The 53rd GST Council meeting, held under the chairmanship of Union Minister for Finance and Corporate Affairs Nirmala Sitharaman in New Delhi, brought forth significant decisions aimed at streamlining GST compliance, easing trade, and revising tax rates.
The meeting was attended by key officials, including the Union Minister of State for Finance, Chief Ministers, Deputy Chief Ministers, Finance Ministers of various states and UTs, and senior officers of the Ministry of Finance.
These are the proposed and clarified changes: —
Goods
1. Aircraft Parts and Components: A uniform rate of 5% IGST will apply to imports of parts, components, testing equipment, tools, and tool-kits of aircrafts, regardless of their HS classification. This aims to boost Maintenance, Repair, and Overhaul ( MRO ) activities.
2. Milk Cans: All milk cans made of steel, iron, or aluminum will now attract a 12% GST, irrespective of their use.
3. Paper Products: The GST rate on cartons, boxes, and cases made of both corrugated and non-corrugated paper or paper-board will be reduced from 18% to 12%.
4. Solar Cookers: All types of solar cookers, whether single or dual energy source, will attract 12% GST.
5. Poultry Keeping Machinery: The existing entry covering Poultry keeping Machinery attracting 12% GST will be amended to include “parts of Poultry keeping Machinery” to regularise past practices due to interpretational issues.
6. Sprinklers: All types of sprinklers, including fire water sprinklers, will attract 12% GST, and past practices will be regularised.
7. Defence Imports: The IGST exemption on imports of specified items for defence forces has been extended for five years, until June 30, 2029.
8. Research Equipment: The IGST exemption on imports of research equipment and buoys under the Research Moored Array for African-Asian-Australian Monsoon Analysis and Prediction (RAMA) program will continue, subject to specified conditions.
9. SEZ Imports: Compensation Cess on imports by SEZ units/developers for authorised operations will be exempted retrospectively from July 1, 2017.
10. Miscellaneous Exemptions: Compensation cess on supplies of aerated beverages and energy drinks to authorised customers by Unit Run Canteens under the Ministry of Defence will be exempted. Additionally, an ad-hoc IGST exemption will be provided for the import of technical documentation for AK-203 rifle kits for Indian Defence forces.
Services
1. Indian Railways: Services provided by Indian Railways to the general public, such as the sale of platform tickets, retiring rooms/waiting rooms, cloakroom services, and battery-operated car services, will be exempt from GST. Intra-Railway transactions will also be exempted and regularized for the past period.
2. Special Purpose Vehicles (SPV): Services provided by SPVs to Indian Railways, including the use of infrastructure built and owned by SPVs during the concession period and maintenance services supplied by Indian Railways to SPVs, will be exempt from GST and regularized for the past period.
3. Accommodation Services: Accommodation services with a value of up to Rs. 20,000 per month per person, provided for a minimum continuous period of 90 days, will be exempt from GST. Similar benefits will be extended for past cases.
4. Insurance Services: Co-insurance premiums apportioned by the lead insurer to the co-insurer in co-insurance agreements will be declared as no supply under Schedule III of the CGST Act, 2017. Reinsurance commissions between insurers and reinsurers will also be treated as no supply, regularizing past cases.
5. Reinsurance Services: GST liability on reinsurance services of specified insurance schemes covered by certain notifications will be regularized for past periods. Retrocession, defined as the re-insurance of re-insurance, will be exempt under specific conditions.
6. Statutory Collections by RERA: Collections made by the Real Estate Regulatory Authority (RERA) will be exempt from GST, falling within the scope of a specific notification.
7. Incentive Sharing under RuPay and BHIM-UPI: Further sharing of incentives by acquiring banks with other stakeholders, as defined under the incentive scheme for RuPay Debit Cards and low-value BHIM-UPI transactions, will not be taxable.
Measures for Facilitation of Trade
1. Waiver of Interest and Penalties: Section 128A of the CGST Act will be inserted to provide for the conditional waiver of interest or penalty related to demands raised under Section 73 for FY 2017-18 to FY 2019-20, provided the full tax is paid by March 31, 2025.
2. Monetary Limits for Appeals: To reduce government litigation, monetary limits for filing appeals under GST will be set as follows:
– GST Appellate Tribunal: Rs. 20 lakhs
– High Court: Rs. 1 crore
– Supreme Court: Rs. 2 crores
3. Pre-Deposit Reduction for Appeals: The pre-deposit amount required for filing appeals under GST will be reduced to ease cash flow and working capital for taxpayers. For filing appeals with the appellate authority, the maximum amount will be reduced from Rs. 25 crores (CGST) and Rs. 25 crores (SGST) to Rs. 20 crores each. For the Appellate Tribunal, it will be reduced from 20% with a maximum of Rs. 50 crores (CGST and SGST each) to 10% with a maximum of Rs. 20 crores each.
4. Taxation of Extra Neutral Alcohol ( ENA ): ENA used for manufacturing alcoholic liquors for human consumption will be explicitly excluded from GST.
5. TCS Rate Reduction for ECOs: The Tax Collected at Source ( TCS ) rate for Electronic Commerce Operators ( ECOs ) will be reduced from 1% to 0.5% to ease the financial burden on suppliers.
6. Appeal Time for GST Appellate Tribunal: The three-month period for filing appeals before the Appellate Tribunal will start from a date to be notified by the Government, allowing sufficient time for pending cases.
7. Relaxation in Section 16(4) Conditions: For FY 2017-18 to 2020-21, the time limit to avail input tax credit ( ITC ) through any return filed up to November 30, 2021, will be deemed to be November 30, 2021. Similar retrospective relaxations will apply to returns filed after revocation of cancellation of registration.
8. Extension of GSTR-4 Due Date: The due date for filing returns in FORM GSTR-4 for composition taxpayers will be extended from April 30 to June 30 for FY 2024-25 onwards.
9. Interest on Delayed Returns: Rule 88B of CGST Rules will be amended to ensure that amounts available in the Electronic Cash Ledger on the due date of filing the return are not included while calculating interest for delayed returns.
10. Section 11A for Waiver of Duties: A new Section 11A will be inserted in the CGST Act to regularise non-levy or short levy of GST due to common trade practices.
11. Refund of Additional IGST: A mechanism for claiming refunds of additional IGST paid due to upward revision in the price of goods post-export will be prescribed.
12. Valuation of Import of Services: In cases where full ITC is available, the value declared by the domestic entity for services provided by a foreign affiliate will be deemed as the open market value.
13. ITC on Ducts and Manholes: ITC on ducts and manholes used in the network of optical fibre cables will not be restricted.
14. Place of Supply for Custodial Services: The place of supply for custodial services provided by Indian banks to Foreign Portfolio Investors will be as per Section 13(2) of the IGST Act.
15. Valuation of Corporate Guarantees: Rule 28(2) of CGST Rules will be amended retrospectively to clarify valuation issues regarding corporate guarantees between related parties.
16. Reverse Charge Mechanism (RCM): The relevant financial year for calculating the time limit for ITC under RCM will be the year in which the invoice is issued by the recipient.
Clarifications and Other Recommendations
1. Employee Stock Options: Reimbursement of securities/shares as ESOP/ESPP/RSU provided to employees will be clarified for taxability.
2. Life Insurance Services: Clarification on ITC reversal requirements for life insurance premium not included in the taxable value.
3. Motor Insurance Claims: Clarification on the taxability of wreck and salvage values.
4. Warranty Services: Clarification on warranty and extended warranty services provided by manufacturers to end customers.
5. Repair Expenses: Clarification on ITC availability for repair expenses incurred by insurance companies in motor vehicle insurance claims.
6. Intercompany Loans: Clarification on the taxability of loans between related persons or group companies.
7. HAM Projects: Clarification on the time of supply for annuity payments under HAM Projects.
8. Spectrum Allotment: Clarification on the time of supply for spectrum allotment in cases of instalment payments.
9. Place of Supply for Unregistered Persons: Clarification on the place of supply for goods delivered to an address different from the billing address.
10. Post-Sale Discounts: Mechanism for providing evidence of compliance with Section 15(3)(b)(ii) conditions for post-sale discounts.
11. Special Procedure for Specified Commodities: Clarifications on procedures for manufacturers of specified commodities like pan masala and tobacco.
The 53rd GST Council meeting made comprehensive recommendations aimed at simplifying GST compliance, reducing litigation, and easing the tax burden on businesses.
These measures, once implemented, are expected to provide significant relief to taxpayers and promote a more efficient GST regime. The decisions cover a broad spectrum, from tax rate changes and exemptions to procedural relaxations and clarifications, reflecting the Council’s commitment to fostering a business-friendly environment.
The detailed recommendations will be given effect through relevant circulars, notifications, and amendments.
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