Detailed Overview of the Recommendations from the 53rd GST Council Meeting

Introduction

The 53rd GST Council meeting, chaired by Union Minister for Finance & Corporate Affairs Smt. Nirmala Sitharaman, made several significant recommendations aimed at easing compliance, reducing litigation, and modifying tax rates. Attendees included key government officials and finance ministers from various states and union territories. This document outlines the important recommendations and changes proposed during the meeting.

Recommendations

1. Changes in GST Tax Rates

A. Goods

1. Aircraft Parts and Equipment: A uniform rate of 5% IGST will apply to imports of parts, components, testing equipment, tools, and tool-kits of aircraft, subject to specified conditions.
2. Milk Cans: All milk cans (steel, iron, and aluminium) will attract a 12% GST rate.
3. Paper Products: GST rate on carton, boxes, and cases of both corrugated and non-corrugated paper or paperboard is reduced from 18% to 12%.
4. Solar Cookers: All types of solar cookers, whether single or dual energy source, will attract a 12% GST rate.
5. Poultry Keeping Machinery: To include parts of poultry keeping machinery under the existing entry, regularizing past practices.
6. Sprinklers: All types of sprinklers, including fire water sprinklers, will attract 12% GST, regularizing past practices.
7. Defence Imports: Extension of IGST exemption on imports of specified items for defence forces for five years until June 30, 2029.
8. Research Equipment: Extension of IGST exemption on imports under the RAMA programme, subject to conditions.
9. SEZ Imports: Exemption from Compensation Cess on imports in SEZ by SEZ units/developers from July 1, 2017.
10. Aerated Beverages and Energy Drinks: Exemption from Compensation Cess on supply to authorized customers by Unit Run Canteens under the Ministry of Defence.
11. AK-203 Rifle Kits: Adhoc IGST exemption on imports of technical documentation for these kits for Indian Defence forces.

B. Services

1. Indian Railways Services: Exemption for services provided by Indian Railways to the general public, such as platform tickets, retiring rooms, waiting rooms, cloakroom services, and battery-operated car services, along with intra-Railway transactions.
2. SPV Services: Exemption for services provided by Special Purpose Vehicles (SPVs) to Indian Railways.
3. Accommodation Services: Exemption for accommodation services valued up to Rs. 20,000 per month per person, subject to a minimum continuous period of 90 days.
4. Co-Insurance: Declaration of co-insurance premiums apportioned by the lead insurer as no supply.
5. Re-Insurance: Declaration of transactions of ceding commission/re-insurance commission between insurer and re-insurer as no supply.
6. Specified Insurance Schemes: Regularization of GST liability on reinsurance services of certain specified insurance schemes.
7. Retrocession: Clarification that retrocession is 're-insurance of re-insurance' and thus eligible for exemption.
8. RERA Collections: Clarification that statutory collections by RERA are exempt from GST.
9. Incentive Sharing: Clarification that incentive sharing defined under the NPCI scheme is not taxable.

2. Facilitation of Trade

1. Waiver of Interest and Penalties: Insertion of Section 128A in CGST Act to waive interest and penalties for demand notices issued under Section 73, for FY 2017-18 to 2019-20, if the full tax is paid by March 31, 2025.
2. Monetary Limits for Appeals: Prescribing monetary limits for departmental appeals to reduce litigation:
   1. GST Appellate Tribunal: Rs. 20 lakhs
   2. High Court: Rs. 1 crore
   3. Supreme Court: Rs. 2 crores
3. Pre-Deposit for Appeals: Reduction in pre-deposit amounts required for filing appeals to ease cash flow:
   1. Appeal with appellate authority: Maximum Rs. 20 crores each for CGST and SGST.
   2. Appeal with Appellate Tribunal: 10% pre-deposit with a maximum of Rs. 20 crores each for CGST and SGST.
4. ENA Taxation: Exclusion of rectified spirit/Extra Neutral Alcohol (ENA) from GST when supplied for manufacturing alcoholic liquors for human consumption.
5. TCS Rate Reduction: Reduction of TCS rate by Electronic Commerce Operators from 1% to 0.5%.
6. Filing Appeals in GST Appellate Tribunal: Amendments to start the three-month period for filing appeals from a date notified by the Government.
7. Input Tax Credit (ITC) Relaxation:
   1. Time limit to avail ITC for FY 2017-18 to 2020-21 deemed to be November 30, 2021.
   2. Conditional relaxation for ITC in cases where returns are filed within 30 days of revocation order.
8. GSTR-4 Due Date: Extension of due date for filing GSTR-4 for composition taxpayers from April 30 to June 30, starting from FY 2024-25.
9. Interest Calculation: Amendment in Rule 88B of CGST Rules to exclude amounts available in Electronic Cash Ledger on the due date from interest calculation.
10. Non-Levy of Duties: Insertion of Section 11A in CGST Act to allow non-recovery of duties short-levied due to common trade practices.
11. Refund of Additional IGST: Mechanism for claiming refund of additional IGST paid due to upward price revision after export.
12. Import Services Valuation: Clarification on valuation of supply of import services by related persons with full ITC eligibility.
13. ITC on OFC Networks: Clarification that ITC is not restricted for ducts and manholes used in Optical Fiber Cable networks.
14. Custodial Services: Clarification on the place of supply for custodial services provided by banks to foreign portfolio investors.
15. Corporate Guarantees: Retrospective amendment and clarification on the valuation of corporate guarantees between related parties.

3. Miscellaneous Recommendations

• Biometric-based Aadhaar Authentication: Rollout of biometric-based Aadhaar authentication for registration applicants on a pan-India basis in a phased manner.

Tables for Quick Reference

GST Rate Changes on Goods

Monetary Limits for Appeals

Pre-Deposit Amounts for Appeals

Conclusion

The 53rd GST Council meeting introduced several critical changes aimed at simplifying compliance, reducing the tax burden, and resolving ongoing issues faced by taxpayers. These recommendations, once implemented, are expected to enhance the efficiency of the GST system and provide substantial relief to businesses and individuals alike.

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Article Compiled by:-

~Mayank Garg

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(LegalMantra.net Team)

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