Recommendations of 52nd GST Council Meeting
Highlights of Recommendations of 52nd GST Council Meeting.
GST Council recommends changes to qualifications and age for GST Appellate Tribunal President and Members
- GST Council recommends changes to qualifications and age for GST Appellate Tribunal President and Members
- Nil GST for millet flour with at least 70% millets sold loose, 5% for pre-packaged millet flour with labels.
- GST Council recommends to keep Extra Neutral Alcohol(ENA), used for making liquor, outside GST.
- GST on molasses reduced from 28% to 5% to help cane farmers to clear dues faster and reduce cost of manufacturing cattle feed.
- GST Council suggests allowing temporary IGST exemption for foreign-flagged vessels when it converts to coastal runs.
The 52nd GST Council meeting was held in New Delhi, chaired by Union Minister Nirmala Sitharaman. Attendees included Union Minister of State for Finance, Chief Ministers of Goa and Meghalaya holding finance portfolio, Finance Ministers of States & UTs, and senior officers of the Ministry of Finance & States/ UTs.
The GST Council recommended changes in GST rates, trade facilitation measures, and compliance streamlining in GST.
I. Changes in GST rates of goods
A) The government has changed the GST rates on millet flour. If the flour is not packaged with a label, it will have a 0% GST rate. If it is packaged with a label, it will have a 5% GST rate.
- 0% if sold in other than pre-packaged and labelled form
- 5% if sold in pre-packaged and labelled form
B) The government has also clarified that fake zari thread, made from metallised polyester film or plastic film, will be taxed at 5% as well. However, any tax paid on the plastic film cannot be refunded.
C) Foreign ships will have to pay a 5% tax if they are used for domestic routes. However, the tax can be waived if the ship turned back to foreign going vessels within six months.
II. Other changes relating to Goods
- GST Council recommends excluding Extra Neutral Alcohol (ENA) for the manufacture of alcoholic liquor from the ambit of GST.
- Molasses GST to be reduced from 28% to 5% to increase liquidity with mills and reduce cost for cattle feed manufacture.
- A new HS code will cover rectified spirit for industrial use, with the GST rate being amended to make an entry for ENA for industrial use with 18% GST.
III. Changes in GST rates of services
- Pure and composite services provided to governments and local authorities for Panchayat/Municipality functions are exempted under notification No. 12/2017-CTR. Council has recommended to retain the existing exemption entries with no change.
- The GST Council recommended exempting services like water supply, sanitation, waste management, and slum improvement supplied to government authorities.
IV. Other changes relating to Services
- To clarify that job work services for processing of barley into malt attracts GST @ 5% as applicable to “job work in relation to food and food products” and not 18%.
- GST Council has recommended that bus operators organised as companies may be excluded from the purview of section 9(5) of CGST Act, 2017. This would enable them to pay GST on their supplies using their ITC.
- DMFTs in mineral mining regions are Governmental Authorities. They also qualify for the same GST exemptions as any other Governmental Authority.
- Indian Railways’ supply of all goods and services will be taxed using Forward Charge Mechanism to lower their costs via ITC.
Measures for facilitation of trade:
i) Amnesty Scheme for filing of appeals against demand orders in cases where appeal could not be filed within the allowable time period:
The Council has recommended providing an amnesty scheme through a special procedure under section 148 of CGST Act, 2017 for taxable persons, who could not file an appeal under section 107 of the said Act, against the demand order under section 73 or 74 of CGST Act, 2017 passed on or before the 31st day of March, 2023, or whose appeal against the said order was rejected solely on the grounds that the said appeal was not filed within the time period specified in sub-section (1) of section 107. In all such cases, filing of appeal by the taxpayers will be allowed against such orders upto 31st January 2024, subject to the condition of payment of an amount of pre-deposit of 12.5% of the tax under dispute, out of which at least 20% (i.e. 2.5% of the tax under dispute) should be debited from Electronic Cash Ledger. This will facilitate a large number of taxpayers, who could not file appeal in the past within the specified time period.
ii) Clarifications regarding taxability of personal guarantee offered by directors to the bank against the credit limits/loans being sanctioned to the company and regarding taxability of corporate guarantee provided for related persons including corporate guarantee provided by holding company to its subsidiary company: The Council has inter alia recommended to:
(a) issue a circular clarifying that when no consideration is paid by the company to the director in any form, directly or indirectly, for providing personal guarantee to the bank/ financial institutes on their behalf, the open market value of the said transaction/ supply may be treated as zero and hence, no tax to be payable in respect of such supply of services.
(b) to insert sub-rule (2) in Rule 28 of CGST Rules, 2017, to provide for taxable value of supply of corporate guarantee provided between related parties as one per cent of the amount of such guarantee offered, or the actual consideration, whichever is higher.
(c) to clarify through the circular that after the insertion of the said sub-rule, the value of such supply of services of corporate guarantee provided between related parties would be governed by the proposed sub-rule (2) of rule 28 of CGST Rules, 2017, irrespective of whether full ITC is available to the recipient of services or not.
iii) Provision for automatic restoration of provisionally attached property after completion of one year: The Council has recommended an amendment in sub-rule (2) of Rule 159 of CGST Rules, 2017 and FORM GST DRC-22 to provide that the order for provisional attachment in FORM GST DRC-22 shall not be valid after expiry of one year from the date of the said order. This will facilitate release of provisionally attached properties after expiry of period of one year, without need for separate specific written order from the Commissioner.
iv) Clarification on various issues related to Place of Supply: The Council has recommended to issue a Circular to clarify the place of supply in respect of the following supply of services:
(i) Supply of service of transportation of goods, including by mail or courier, in cases where the location of supplier or the location of recipient of services is outside India;
(ii) Supply of advertising services;
(iii) Supply of the co-location services.
v) Issuance of clarification relating to export of services-: The Council has recommended to issue a circular to clarify the admissibility of export remittances received in Special INR Vostro account, as permitted by RBI, for the purpose of consideration of supply of services to qualify as export of services in terms of the provisions of sub-clause (iv) of clause (6) of section 2 of the IGST Act, 2017.
vi) Allowing supplies to SEZ units/ developer for authorised operations for IGST refund route by amendment in Notification 01/2023-Integrated Tax dated 31.07.2023: The Council has recommended to amend Notification No. 1/2023-Integrated Tax dated 31.07.2023 w.e.f. 01.10.2023 so as to allow the suppliers to a Special Economic Zone developer or a Special Economic Zone unit for authorised operations to make supply of goods or services (except the commodities like pan masala, tobacco, gutkha, etc. mentioned in the Notification No. 1/2023-Integrated Tax dated 31.07.2023) to the Special Economic Zone developer or the Special Economic Zone unit for authorised operations on payment of integrated tax and claim the refund of tax so paid.
C. Other measures pertaining to law and procedures:
i) Alignment of provisions of the CGST Act, 2017 with the provisions of the Tribunal Reforms Act, 2021 in respect of Appointment of President and Member of the proposed GST Appellate Tribunals: The Council has recommended amendments in section 110 of the CGST Act, 2017 to provide that:
- an advocate for ten years with substantial experience in litigation under indirect tax laws in the Appellate Tribunal, Central Excise and Service Tax Tribunal, State VAT Tribunals, by whatever name called, High Court or Supreme Court to be eligible for the appointment as judicial member;
- the minimum age for eligibility for appointment as President and Member to be 50 years;
- President and Members shall have tenure up to a maximum age of 70 years and 67 years respectively.
ii) Law amendment with respect to ISD as recommended by the GST Council in its 50th meeting: GST Council in its 50th meeting had recommended that ISD (Input Service Distributor) procedure as laid down in Section 20 of the CGST Act, 2017 may be made mandatory prospectively for distribution of ITC in respect of input services procured by Head Office (HO) from a third party but attributable to both HO and Branch Office (BO) or exclusively to one or more BOs. The Council has now recommended amendments in Section 2(61) and section 20 of CGST Act, 2017 as well amendment in rule 39 of CGST Rules, 2017 in respect of the same.
Note: These are the recommendations of the GST Council and would be given effect through the relevant circulars/ notifications/ law amendments which alone shall have the force of law.
