly 2017-18 and 2018-19 for some time now. As a result, over 50,000 notices have been issued to taxpayers who were audited across the country.  These show cause notices seek explanation on various short comings noticed during the audit.

Fake invoices continue to be a major source of tax evasion. 1030 arrests have been made since 2020 involving about 8200 cases and Rs. 62000 crore of fraud through fake invoices.

Revocation of Suspension of Registration

  • GSTN has introduced a new facility to drop the proceedings for suspension of registration at the GST portal and revoke the suspension of registration.
  • Taxpayers can initiate drop proceedings for suspension of registration at the GST portal and revoke the suspension of registration.
  • The new functionality is for taxpayers who have filed their pending returns after the receipt of the show cause notice (SCN) issued by the GST system.
  • Before this, taxpayers who filed their pending returns, but have not responded to the SCN, their registration remained suspended despite filing their returns.
  • Such taxpayers have been given the facility to initiate drop proceedings on their own once the pending returns are filed.

[Source:  GSTN]

Selective extension of due date of GSTR-1

  • CBIC has amended Notification No. 83/2020-CT dated 10.11.2020 to provide for extension of due date for furnishing Form GSTR-1 for the month of November, 2022 till 13th December for certain districts of Tamil Nadu.
  • This will be applicable to registered persons whose principal place of business is in districts of Chennai, Tiruvallur, Chengalpattu, Kancheepuram, Tiruvannamalai, Ranipet, Vellore, Villupuram, Cuddalore, Thiruvarur, Nagapattinam, Mayiladuthurai and Thanjavur in the State of Tamil Nadu.
  • GSTN has issued a advisory to the effect that Since, the Notification for extension has been issued after the expiry of normal period of filing, i.e., 11th of December, 2022, the credit of invoices covered in the returns pertaining to GSTINs of aforesaid districts, filed during 12th to 13th December, 2022 will not be populated in GSTR-2B generated for December, 2022. Thus, the taxpayers have been advised to take the Input Tax Credit (ITC) in respect of suppliers of the aforesaid districts on the basis of GSTR-2A.

[Source: Notification No. 25/2022-Central Tax dated 13.12.2022

read with GSTN Advisory dated 14.12.2022]

Decisions @ 48th GST Council Meeting

GST Council met for 48th time on 17th December, 2022. It inter alia, decided on :

  • Reduction of rates on husks of pulses, ethyl alcohol used for motor spirit.
  • Compensation cess @ 22% for SUV’s with specific conditions.
  • 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.
  • 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
  • Raising 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 (fake invoices).
  • Reducing the compounding amount from the present range of 50% to 150% of tax amount to the range of 25% to 100%.
  • Facilitation for e-commerce for micro enterprises.
  • No claim bonus offered by the insurance companies not to attract GST
  • Supply of Mentha arvensis to attract GST under reverse charge mechanisms like Mentha oil
  • Scheme for unregistered suppliers, composition taxpayers to make intra-state supply of goods through e-commerce operators (ECOs), to start from October.
  • Husk of pulses including chilka and concentrates including chuni /churi, khanda to attar Nil GST
  • Ethyl alcohol supplied to refineries for blending with petrol to attract 5% GST.

(Source: Press Release ID 1884399 dated 17.12.2022) 

GST Council on Input Tax Credit

> In 48th meeting of GST Council held on 17.12.2022, the council has recommended the following amendments in rules relating to input tax credit (ITC):

  • 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.
  • 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-a ailment 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.

> These shall come into force after rules are amended.

(Source: Press Release ID 1884399 dated 17.12.2022)) 

GST Council approves Decriminalization under GST

> The GST Council in its 48th Council meeting held on 17.12.2022 has approved the decriminalization of certain provisions under GST law.

> The recommendations include 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.

(Source: Press Release ID 1884399 dated 17.12.2022)

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