The 53rd meeting of the Goods and Services Tax (GST) Council, chaired by Union Finance Minister Nirmala Sitharaman, was held on June 22 in New Delhi. The meeting focused on refining tax rates and service exemptions under the GST regime, aiming to streamline GST applicability across goods and services. Significant changes in GST rates were recommended for various goods. It was attended by senior officials and representatives from various states and union territories, marking a collaborative effort towards advancing GST reforms and governance. Looking ahead, the Finance Minister announced the next GST Council meeting tentatively scheduled for mid to late August.
A 5 per cent IGST is now applicable on imports of aircraft parts, components, testing equipment, tools, and tool-kits, while all steel, iron, and aluminium milk cans will attract a 12 per cent GST. The GST on cartons, boxes, and cases of paper has been reduced from 18 per cent to 12 per cent. Solar cookers, regardless of their energy source, will be taxed at 12 per cent, as will parts of poultry-keeping machinery and all types of sprinklers, including fire water sprinklers.
Several exemptions were also proposed. The IGST exemption on specified defence items has been extended until June 30, 2029. The RAMA programme will benefit from an IGST exemption on research equipment and buoys, while SEZ units and developers will enjoy a Compensation Cess exemption on imports dating back to July 1, 2017. More exemptions were granted, such as not taxing aerated beverages and energy drinks supplied to canteens run by the Ministry of Defence, and giving temporary exemptions on IGST for technical documentation related to AK-203 rifle kits imported for the Indian Defence forces.
As far as services are concerned, the council proposed several critical adjustments. Indian Railways services, like platform tickets, retiring rooms, cloak rooms, battery-operated car services, and intra-railway transactions, have been exempted. Accommodation services that provide relief to students and working professionals have also been exempted for stays up to 20,000 rupees per month per person for periods exceeding 90 days. SPV services to Indian Railways and maintenance services provided by Indian Railways to SPVs have been granted exemptions as well.
The council has also decided to cancel interest and penalties on Section 73 demand notices for the fiscal years 2017-18, 2018-19, and 2019-20, as long as the full tax is paid by March 31, 2025. They also extended the deadline for claiming Input Tax Credit (ITC) on invoices and debit notes from the fiscal years 2017-18 to 2020-21 to November 30, 2021, for returns that are filed by that date. To simplify legal proceedings, monetary limits for department appeals have been set at 20 lakh rupees for the GST Appellate Tribunal, 1 crore rupees for the High Court, and 2 crore rupees for the Supreme Court. Additionally, the council proposed gradually introducing biometric-based Aadhaar authentication nationwide for GST registration applicants to improve registration accuracy and also prevent fraudulent claims.
To ease the cash flow for businesses, the pre-deposit amount for filing appeals under the GST Act has been reduced, with a maximum reduction to 20 crore rupees for CGST and SGST. Amendments to the CGST Act were proposed to start the three-month period for GST Appellate Tribunal appeals from a notified date, and no interest will be charged on delayed return filing if the amount is available in the Electronic Cash Ledger on the due date. From April 1, 2025, new applications for Anti-profiteering will no longer be accepted. Also, the rate of Tax Collected at Source (TCS) by Electronic Commerce Operators (ECOs) has been decreased from 1 per cent to 0.5 per cent to lighten the financial load on suppliers.
The council recommended an amendment to exclude Extra Neutral Alcohol from GST when used for manufacturing alcoholic liquor. It also proposed amendments to the IGST Act and CGST Act to restrict IGST refunds in cases where export duty is payable. The threshold for reporting B2C inter-State supplies invoice-wise in FORM GSTR-1 has been reduced from 2.5 lakh to lakh rupees. Small taxpayers now have until June 30th to file GSTR-4 starting from the fiscal year 2024-25. GSTR-7 must now be filed monthly by TDS deductors, with no late fee for delayed filing of Nil returns.
The council also recommended establishing a uniform time limit for issuing demand notices and orders, regardless of whether fraud, suppression, or willful misstatement is involved, to simplify the enforcement process. Additionally, the time allowed for taxpayers to avail of reduced penalties by paying the tax demanded along with interest has been extended from 30 days to 60 days for FY 2024-25 onwards.
Other notable changes include the declaration of co-insurance premiums and re-insurance commissions as no supply under Schedule III, with regularization of past cases. GST on reinsurance services has been regularized on an “as is where is” basis for specified insurance schemes, and retrocession has been defined as reinsurance of reinsurance, making it eligible for exemption. Collections under Real Estate Regulatory Authority (RERA) are now exempt from GST, according to Notification No. 12/2017-CTR. Also, incentives for RuPay debit cards, as defined by NPCI in consultation with banks, are no longer subject to taxes.
Overall, the 53rd GST Council meeting made important changes to make the GST system clearer and easier to follow. These changes aim to simplify tax exemptions and reduce the administrative burden on taxpayers.
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