53rd GST Council Meeting: Key Highlights

During the 53rd GST Council meeting, led by Finance Minister Nirmala Sitharaman post-India’s general elections, the focus was on easing GST rules and minimizing taxpayer legal hurdles. Key efforts included streamlining compliance and the notice process, alongside a push to refine the GST framework. The meeting also saw a proposal to the GoM on rate rationalization to lower GST on fertilizers, while it was clarified that GST on online gaming was not discussed.

While the 52nd GST Council Meeting focused on adjusting GST rates, facilitating trade, and updating legal procedures to enhance tax compliance and transparency, let us dive into all the changes and announcements made by the finance ministry in the 53rd GST Council Meeting here…

Key Strategic Decisions

1. Future GST Council Meeting Plans

The Finance Minister revealed that discussions would continue in the next Council meeting slated for mid-August, focusing on topics not covered due to time constraints.

2. Relief Measures for Taxpayers

Insertion of Section 128A in CGST Act, to provide for conditional waiver of interest or penalty or both, relating to demands raised under Section 73, for FY 2017-18 to FY 2019-20 . in cases where the taxpayer pays the full amount of tax demanded in the notice upto 31.03.2025. The waiver does not cover demand of erroneous refunds.

3. Financial Threshold for Appeals

In efforts to minimize government litigation, the Council has set monetary thresholds subject to certain exclusions, for filing of appeals in GST by the department for filing appeals: Rs 20 lakh for the GST Appellate Tribunal, Rs 1 crore for the High Court, and Rs 2 crore for the Supreme Court, as stated by Sitharaman.

3.1 Amendment in Section 107 and Section 112 of CGST Act for reducing the amount of pre-deposit required to be paid for filing of appeals under GST:

The GST Council recommended reducing the amount of pre-deposit for filing of appeals under GST to ease cash flow and working capital blockage for the taxpayers. The maximum amount for filing appeal with the appellate authority has been reduced from Rs. 25 crores CGST and Rs. 25 crores SGST to Rs. 20 crores CGST and Rs. 20 crores SGST. Further, the amount of pre-deposit for filing appeal with the Appellate Tribunal has been reduced from 20% with a maximum amount of Rs. 50 crores CGST and Rs. 50 crores SGST to 10 % with a maximum of Rs. 20 crores CGST and Rs. 20 crores SGST.

4. GSTR 4 Filing Extension

Acknowledging the challenges faced by small taxpayers, the deadline for GSTR 4 filing has been extended to June 30 from April 30, applicable from FY25.

5. Facilitating Amendments through GSTR 1A

The Council recommended providing a new optional facility by way of FORM GSTR-1A to facilitate the taxpayers to amend the details in FORM GSTR-1 for a tax period and/ or to declare additional details, if any, before filing of return in FORM GSTR-3B for the said tax period. This will facilitate taxpayer to add any particulars of supply of the current tax period missed out in reporting in FORM GSTR-1 of the said tax period or to amend any particulars already declared in FORM GSTR-1 of the current tax period (including those declared in IFF, for the first and second months of a quarter, if any, for quarterly taxpayers), to ensure that correct liability is auto-populated in FORM GSTR-3B.Welcomed by tax experts, this functionality streamlines amendments, allowing for corrections within the same return period. Overall, GSTR-1A is set to improve the GST filing process, making it more efficient and convenient for taxpayers.

6. Aadhaar Verification for GST Registration

To combat fraudulent activities, a nationwide implementation of biometric Aadhaar verification for GST registration has been launched. Before this rollout, a pilot test was conducted in Gujarat and Puducherry to evaluate Aadhaar verification’s effectiveness in enhancing the security and integrity of the GST registration process. This initiative aims to strengthen the verification process, ensuring that only legitimate businesses can register for GST.

7. The Council recommended that filing of annual return in FORM GSTR-9/9A for the FY 2023-24 may be exempted for taxpayers having aggregate annual turnover upto two crore rupees.

8. Clarification regarding applicability of provisions of Section 16 (4) of CGST Act, 2017, in respect of invoices issued by the recipient under Reverse Charge Mechanism (RCM):

The Council recommended to clarify that in cases of supplies received from unregistered suppliers, where tax has to be paid by the recipient under reverse charge mechanism (RCM) and invoice is to be issued by the recipient only, the relevant financial year for calculation of time limit for availment of input tax credit under the provisions of section 16(4) of CGST Act is the financial year in which the invoice has been issued by the recipient.

Summary of Rate Changes and Exemptions:

Below is a concise table of the uniform GST rate adjustments and the key exemptions discussed:

S. No	Item/Service	Previous GST Rate	New/Recommended GST Rate	Remarks
1	Milk Cans (irrespective of material)	Varied	12%	Simplifies the rate structure, benefiting dairy industries.
2	Carton Boxes (corrugated and non-corrugated paper)	Varied	12%	Supports apple growers in Himachal Pradesh and Jammu and Kashmir.
3	All types of Sprinklers	Varied	12%	Streamlines the tax rate structure.
4	Solar Cookers	Varied	12%	Promotes the use of renewable energy products.
5	Railway Services (specific services mentioned)	Taxable	Exempt	Covers platform tickets, battery-operated vehicles and intra-railway services.
6	Hostel Accommodation (charging less than Rs. 20,000 per month)	Taxable	Exempt	Eases the financial load on students and budget accommodation providers*.

Note:

(* It’s important to note that the exemption on hostels applies only if the stay is for 90 days and not less, adding a condition to ensure the benefit is targeted towards student accommodation needs.)

Finance Minister’s Briefing on Taxpayer Notices

In her briefing, Finance Minister Sitharaman addressed the issuance of notices to taxpayers. She clarified that as of December 31, 2023, a small fraction (1.96% or 1,14,939) of all active tax assesses (58,62,886) received notices from the Central GST. The purpose behind these notices is to streamline the GST process, aiming for a less cumbersome and more business-friendly environment.

The deliberations and decisions of the 53rd GST Council meeting underscore the government’s commitment to enhancing the GST framework for better compliance, reduced litigation, and a more conducive business environment in India. The strategic adjustments, including litigation thresholds, compliance deadlines, and rate rationalizations, are significant steps towards simplifying the tax regime and alleviating taxpayer burdens.

Watch the full Post- 53rd GST Council Meeting Press Conference here:

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The 53rd GST Council Meeting: Expectations

The Goods and Services Tax (GST) Council, a cornerstone of tax reform in India, is poised to convene for its 53rd meeting on June 22, 2024, in New Delhi under the chairpersonship of Finance Minister Nirmala Sitharaman. This council, representing both the central and state governments, has played a pivotal role in shaping the GST framework, ensuring it remains adaptive to the evolving economic landscape. The upcoming meeting is anticipated to address several critical issues, aiming to refine and enhance the GST regime further.

The 52nd GST Council meeting’s recommendations focused on revising GST rates, enhancing trade facilitation, and updating legal procedures.

Highlights include

Adjusting GST Appellate Tribunals’ appointment criteria.
Implementing a nil GST rate for loose millet flour and a 5% rate for packaged versions.
Excluding Extra Neutral Alcohol (ENA) from GST.
Reducing molasses GST from 28% to 5% and proposing IGST exemptions for foreign-flagged vessels engaging in coastal operations to encourage tourism.

Expectations for the 53rd GST Council Meeting:

Rationalization of GST Rates: Amidst economic feedback and the drive towards fostering a more conducive business environment, there’s a strong expectation that the council will engage in discussions aimed at fine-tuning GST rates for select goods and services.
Simplification of Compliance Procedures: With the challenges that small and medium enterprises (SMEs) face in adhering to GST mandates, there’s a hopeful anticipation that the council will explore strategies to streamline these compliance requirements.
Enhancement of the GSTN Infrastructure: The smooth operation of the GST portal is crucial for stakeholders, prompting an expectation for talks on bolstering the technological framework of the GST Network (GSTN).
Clarifications and Amendments: The council is anticipated to tackle the pressing need for clarity and adjustments in response to taxpayer queries, aiming to resolve ambiguities and streamline tax laws.
Input Tax Credit (ITC) Rules: With an eye on reducing misuse and enhancing transparency, modifications to the ITC rules are highly anticipated, reflecting a commitment to refining the process.
Inclusion of Petroleum Products in GST: There’s a growing call for integrating low-impact petroleum products, like natural gas, into the GST regime. This move aims to streamline the tax system and stabilize GST revenues, making them less reliant on Union Budget changes.
Taxation of ESOPs and Corporate Guarantees: The taxation of Employee Stock Ownership Plans (ESOPs) and corporate guarantees has led to significant debate and litigation. The Council is expected to seek clarifications and consider regulatory adjustments to provide businesses with more clarity.

Expected Outcomes

The decisions made during the 53rd GST Council meeting are expected to have far-reaching implications for businesses and consumers alike. Enhanced compliance procedures and rationalized tax rates are anticipated to bolster economic growth and increase the ease of doing business in India.

To read our coverage on the previous Council Meet decisions, you may refer here:

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