50th GST Council Meeting Highlights: Key Decisions and Updates

The 50th GST Council meeting 2023 led by FM Nirmala Sitharaman was held on 11th July at Vigyan Bhawan, New Delhi. Ministers representing their states and union territories were also present in the meeting. As of now, the 51st GST Council meeting was also held on 2nd August 2023.

Since the introduction of GST, 49 GST council meetings were already held and to acknowledge the Landmark of the 50th GST council meeting the chairperson of the meeting released a short video titled- ‘GST council-50 steps towards a journey’ in the presence of the GST council members. The India Post also launched the first set of special covers and customized ‘My stamp’ and the chief postmaster general presented it to the chairperson of the GST council. Here we have considered detailed information at the 50th GST Council Meeting Highlights. The 50th GST Council meeting Notification pdf. The 50th GST Council meeting undertook three important matters under the GST law.

Recommendation Relating to GST Rate Changes on Goods

Changes in GST Rate of Goods

The GST Council in its 50th meeting decided to reduce the GST rates on the following goods:

• Uncooked/ Unfried snack pellets: The rate has been reduced from 18% to 5% which aims at reducing the tax burden on this category of goods.

• Fish soluble paste:- Rate reduced from 18% to 5%

• Imitation zari threads/yarn:- Rate reduced from 12% to 5%

• LD slag:- This will now be taxed at a reduced rate of 5% instead of 18% which is equivalent to blast furnace slag and fly ash

Other Changes Relating to Goods

Exemption from IGST has been provided on:-

• Dinutuximab (Quarziba) medicine when imported for personal use.

• Medicines and Food for Special Medical Purposes (FSMP) are used in the treatment of rare diseases by the Center of Excellence.

The supply of raw cotton and kala cotton, by agriculturists to cooperatives is now taxable under the reverse charge mechanism.

Regularization of past period issues was decided to be done on an “as is basis” with respect o:-

• Raw Cotton

• Trauma, spine, and arthroplasty implants: For the period before 18.07.2022

• Desiccated coconut: For the period 01.07.2017 to 27.07.2017

• Cups and plates made of areca leaves: for the period prior to 01.10.2019

• Biomass briquettes: for the period 01.07.2017 to 12.10.2017

GST on Multi-Utility Vehicles: The Council in the meeting also decided to amend entry 52B in the compensation cess to include all multi-utility vehicles meeting the following parameters:

• Length exceeding 4000 mm

• Engine capacity exceeding 1500 cc

• Ground clearance of 170 mm and above (in an unladen condition)

It was also decided that the ad valorem rate applicable on 31st March 2023 may be notified for the levy of compensation cess under GST on pan masala, tobacco products, etc if it is not legally required to declare the retail sale price.

RBL Bank and ICBC Bank have been included in the list of specified banks eligible for IGST exemption on importing gold, silver, or platinum as decided in the meeting.

Recommendations Relating to Rate of GST on Services

GST rate changes of Services

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

Other Changes Relating to Services

As a gesture to promote trade, the Goods Transport Agency (GTA) will not be required to file a declaration for paying GST under the forward charge every year. For eg, if the option was exercised for a particular financial year, it will be deemed exercised for the next and future financial years unless a declaration is filed to revert that decision. The deadline has also been extended to 31st March of the preceding financial year to exercise this option.

• Clarification has been provided that if a Director provides services to the company in his personal or private capacity will not be taxable under RCM.

• The supply of food and beverages in Multiplexes is taxable as a restaurant service if they are supplied by way of or as part of a service and supplied independently of the cinema exhibition service. If clubbed together and the same satisfies the test of composite supply, the entire supply will attract GST rate on food and beverages in multiplexes applicable to the service of exhibition of cinema, the principal supply.

Recommendation of Group of Ministers (GOM) on Casinos, Race Courses and Online Gaming Tax

The GST Council formed a GOM last year to examine the issues related to GST on online gaming, casinos, and horse racing. The following recommendations were made at the 50th GST Council meeting:

• The GOM recommended in its 2nd report that in the absence of a consensus the GST Council may decide whether GST on online gaming, casinos, and horse racing should be at 28% on the full-face value of bets placed or on the GGR.

• To make suitable amendments to the GST law so as to include online gaming and horse racing in Schedule III of the CGST Act as taxable actionable claims.

• Casinos, horse racing, and online gaming will be taxed at a uniform GST rate of 28%.

• The GST will be levied on:

  • The face value of the chips purchased in the case of casinos.

  • The total value of the bets placed with the bookmaker/totalisator in the case of horse racing.

  • The total value of the bets placed in the case of online gaming

Key Measures for Facilitation of Trade

Recommendation on Rules for GST Appellate Tribunals 

The council recommended rules for the appointment and conditions of the President and members of GSTATs which are expected to be notified wef 01.08.2023

Continuation of Relaxations for Form GSTR-9 and 9C Relaxation in GST return filing

The Relaxation in GST filing has been provided in the previous fiscal year (2021-22) for various tables of Form GSTR-9 and 9C will be extended to FY 2022-23.

Small Taxpayers Exemption from Filing GSTR-9/9A

The Small taxpayers having annual turnover of up to Rs. 2 crore will be exempt from filing GSTR-9/9A for FY 2022-23.

Clarification on Input Services Distributor (ISD) Mechanism

ISD mechanism is not mandatory for distributing input tax credit (ITC) of standard input services procured from third parties to distinct persons, in line with the present provisions of the GST law.

Clarification on GST Liability and Reverse Input tax credit (ITC) for Warranty Replacement

A circular will be released to address various concerns regarding GST liability and the reversal of ITC in cases involving warranty replacement of parts and repair services during the warranty period without customer consideration.

Restriction on Refund of Accumulated Input Tax Credit (ITC)

Refunds of accumulated ITC for a tax period are to be restricted to the Input tax credit (ITC) on inward supplies reflected in the GSTR-2B of the said tax period or any previous tax period wef 01.01.2022.

Inclusion of Export Goods in Adjusted Total Turnover

The value of Export goods will now be included while calculating the “adjusted total turnover” in the formula.

Clarification on TCS Liability for Multiple E-Commerce Operators

A circular providing clarity regarding the TCS on e-commerce transactions in cases where multiple e-commerce operators (ECOs) are involved in a single transaction for the supply of goods or services or both were issued.

Amendment to Rule 46 of CGST Rules, 2017 for Tax Invoices

Amendments will be made with regards to GST rules, this includes an amendment in rule 46 to mention only the name of the state and no full address of the recipient on tax invoices in cases of supply of taxable services by/through an ECO or OIDAR supplier to an unregistered recipient.

Amendment in Rule 108(1) and Rule 109(1) 

Rule 108(1) and 109(1) were amended to cater for the need for manual filing of an appeal under specified circumstances.

Issuance of circulars regarding:

• Clarification on the matter of generating e-invoices under Rule 48(4) of CGST Rules for supplies made to government departments.

• Clarification on the issues relating to the manner of calculation of interest liable to be paid under Section 50(3) of the CGST Act, 2017 in respect of wrongly availed and utilized IGST credit.

• Clarification that just holding securities of a subsidiary company by a holding company cannot be treated as a supply of services and taxed under GST.

Procedure for Verification of ITC Discrepancies

To mention the procedure for verification of Input tax credit (ITC) in cases involving differences in ITC claimed in the GSTR-3B and the ITC available in the GSTR-2A during the period from 1st April 2019 to 31 December 2021 a circular will be issued.

Special Procedure for Manual Filing of Appeals against TRAN-1/TRAN-2 Claims

To enable the manual filing of appeals against orders passed by the proper officers  in respect of TRAN-1/ TRAN-2 claims of taxpayers a special procedure will be provided under section

Extension of Amnesty Schemes and Extension of Due Dates for Filing GSTR-1, GSTR-3B, and GSTR-7 for Taxpayers in Manipur.

The extension will be provided to the Amnesty schemes toll 31st August 2023 related to the non-filing of GSTR-4, GSTR-9, and GSTR-10, revocation of registration cancellation, and deemed withdrawal of assessment orders. 

Additionally, the due dates for filing GSTR-1, GSTR-3B, and GSTR-7 for April, May, and June 2023 will be extended until 31st August 2023 for taxpayers in Manipur.

Key Measures for Streamlining GST Compliances 

Recommendation for E-Way Bill Generation

To mandate the requirement of an E-way bill for gold and precious metals to be generated for intra-state movement the Council has recommended inserting Rule 138F in CGST and SGST Rules, 2017.

Recommendations on Capacity-Based Taxation and Special Composition Scheme proposed in the 50th GST council meeting

Special Procedure for Manufacturers of Tobacco and Similar Items 

A notification was issued to prescribe the special procedure to be followed by the manufacturers of tobacco, pan masala, and other similar items for registration and return filing.

Special Penalty for Non-Registration of Machines

Section 122A was inserted in the CGST Act, 2017 which provided for a special penalty for non-registration of machines by such manufacturers.

Amendment to IGST Act Regarding Refund Route Restriction

Amendment in Section 16 of the IGST Act, to be notified with effect from 1st October 2023 and a notification to be issued under Section 16(4) of the IGST Act, 2017 to provide for the restriction of the IGST refund route in respect of exports of tobacco, pan masala, mentha oil, and other similar items.

Amendments to CGST Rules, 2017 Regarding GST Registration and GST exemptions.

Amendment to Bank Account Details Provision

The bank account details in the name and PAN of the registered person are required to be furnished within 30 days of the grant of registration or before filing of Form GSTR-1/ IFF, whichever is earlier.

System-Based Suspension of GST Registration

The taxpayers that do not furnish a valid bank account under Rule 10A within the prescribed period, system-based suspension of GST registration will be coming into force.

Automatic Revocation of Suspension

Automatic revocation of such system-based suspension will be done after compliance with the provisions of Rule 10A.

Non-Filing of GSTR-1/IFF

Taxpayer who has not furnished a valid bank account under Rule 10A, cannot file their GSTR-1/IFF.

Elimination of Physical Verification Requirement

Abolishment of the requirement to physically verify the business premises in the presence of the applicant and also of physical verification in high-risk cases even if the Aadhaar has been authenticated.

Pilot for Aadhaar Authentication

A pilot to be conducted in Puducherry for risk-based biometric-based Aadhaar authentication of registration applicants

Recovery of Tax and Interest Procedure

Form GST DRC-01D will be inserted to provide for the manner of recovery of the tax and interest in respect of the amount intimated in cases where the output tax liability in the GSTR-1 exceeds the liability reported in the GSTR-3B for the said month by a specified threshold.

System-Based Intimation on Excess ITC Claims

System-based intimation will be given to taxpayers in respect of the excess ITC claims in the GSTR-3B vis a vis the Input tax credit (ITC) available in the GSTR-2B above a certain threshold.

Issuance of Notices for Non-Filing of Annual Returns

Form GSTR-3A will be amended to provide for the issuance of notices to taxpayers for failing to furnish their annual return in Form GSTR-9/9A before the due date.

Requirement for OIDAR Service Providers

Rule 64 of the CGST Rules will be amended to mandate OIDAR service providers to provide details of supplies made to registered taxpayers in India in their Form GSTR-5A return to help the tracking of due payments of tax on a reverse charge basis by such taxpayers on supplies received from OIDAR service providers.

Inclusion of Duty-Free Shop Supplies in Exempt Supplies

Explanation 3 is to be inserted to prescribe that the value of the supply of goods from Duty-Free shops at arrival terminals in international airports is to be included in the value of exempt supplies for the purpose of reversal of input tax credit.

Consent-Based Sharing of Taxpayer Information

Rule 163 will be inserted to mention the manner and conditions of consent-based sharing of information of taxpayers available on the common GST portal with other systems.

Compounding Amounts for Offences

Rule 162 will be inserted to mention compounding amounts for various offences under Section 132 of the CGST Act, 2017.

Clarification on Place of Supply for Unregistered Persons

Insertion of the rule to clarify the place of supply with respect to the supply of goods to unregistered persons.

Formation of State-Level Coordination Committee

Formation of a state-level coordination Committee comprising GST officers from both Centre and state GST administrations for knowledge sharing on GST matters and coordinated efforts towards administrative and preventive measures.

GoM Report on IT System Reforms

IT System Reforms was also discussed by the Council. The report recommended various measures to curb GST fraud.

Other Key Considerations Expected from the 50th GST Council Meeting

Setting up of GST Appellate Tribunals (GSTATs)

The taxpayers for a very long time have been demanding the Setting up of GST Appellate TribunalsGSTATs) which is expected to reduce the burden on taxpayers and courts by streamlining and expediting indirect tax litigations. The 50th GST Council meeting is expected to address this issue.

Amendments to Law for timelines of E-invoicing under GST

In its 50th meeting, the council is expected to propose an amendment to the law regarding timelines of E-invoicing under GST for the generation of e-invoices on the Invoice Registration Portal(IRP) as there is a lot of confusion among the taxpayers regarding the timeline for generating e-invoices, especially after the announcement of 7 days time limit.

Automated Scrutiny of GST Return and Expansion of GST taxpayer base

The Finance Minister has a keen interest in the Automation of GST return scrutiny process and has asked the officials to implement a plan to increase the taxpayer's base by extensive use of technology.

Charge of TCS in Transactions Involving Multiple E-Commerce Operators

Since the initiation of the Open Network for Digital Commerce (ONDC) model by the Govt. there has been a significant rise in transactions involving multiple e-commerce operators. The law is silent regarding the taxpayer on whom this liability is to be charged and hence the GST Council is expected to provide a clarification regarding the same.

Other Expectations and Potential Discussion Topics

• A variety of millet goods, cancer medicine, and related rates are now being defined by a GST fitment panel. As per the sources, the GST fitment panel comprises authorities from the Centre and states who categorize the products where millets are critical.

• The council might also consider the correction of the inverted tax structure in textile sector.

• Under the 'Scheme for Budgetary Support' the council might consider GST compensation for hill states.

Conclusion

The 50th GST Council meeting as stated above was a significant milestone with the 50th GST Council meeting press release which can be checked in the GST Council meeting 50th pdf on the implementation of GST in India. Key decisions were made regarding the Rate of GST on goods and services with GST rate cuts on various items. GST Exemptions and regularisations were also provided and amendments were made to compensation cess and IGST exemption on Gold imports.

Measures to facilitate trade were taken including recommendations on GSTAT rules and compliance Relaxation in GST filing for small taxpayers. The council also proposed amendments to e-way bill generation rules and Capacity-based taxation schemes.

The establishment of GSTAT was also given focus by the council.

Overall the aim of the meeting was to take Measures for streamlining GST compliances where needed and measures to facilitate trade as well as Expansion of GST taxpayer base was given focus upon.