44th GST Council Meeting Highlights, Updates, Outcome, and More

The 44th GST Council Meeting took place on the 12th of June 2021 in New Delhi, India. Led under the adept guidance of Finance Minister Smt. Nirmala Sitharaman, the council members discussed significant improvements in the Goods and Services Tax (GST). The Union Minister of State for Finance and Corporate Affairs Shri Anurag Thakur, the finance ministers of the states and Union Territories (UTs), and other senior officers of both the Ministry of Finance and the states and UTs were present in the meeting. The meeting covered a range of topics, specifically focusing on rationalizing rates and tax exemptions. Additionally, the discussion included measures to promote compliance. Moreover, the Council approved several ideas presented during the session. These proposals, in turn, aimed to simplify the GST system for small businesses and enhance user-friendliness. Notably, the Council reintroduced a GST amnesty scheme with reduced late fees, ensuring relief for taxpayers. Additionally, the Finance Minister formed a Group of Ministers (GoM) to discuss further tax cuts. Furthermore, the Council removed IGST on the import of COVID-19 treatment equipment and relief materials until August 31, 2021, providing crucial support to healthcare providers. Additionally, the Council showcased its foresight by rationalizing late fees for delayed filing of annual returns from the fiscal year 2022-23 onwards. In this article, we will dissect and analyze the nuanced decisions that emerged from this significant council meeting, shaping the trajectory of GST policies in the nation.

Highlights of the 44th GST Meeting

Key Highlights	Description
GST Amnesty Scheme	Reduced late fees for all taxpayers, especially small taxpayers.
IGST Exemption on COVID Supplies	Exemption of IGST on import of COVID-treating equipment and relief materials up to 31st August 2021.
GoM for COVID Essentials and Black Fungus Treatment	Formation of a Group of Ministers (GoM) to discuss the need for further reductions and decide on any new exemptions for COVID essentials and treatment of Black Fungus.
Late Fee Rationalisation	Rationalization of late fee for delayed filing of annual returns from FY 2022-23 onwards.
Special Composition Scheme	Approval of a special composition scheme for certain sectors, including pan masala and Gutkha.
GST Rate Cut on Rab/Liquid Jaggery	Reduction of GST rate on Rab/Liquid jaggery from 18% to nil (unlabelled) or 5% (labeled/packaged).
GST Reduction on Pencil Sharpeners	Reduction of GST on pencil sharpeners from 18% to 12%.
GST Exemption on Tracking Devices	Exemption of GST on tracking devices fixed on durable containers, subject to conditions.
RCM for Services by Courts and Tribunals	Services by courts and tribunals are to be taxed under RCM (Reverse Charge Mechanism).
RCM for Renting Premises by Court/Tribunal Registries	Renting of premises by registries of courts/tribunals for commercial use to local bodies will attract RCM.

Expected Outcome of the Changes

• These developments will significantly impact the country’s economy.
• Furthermore, the implementation of the amnesty scheme will encourage taxpayers to step forward and regularize their commitment to GST regulations.
• In addition, waiving IGST on the import of COVID-19 supplies will provide much-needed relief to healthcare providers.
• Meanwhile, establishing the Group of Ministers (GoM) will drive further streamlining of GST rates and exemptions.
• Moreover, rationalizing late fees will ease the burden on taxpayers facing challenges in meeting filing deadlines. At the same time, introducing the specialized composition scheme will support taxpayers in specific sectors.
• Similarly, reducing GST rates for Rab/Liquid jaggery will help both farmers and consumers by lowering costs. Likewise, decreasing GST on pencil sharpeners will benefit students and educational institutions.
• Finally, exempting GST on tracking devices will assist businesses in efficiently utilizing these tools for asset tracking.
• The Reverse Charge Mechanism (RCM) for services by courts and tribunals was set to simplify GST compliance procedures for these entities.
• Furthermore, the RCM for renting premises by court/tribunal registries will impart clarity regarding GST liabilities associated with such transactions.

Tax Relief Measures

The 44th GST Council Meeting approved two major tax relief measures:

1. GST Amnesty Scheme

The Council approved the reintroduction of a GST amnesty scheme, offering a reduced late fee for all taxpayers. Moreover, it prioritizes support for small taxpayers. This initiative provides taxpayers with the opportunity to rectify their GST compliance without facing severe penalties.

• Eligibility for the amnesty scheme

The amnesty scheme is open to all taxpayers who have any pending GST returns or GST dues. This includes taxpayers who have not filed their GST returns on time, taxpayers who have filed their returns but have not paid the full amount of GST due, and taxpayers who have not paid any GST at all.

• Procedure for availing of the amnesty scheme

To benefit, taxpayers must promptly file overdue GST returns, and settle dues with the reduced late fee during the limited availability of the amnesty scheme.

• Benefits of the amnesty scheme

The GST amnesty scheme offers several benefits to taxpayers, including

• Reduced late fees
• Avoidance of harsh penalties
• Peace of mind knowing that their GST compliance is up to date

The scheme will also benefit the government by increasing GST revenue collection and reducing the administrative burden of pursuing non-compliant taxpayers.

2. IGST Exemption on COVID Supplies

The Council approved an IGST exemption for importing COVID-19 treatment equipment and relief materials until August 31, 2021. Furthermore, this measure aimed to provide crucial relief to healthcare providers and ensured the accessibility of vital medical supplies throughout the pandemic. The implementation of IGST exemption and a reduced GST rate aimed to achieve the following objectives:

• Cost Minimization for COVID-19 Relief Efforts

By either exempting or reducing taxes on COVID-related supplies, the government sought to enhance affordability for healthcare providers and relief organizations, thus minimizing the overall cost of COVID-19 relief endeavors.

• Stimulate Donations and Imports

The exemptions were designed to serve as incentives for individuals and organizations to contribute COVID-related supplies through donations. Additionally, they aimed to encourage increased imports of these items to meet the escalating demand.

• Relief for the Healthcare Sector

The government reduced GST rates on COVID-19 medicines and medical equipment to alleviate pressure on the healthcare sector, particularly during the challenging period of the pandemic. The objective of these tax relief measures is to bolster both individuals and businesses amid an economically challenging period. Additionally, they aim to stimulate compliance, foreseeing a subsequent boost in long-term GST revenue collection.

Simplification and Rationalization

In the 44th GST Council Meeting, the Council endorsed two measures to streamline and simplify the GST framework.

1. Rationalization of Late Fees

The Councilrevised late fees for overdue annual return filings, effective from FY 2022-23 onward. Moreover, this adjustment aims to ease the burden on taxpayers, providing greater flexibility in meeting their GST compliance requirements.

2. Special Composition Scheme

The Council approved a specialized composition scheme tailored for specific sectors, such as pan masala and Gutkha. This scheme aims to simplify tax compliance for these sectors and alleviate their administrative burdens.

These initiatives are expected to enhance the user-friendliness and efficiency of the GST regime. They will also help reduce disputes and improve overall GST compliance.

GST Rate Reduction 

The 44th GST Council Meeting approved two significant GST rate reductions:

1. Jaggery Rate Adjustment

The Council removed the GST rate on Rab/Liquid jaggery (unlabelled) and reduced it to 5% for labeled and packaged variants, bringing it down from 18%. Furthermore, this revision aims to ease the financial strain on farmers and consumers, acknowledging jaggery’s significance as a traditional sweetener in India.

2. Pencil Sharpener GST Reduction

The Council lowered the GST rate on pencil sharpeners from 18% to 12%. This move directly benefits students, educational institutions, and manufacturers in the stationery industry. Moreover, the GST rate reductions highlight the government’s commitment to making essential goods and services more affordable for the general public. By boosting demand, these adjustments aim to stimulate economic activity in the affected sectors.

3. Impact of the GST Rate Reductions

The GST rate adjustments represent a positive stride toward enhancing affordability for essential goods and services while fostering economic activity in pertinent sectors. The anticipated positive outcomes of the GST rate adjustments include:

• Farmers

The lowered GST rate on Rab/Liquid jaggery aimed to enhance profitability in jaggery production, consequently increasing farmers’ income.

• Consumers

The Council reduced GST rates on Rab/Liquid jaggery and pencil sharpeners to drive down product prices, making them more affordable for consumers.

• Educational Institutions

The diminished GST rate on pencil sharpeners was likely to reduce stationery supply costs for educational institutions.

• Stationery Manufacturers

The decreased GST rate on pencil sharpeners was anticipated to stimulate demand, benefiting manufacturers in the stationery sector. Also Read: GST Rate For Stationary Products Pen And Paper

Reverse Charge Mechanism (RCM) for Services and Premises Rental

In the 44th GST Council Meeting, pivotal decisions were made regarding the Reverse Charge Mechanism (RCM) in GST:

1. RCM for Services by Courts and Tribunals

The Council mandated that services offered by courts and tribunals would be subject to RCM. Consequently, the responsibility for GST payment on these services shifts to the service recipient, such as the government or court administration, rather than the service provider.

2. RCM for Renting Premises by Court/Tribunal Registries

The Council ruled that the renting of premises by registries of courts/tribunals for commercial use to local bodies will now fall under RCM. This signifies that the local body, as the lessee of the premises, assumes the responsibility for GST payment on the rent, relieving the court/tribunal registry of this obligation. These measures are anticipated to streamline GST compliance for courts, tribunals, and local bodies, fostering improved tax collection and reducing tax evasion within these sectors.

Impact of RCM Measures

The envisaged impacts of the RCM measures include:

• Courts and Tribunals: Simplification of the tax compliance process and a reduction in administrative burdens.

• Local Bodies: Clarity on GST liability for premises rental transactions and enhanced tax collection.

• Tax Administration: Improved tax administration through reduced evasion and simplified compliance in specific sectors.

Also Read: Understanding Reverse Charge Mechanism (RCM) Under GST

Impact of Various Decisions Made at 44th GST Council Meeting 

The outcomes of the 44th GST Council Meeting are anticipated to positively influence the Indian economy by promoting taxpayer compliance, simplifying the GST framework, lowering the costs of essential goods and services, and enhancing tax collection efficiency. These measures are expected to bolster economic growth and benefit various sectors. Here’s a summary of the effects of the 44th GST Council Meeting:

• Promoting compliance and regularizing GST status for taxpayers.
• Cutting costs for importing crucial medical supplies during the COVID-19 pandemic.
• Easing administrative burdens on taxpayers and offering more flexibility for GST compliance.
• Streamlining tax compliance for specific sectors, reducing their administrative load.
• Making jaggery more affordable for farmers and consumers, especially in rural areas.
• Lowering the expense of stationery supplies for students and educational institutions, benefiting both consumers and manufacturers.
• Simplifying GST compliance for courts and tribunals, reducing their administrative workload.
• Clarifying GST liability for renting premises by court/tribunal registries and enhancing tax collection efficiency.

Additional Thoughts

Here are additional reflections concerning the 44th GST Council meeting:

1. Timeliness of Decision-Making

Convened in June 2021 amid the peak of the second wave of the COVID-19 pandemic in India, the 44th GST Council meeting demonstrated timely decision-making. The choice to grant tax exemptions and reductions on COVID-related supplies addressed the urgent demand for these items.

2. Positive Influence on Healthcare Accessibility

The positive impact of the IGST exemption and reduced GST rate extended to healthcare accessibility. This measure rendered COVID-related supplies more affordable, particularly benefiting low-income individuals and communities who might have encountered challenges in accessing these crucial items.

3. Government Responsiveness on Display

The decision to implement tax exemptions and reductions showcased the government’s responsiveness to the healthcare sector’s needs and the public during the pandemic. This proactive approach contributed to building trust and confidence in the government’s crisis management capabilities.

4. Potential for Ongoing Reforms

While the 44th GST Council meeting took significant strides in addressing taxation issues related to COVID-19, there remains potential for ongoing reforms. Consideration could be given to extending tax exemptions or reducing the GST rate on a broader spectrum of COVID-related items.

5. Lessons for Future Crises

The experience of the 44th GST Council meeting imparts valuable lessons for future crises. Governments should be prepared to act swiftly and decisively implementing tax measures that can effectively support the healthcare sector and provide relief to those affected. Also Read: 43rd GST Council Meeting Highlights, Updates, Outcome, And More

Further Information Guide

• Official website of the GST Council

[https://gstcouncil.gov.in/44th-gst-council-meeting](https://gstcouncil.gov.in/44th-gst-council-meeting)

• Press release from the Ministry of Finance

[https://gstcouncil.gov.in/44th-gst-council-meeting](https://gstcouncil.gov.in/44th-gst-council-meeting)