48th GST Council meeting was held on 17.12.2022, Saturday, virtually from New Delhi. Nirmala Sitharaman, the Hon’ble Union Finance Minister, chaired the meeting, along with the Finance Ministers of the states/Union Territories. Since 48th GST Council meeting was scheduled after a gap of 5-6 months, it had many items on agenda.
Key Highlights of 48th GST GST Council meeting. Eight points out of 15 items on the Council’s agenda, including data-sharing matters, were discussed in the meeting. The matters which could not be taken up refers to revenue augmentation matters, setting up of GST appellate tribunal and GST on Gutkha and pan masala. The meeting ended early due to time constraints expressed by most of the GST Council members. Key Highlights are:
- Decriminalisation of three kinds of offences : Obstruction of duties of an officer, the threshold amount of tax for launching criminal offence under GST increased from the current limit of Rs.1 crore to 2 crores, except where fake invoices are involved and to reduce the workload of courts decriminalised the compounding of offence up to a limit;
- Few GST rate rationalisation matters – GST on pulse husks for cattle feed (including chilka and concentrates) was reduced to nil from 5%. Further, the concessional 5% GST on ethyl alcohol was extended to refineries for blending with petrol, which was earlier charged at 18%.
- Clarifications were given on a few taxation matters, such as the GST on equipment used by petroleum companies for exploration and how to deal with mismatches of invoices in GSTR-1 vs GSTR-3B in the early years.
- e-Commerce operators can allow the suppliers to be registered under the composition scheme and unregistered vendors, facilitating e-commerce for all the micro-enterprises.
- The second report on casinos and online gaming was not circulated and hence not part of the 48th meeting agenda.
- No decision has been taken on any GST rate hike.
- Cess on SUV at 22% clarified- Applicable if meets 4 criteria-
- Popularly known as SUV,
- The engine capacity of more than 1500 cc,
- Length more than 4000 mm and
- Ground clearance equal to or more than 170 mm
- Further, Council clarified that no GST on insurance is levied on the No-claim bonus offered by insurance companies, so it is deductible from the premium without a GST charge.
Tax Rates – Reduuction in rates and clarifications. GST rates on the following items were slashed-
Item description Before After Husk of pulses, along with chilka and concentrates, chuni or churi, and khanda used as cattle feed* 5% Nil Ethyl alcohol that is sold to refineries to blend it with the motor spirit or petrol 18% 5% Sale of Mentha arvensis, similar to Mentha oil No RCM Under RCM
*Intervening period from 3rd August 2022, as per the Circular clarifying levy, has been regularised.
GST rate change notifications and circulars are to be issued . These changes will come into effect from the date of such notification or the date mentioned in such notification.
Clarifications on tax rates for supply of goods and services:
- Rab, also called rab-salawat is categorised under HSN code 1702, and GST rate of 18% gets charged.
- GST at 18% is charged on fryums made using extrusion, particularly covered under HSN code 19059030.
- Cess on SUV at 22% clarified- Applicable if meets 4 criteria-
- Popularly known as SUV,
- Engine capacity of more than 1500 cc,
- Length more than 4000 mm, and
- Ground clearance equal to or more than 170 mm.
- 5% GST is charged on imported equipment or goods classified in the concessional 5% GST rate category for petroleum operations and 12% GST applies if the general rate is higher than 12%.
- No GST chargeable if the residential dwelling is rented to a GST-registered person in their personal capacity for their own use/account as a residence and not for business.
- No GST on incentives paid to banks by Central Government as a subsidy under the promotion of RuPay Debit Cards and low-value BHIM-UPI transaction schemes
Ease of Trade and Business – GST amendments
(A) Decriminalisation under GST.
GSTCouncil has decided to decriminalise the following three offences under GST law –
- Tax threshold for launching prosecution under GST or taking criminal action, increased from Rs.1 crore to Rs.2 crore, except for fake invoices. In other words, offences pertaining to the issuance of invoices without the sale of goods or services or both or dealing with fake invoices continue to be prosecuted if the tax amount is more than Rs.1 crore.
- Reduction in the compounding amount from the current tax range of 50%-150% to the range of 25%-100%
- Certain offences under section 132(1), clauses (g), (j) and (k) of the CGST Act, 2017, such as obstruction or restricting any officer from discharging their duties, intentional tempering of material evidence and failure to provide the information.
(B) Unregistered persons to get new GST refund rules.
Earlier, there was no defined process for refund claims for the buyers not registered under GST upon cancellation of the contract/ agreement for the sale of services such as flat/house construction and long-term insurance policy and upon the expiry of the time limit to issue credit note by the supplier. The Council decided to amend the CGST Rules and directed CBIC to issue a Circular for the procedure to file a refund application by such unregistered buyers.
(C) Facilitate e-commerce for micro-enterprises from 1.10.2023.
From 1.10.2023, GST-unregistered suppliers, dealers and composition taxable persons can sell goods through e-commerce operators within the state, subject to some conditions. CBIC and GSTN will make the necessary amendments to the Rules through notifications, an amendment to the Act and to get the GST portal ready for the new functionality within the defined timeline.
(D) Clarifying date of applicability for new entries in Schedule III.
New entries were added in Schedule III (Items not covered under GST) from 1.2.2019, such as para 7 (sale from one non-taxable territory to another, such as high sea sales), para 8(a) (sale of warehoused goods before clearance for home consumption) and para 8(b) (Sale of goods by the consignee to any other person where goods are dispatched from the foreign port but before clearance for home consumption). Confusion arose about their taxability from 1.7.2017 up to 31.1.2019, hence the GST Council recommended giving effect to these additions from the inception of GST. However, no refund of tax already paid will be granted.
(E) Reversal of Input Tax Credit (ITC) for non-payment of invoice within 180 days.
CGST Rule 37(1) will be amended retrospectively from 1.10.2022 for ITC reversal to provide for reversal of input tax credit (ITC) as per the second proviso to section 16 of CGST Act, 2017 only to the extent of the invoice amount unpaid to the supplier versus the value of the supply, along with tax payable.
(F) New CGST Rule 37A for ITC reversal where supplier fails to deposit tax.
GST Council has decided to insert Rule 37A in CGST Rules, 2017 which will define steps to reverse ITC claimed on taxes undeposited by the supplier within a specified date. Further, the process of re-availing such ITC, where the supplier pays it subsequently, will be provided. It will allow easy compliance with the condition for claiming an input tax credit as per Section 16(2)(c) of the CGST Act.
(G) Amendments for timely and easier GST appeal processing.
a. Changes in CGST Rule 108(3) and Rule109: More clarity for submission of a certified copy of the order against which appeal is filed and the final acknowledgement issued by appellate authority.
b. Change in CGST Rule 109C and insertion of new form GST APL-01/03 W: Facility given for withdrawing an appeal application up to a certain defined stage, avoiding litigations at the level of appellate authorities.
(H) Insurance – No Claim Bonus (NCB) offered by insurance companies, especially in motor vehicle insurance, has been allowed as a deduction from the taxable premium amount for valuation purposes.
(I) Fresh GST Circulars shall be issued on following issues:
- Treatment of pending GST dues from bankrupt businesses where proceedings are filed under the Insolvency and Bankruptcy Code, 2016 (IBC). For this, Rule 161 of CGST Rules, 2017 and form DRC-25 will be amended accordingly.
- Place of supply of mail/courier services for transportation of goods to places outside India under the proviso to section 12(8) of the IGST Act, 2017 and ITC availability to the recipient. Removal of that proviso from the law has further been recommended by GST Council.
- Procedure for verification of ITC differences between GSTR-3B and GSTR-2A for FY 2017-18 and 2018-19, which would reduce the need for litigations and give much-needed clarity to taxpayers and officers.
- Manner of demand re-determination as per section 75(2) of the CGST Act, 2017. Where the tax officer claims there is a misstatement, suppression of returns, or fraud involving tax evasion but has not proved it, taxes shall be recomputed under section 73 and not as per section 74.
- Applicability of e-invoicing for a business entity. For instance, when the turnover during FY 2022-23 exceeds the threshold limit of Rs.10 crore, whether e-invoicing applies from the next financial year, i.e., 1.4.2023 or from the current year.
(J) Grant of GST registration to TDS deductor and TCS collectors. CGST Rule 12(3) shall be amended to introduce a facility to GST-registered TDS deductor and TCS collectors for applying for the cancellation of GST registration.
Streamlining GST Compliance.
- Biometric-based Aadhaar authentication, as well as risk-based physical verification of GST registration applicants, has been proposed in Gujarat on a pilot basis with amendments in CGST Rule 8 and rule 9 for curbing fake and fraudulent registrations.
- Form REG-01 shall capture PAN-linked mobile numbers and e-mail IDs (from the CBDT database) with OTP verification to restrict misuse of the PAN of a person and to curb identity thefts/frauds.
- Amendment that will not allow the filing of all GST returns and statements, such as GSTR-1, GSTR-3B, GSTR-4, GSTR-9, GSTR-9C, etc., after a maximum of three years from the due date.
- Amendment to GSTR-1 for allowing e-commerce operators and sellers to report sales through e-commerce operators, covered under sections 52 and 9(5) of the CGST Act, 2017.
- Insertion of CGST Rule 88C and form DRC-01B for intimation to the taxpayer, by the GST portal, for any tax liability difference between GSTR-1 and GSTR-3B for a tax period over a defined amount and/ or percentage, to either pay or explain the difference.
- A new clause (d) will be inserted in CGST Rule 59(6) to restrict the filing of GSTR-1 for future tax periods if the taxpayer has not deposited the tax laid down in the intimation. Further, that restriction may apply if he has also not replied to such intimation giving reasons for the pending unpaid tax without the intervention of the tax officers.
- Amendment in the definition of “non-taxable online recipient” under section 2(16) of IGST Act, 2017 and definition of “Online Information and Database Access or Retrieval Services (OIDAR)” under section 2(17) of IGST Act, 2017 to reduce issues in interpretation and litigation on taxation of OIDAR Services.
The Honourable Union FM, Smt Nirmala Sitharaman and the Revenue Secretary, clarified that GST on online gaming, horse races, gambling, etc., will be taken up in the subsequent meetings since the matter or GoM report could not be circulated before Saturday.
Next 49th GST Council meeting may be scheduled in February 2022 to take up the GoM’s report on GSTAT as well as the taxation of online gaming.