52nd GST Council Meeting Highlights: Key Takeaways and Updates

52nd GST Council Meeting: Key Highlights

The 52nd GST Council Meeting 2023 was held at Sushma Swaraj Bhawan, New Delhi on 7th October 2023, The meeting was presided by the Union Finance Minister Smt Nirmala Sitharaman. Shri Pankaj Chaudhary MoS (F), the Revenue Secretary, Chairman CBIC, and various other senior officers from the Union Government and State government attended the meeting. Here we have considered detailed information about the 52nd GST Council Meeting Highlights the 52nd GST Council Meeting Notification pdf and the 52nd GST Council meeting press release.

Taxability and Valuation of Personal and Corporate Guarantees

1. Personal Guarantee: 

There were issues in taxability when directors of the companies extended personal guarantees to the companies. To resolve this issue the GST Council has proposed that a circular will be issued clarifying that if no consideration has been paid by the company to the director for personal guarantees the open market value of the said transaction/ supply can be zero and thus GST will not be payable on such supply.

2. Corporate Guarantee: 

The GST Council has proposed to prescribe a valuation mechanism to tax Corporate guarantees extended by related parties to the companies. The valuation technique will be provided by incorporating a new provision in the CGST Rules, whereby the taxable value will be 1% of the amount of guarantee offered or the actual consideration, whichever is higher. The valuation mechanism will be applicable irrespective of the fact that,  whether the recipient will be eligible to avail full Input tax credit (ITC) or not. 

Making ISD Mechanism Mandatory

Pursuant to the recommendations made in the 50th GST Council meeting where the council recommended necessary amendments to be made in the CGST Act to make the ISD mechanism mandatory, the GST Council has in the 52nd GST Council meeting proposed the following amendments to the provisions of the CGST Act and the rules thereunder:

1. Amendment in the Definition of Input Service Distributors (ISD).

2. Amendment in the Manner of distribution of credit by ISD.

3. Amendment in the Procedure for distribution of Input tax credit (ITC) by ISD.

Recommendation Regarding Amnesty Scheme

If a taxpayer could not raise an appeal against a demand raised under Sections 73 and 74 of the CGST Act within the prescribed timeframe of 3 (three) months,  the GST Council has recommended to introduce an Amnesty Scheme to allow such taxpayers who were unable to file an appeal (or where the appeal was rejected due to delay). The taxpayers are allowed to file such appeals under Amnesty Scheme, up to January 31, 2024, subject to the following conditions:

1. The taxpayer has paid a pre-deposit of 12.5% of the tax under dispute

2. 20% of the pre-deposit payable (i.e., 2.5% of the tax under dispute) should be debited from the Electronic cash ledger.

Recommendation with respect to GSTAT Appointment

The GST Council has recommended qualification for appointment as President and Members of the Appellate Tribunal. The recommendations are as follows-

1. Advocates with 10 (ten) years of experience in litigation under indirect tax laws are eligible for appointment as member of GST Appellate Tribunals (GSTATs).

2. The minimum age to be eligible for appointment as President and Member is to be 50 (fifty) years.

3. The maximum tenure of the President and members will be up to the age of 70 (seventy) years and 67 (sixty-seven) years respectively.

Claiming IGST Refunds on Payment of Supplies to SEZ Units and Developers

On July 31, 2023, a notification was issued enabling the export of goods and services (except for specifically restricted commodities) with the payment of GST integrated tax, along with provisions for suppliers to claim refunds. The GST Council has proposed an amendment to clarify that suppliers providing these goods and/or services to SEZ units/developers for authorized operations can also make such supplies, pay integrated tax, and claim refunds on taxes paid.

Recommendation Regarding GST Rate Changes on Goods and Service

Revision of GST Rates on Goods

• 0% GST will be applicable if millet flour in powder form is blended with any other atta with 70% composition of millets under (HS1901) if sold loose and 5% GST will be applicable if sold pre-packaged and labelled.

• The rate of GST on molasses was reduced from 28% to 5%

• ENA is used for the manufacture of alcoholic liquor for human consumption to be kept outside the ambit of GST. GST on ENA for industrial use to attract 18% by a separate tariff HS code.

• Imitation zari thread or yarn made out of metallized polyester film or plastic film without refund due to inversion will attract 5% GST.

Revision of GST Rates on Services

• Services of water supply, public health, sanitation, solid waste management, and slum development and upgradation when supplied to Governmental Authorities are recommended to be given GST exemption.

• Foreign-going vessels have been given a conditional GST exemption when they convert to coastal run subject to its reconversion in six months.

• Job work services in relation to the processing of barley into malt will attract GST at the rate of 5%

• Bus operator companies have been excluded from section 9(5) ECO.

• All services supplied by Indian Railways are to be taxed under the forward charge mechanism, which will enable them to avail of the Input tax credit (ITC)

GST Clarifications on Other Key Issues

1. CGST Rules have been amended to facilitate automatic restoration of provisionally attached property after completion of 1 (one) year from the date of attachment/ order.

2. A circular will be issued to clarify that the amount received in Special INR Vostro (as permitted by RBI) as export proceeds will qualify as receipt of export.

Other Key Considerations Expected from the 52nd GST Council Meeting

Establishment of GST Appellate Tribunals

In the 50th and 51st GST council meetings, steps have been taken towards setting up and proper functioning of GST Appellate Tribunals (GSTATs). In the 52nd GST Council meeting, the GST Council is expected to deliberate on all technical aspects around setting up the GST Appellate Tribunals(GSTATs).

Regarding Levy of 28% GST on Online Gaming

The GST council has fixed the rate of Online Gaming tax and certain rules for its implementation has also been defined by the council. In the 52nd GST Council meeting, the GST Council may review if all the states have passed necessary law amendments by 1st October 2023.

Conclusion

In the 52nd GST Council meeting, steps were taken to solve the taxability-related issues in personal and corporate guarantees given by the directors of the companies and also towards the implementation and functioning of GST Appellate Tribunals (GSTATs).

Some changes in rates of Goods and Services have also been proposed by the council and the Amnesty scheme was brought to facilitate the taxpayers in filing the appeals.

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