50th GST Council Meeting: Key Changes in GST Rates & Compliance Measures

50th GST Council Meeting: Key Changes in GST Rates & Compliance Measures

The 50th Meeting of the GST Council was held on 11th July, 2023 in New Delhi, under the chairpersonship of the Union Finance & Corporate Affairs Minister Smt. Nirmala Sitharaman.

To mark the milestone of 50th meeting of the GST Council, Hon’ble Chairperson released a short video film titled ‘GST Council- 50 steps towards a journey’ in the August presence of the Hon’ble Members of the Council.

The GST Council inter-alia made the following recommendations relating to changes in GST tax rates, measures for facilitation of trade and measures for streamlining compliances in GST.

Recommendations Relating to GST Rates on Goods:

It has been decided to reduce the rate on uncooked/unfried snack pellets from 18 per cent to 5 per cent. Moreover, IGST on imported medicines and also Food for Special Medical Purposes (FSMP) used in the treatment of rare diseases listed under the National Policy for Rare Diseases, 2021 are exempted.

Additionally, entry 52B in compensation cess notification has been amended to include all utility vehicles by whatever name called provided they meet the parameters of Length exceeding 4000 mm, Engine capacity exceeding 1500 cc and having Ground Clearance of 170 mm and above and to clarify by way of explanation that ‘Ground clearance’ means Ground Clearance in un-laden condition.

It has been decided to include RBL Bank and ICBC bank in the list of specified banks for which IGST exemption is available on imports of gold, silver or platinum and update the list of banks /entities eligible for such IGST exemption as per Annexure 4B (HBP) of Foreign Trade Policy 2023.

Recommendations Relating to GST Rates on Services:

It has been decided that GST exemption on satellite launch services supplied by ISRO, Antrix Corporation Limited and New Space India Limited (NSIL) may be extended to such services supplied by organizations in private sector also to encourage start-ups.

Goods Transport Agencies (GTAs) will not be required to file a declaration for paying GST under forward charge every year. The option to pay GST under forward charge must be exercised by 31st March of the preceding financial year.

Services provided by a director of a company in his private or personal capacity, such as renting immovable property, will not be taxable under reverse charge mechanism (RCM). Only services supplied by a director in their capacity as a director of the company or body corporate will be taxable under RCM.

Second Report of Group of Ministers (GoM) on Casinos, Race Courses, and Online Gaming:

The GoM recommended taxing casinos, horse racing, and online gaming at a uniform rate of 28%, with tax applicable on the face value of chips purchased in the case of casinos, the full value of bets placed with bookmakers/totalizator in the case of horse racing, and the full value of bets placed in the case of online gaming.

Measures for Facilitation of Trade:

For a smooth establishment and operation of the proposed GST Appellate Tribunal, the GST Council has also suggested rules regulating the appointment and conditions of the President and Members.

It further indicated that the FORM GSTR-9 and FORM GSTR-9C table relaxations offered in FY 2021–22 be maintained for FY 2022–23. In addition, the exemption from submitting an annual return for taxpayers with an aggregate annual revenue of up to Rs. 2 crores would be maintained for FY 2022–23 to lessen the compliance burden on smaller taxpayers.

Issuance of Circulars in Order to Remove Ambiguity and Legal Disputes on Various Issues:

The Council said a circular would be released to clarify TCS’s responsibility when numerous e-commerce operators (ECOs) participate in a single supply transaction of products or services.

The GST Council also issued provisions that clarified that a holding company could not be taxed under the GST for just holding securities of a subsidiary firm since the stocks cannot be viewed as a delivery of services.

The dispute concerning the specific entry in the Services Accounting Code 997171, which covers Services of holding stock of subsidiary firms, would also be resolved.

Amendment in CGST Rules, 2017 regarding registration:

The Council has recommended the following amendments in CGST Rules, 2017 to strengthen the registration process and to effectively deal with the menace of fake and fraudulent registrations in GST:

1. Amendment in rule 10A: To provide that the details of bank account, in name and PAN of the registered person, to be required to be furnished within 30 days of grant of registration or before filing of statement of outwards supply under section 37 of CGST Act in FORM GSTR-1/ IFF, whichever is earlier.

2. Amendment in rule 21A(2A): To provide for system-based suspension of the registration in respect of such registered persons who do not furnish the details of valid bank account under rule 10A with the time period prescribed under the said rule.

3. Insertion of 3rd proviso in rule 21A(4): To provide for automatic revocation of such system-based suspension upon compliance with provisions of rule 10A.

4. Amendment in rule 59(6): To provide that where a registered person has not furnished details of a valid bank account under rule 10A, the said registered person may not be allowed to furnish the details of outward supplies in FORM GSTR-1 or using IFF.

5. Amendment in rule 9 and rule 25: To do away with the requirement that the physical verification of business premises is to be conducted in the presence of the applicant and also to provide for physical verification in high-risk cases even where Aadhaar has been authenticated.

The GST Council’s meeting was noteworthy for its extensive changes to GST rates and compliance measures. As these changes come into effect, monitoring their impact on the economy and making further adjustments as necessary will be crucial.