The 45th GST Council Meeting, convened on September 17, 2021, in Lucknow under the leadership of Union Finance Minister Nirmala Sitharaman, marked a pivotal moment in the trajectory of India’s Goods and Services Tax (GST) regime. This gathering of key stakeholders aimed at addressing multifaceted challenges and refining the GST framework, encompassing rate adjustments, COVID-19 relief measures, and procedural enhancements.
The decisions undertaken during this meeting not only reflect a commitment to streamline taxation but also underscore the Council’s dedication to supporting businesses and taxpayers in navigating complex economic landscapes. This article provides a comprehensive overview of the significant discussions, outcomes, and updates emanating from the 45th GST Council Meeting, shedding light on its implications for businesses and the broader economy.
Key Agendas Discussed in the Meeting
The key agendas discussed in the 45th GST Council Meeting were:
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Confirmation of Minutes
- Confirmation of minutes of the 43rd GST Council Meeting held on 28th May 2021
- Confirmation of minutes of the 44th OST Council Meeting held on 12th June 2021
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Ratification of Notifications, Circulars, and Orders
Ratification of notifications, circulars, and orders issued by the GST Council and decisions of the GST Implementation Committee.
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Issues Recommended by the Law Committee
- Aadhaar authentication of existing taxpayers under OST.
- Clarifications related to the export of services under Section 2(6) of the IGST Act 2017.
- Various clarifications related to GST issues.
- Notifying www.gst.gov.in as the Common Goods and Services Tax Electronic Portal.
- Mechanism to collect late fees for delayed filing of FORM GSTR-1.
- Review of the requirement of filing FORM GST ITC-04.
- Amendments in CGST Rules for refund processes.
- Applicability of interest on ineligible Input Tax Credit (ITC) wrongly availed and utilized.
- Proposal for clarification in respect of the refund of tax wrongfully paid.
- Transfer of CGST/IGST cash ledger balance between ‘distinct persons’ with the same PAN but registered in different states.
- Additional measures to tackle fake invoices, including amendments to CGST Rules.
- Agenda note for amendment in Section 54 of the CGST Act, 2017.
- Clarification on doubts related to the scope of “intermediary.”
- Agenda note for notifying supplies and classes of registered persons eligible for refund under the IGST route.
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Performance Report of NAA
Information on the National Anti-profiteering Authority for the 1st quarter (April to June 2021).
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Ad-hoc Exemptions Orders
Ad-hoc exemptions orders issued under Section 25(2) of the Customs Act, 1962.
- Report of GoM on Covid Cess
Report of the Group of Ministers (GoM) on the levy of Covid Cess on Pharma and Power in Sikkim.
- Closure of GoM on GST Concessions/Exemptions
Closure of the Group of Ministers (GoM) on concessions/exemptions from GST to COVID relief material.
- Agenda Note on Capacity-Based Taxation
Agenda note based on the Interim Report of the Group of Ministers (GoM) on capacity-based taxation and special composition schemes for certain sectors.
- Transposition of GST Rate Notifications
Transposition of GST rate notifications consequent to changes in tariff item codes in the First Schedule to the Customs Tariff Act, 1975.
- GST Rate on Job Works Services
Discussion on the GST rate on job works services concerning the manufacture of alcoholic liquor for human consumption.
- Agenda Note based on Kerala High Court Order
Agenda note based on the order of the Hon’ble Kerala High Court in W.P. (Civil) No. 12481 of 2021 regarding the representation by Kerala Pradesh Gandhi Darshanavedhi, Thiruvananthapuram, regarding the inclusion of petrol and diesel under GST.
- Concessions for Covid-19 Treatment
Concessions to specified drugs used in COVID-19 treatment till 31st December 2021.
- Issues Recommended by the Fitment Committee
Issues recommended by the Fitment Committee for the consideration of the GST Council.
- Recommendations of the IT Grievance Redressal Committee
Recommendations of the 15th IT Grievance Redressal Committee for approval/decision of the GST Council.
Others
- Agenda Note for GST Council on National Anti-Profiteering Authority.
- Review of Revenue Position under Goods and Services Tax.
- Compensation Scenario Post June-2022 and Options.
- Nominations from State Governments on the Board of GSTN
Highlights of the 46th GST Council Meeting
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GST Rate Changes
- COVID-19 Relief Measures:
- Extension of concessional GST rates on specified COVID-19 treatment drugs until 31st December 2021.
- Reduction of GST rates to 5% on additional COVID-19 treatment drugs until 31st December 2021.
- Changes in GST Rates for Goods (w.e.f 1st October 2021):
- Reduced the GST rate on fortified rice kernels for schemes like ICDS from 18% to 5%.
- Reduced the GST rate on medicine Keytruda for the treatment of cancer from 12% to 5%.
- Reduced the GST rate on biodiesel supplied to OMCs for blending with diesel from 12% to 5%.
- Increased the GST rate on ores and concentrates of metals such as iron, copper, aluminum, zinc, and others from 5% to 18%.
- Increased the GST rate on specified renewable energy devices and parts from 5% to 12%.
- Increased the GST rate on cartons, boxes, bags, and packing containers of paper from 12%/18% to 18%.
- Increased the GST rate on waste and scrap of polyurethanes and other plastics from 5% to 18%.
- Increased the GST rate on all kinds of pens from 12%/18% to 18%.
- Correction in Inverted Duty Structure (w.e.f 1st January 2022):
- Correction in inverted duty structure in the footwear and textiles sector.
- Decision not to include specified petroleum products under GST.
- **Major GST Changes for Services (w.e.f 1st October 2021):**
- Extension of GST exemption on transport of goods by vessel and air until 30th September 2022.
- Changes in GST rates for services related to National Permit, skill training, AFC Women’s Asia Cup 2022, and more.
- E-commerce operators are made liable for tax on passenger transport and certain restaurant services.
2. Compensation Scenario
- Presentation on the exhaustion of Compensation Cess collections from June 2022 to April 2026 for debt servicing.
- Establishment of a Group of Ministers (GoM) to examine correction of inverted duty structure, rationalize rates, and review exemptions for revenue augmentation.
- Another GoM to explore technology-driven compliance improvement.
3. GST Law and Procedure
- Measures for Trade Facilitation:
- Relaxation in filing FORM GST ITC-04 based on annual turnover.
- Retrospective amendment of section 50 (3) of the CGST Act to clarify interest on “ineligible ITC availed and utilized.”
- Transfer of unutilized balance in CGST and IGST cash ledger between distinct persons.
- Issuance of clarifying circulars on various GST-related issues.
- Streamlining Compliances:
- Aadhaar authentication made mandatory for eligibility in filing refund claims and revocation of registration cancellation.
- Auto-population and collection of late fees for delayed filing of FORM GSTR-1.
- Refund disbursal to be linked to the bank account associated with the same PAN used for GST registration.
- Amendments to rules for late filing of FORM GSTR-1, ITC availment, and communication of invoice details.
4. Amendments in Provisions:
- Amendments recommended in certain provisions of the GST Act and Rules.
- These decisions aim to provide relief, streamline processes, and address challenges in the GST framework, reflecting the ongoing efforts to enhance efficiency and compliance in the GST regime.
Major Decisions Taken in the 45th GST Council Meeting
The 45th GST Council Meeting brought about several significant decisions aimed at streamlining the Goods and Services Tax (GST) regime and providing relief to taxpayers. These decisions encompassed various aspects of GST, including rate rationalization, COVID-19 relief measures, and procedural simplifications.
Rate Rationalization:
The Council made several changes to the GST rate structure, including:
1. Reduction in GST Rates:
- Fortified rice kernels for ICDS schemes: Reduced from 18% to 5%
- Medicine Keytruda for cancer treatment: Reduced from 12% to 5%
- Biodiesel supplied to OMCs for blending with diesel: Reduced from 12% to 5%
2. Increase in GST Rates:
- Ores and concentrates of metals like iron, copper, aluminum, and zinc: Increased from 5% to 18%
- Renewable energy devices and parts: Increased from 5% to 12%
- Cartons, boxes, bags, and packing containers of paper: Increased from 12%/18% to 18%
- Waste and scrap of polyurethanes and other plastics: Increased from 5% to 18%
- All kinds of pens: Increased from 12%/18% to 18%
COVID-19 Relief Measures:
To provide relief during the ongoing COVID-19 pandemic, the Council extended concessional GST rates on certain COVID-19 treatment drugs until December 31, 2021. Additionally, it reduced the GST rate to 5% on several other COVID-19 treatment drugs until December 31, 2021.
Also Read: The Impact Of GST On The Post-COVID Indian Economy
Other Decisions:
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Draft CGST (Amendment) Bill, 2021
The Council approved the draft Central Goods and Services Tax (CGST) (Amendment) Bill, 2021, which proposes to levy GST on the intra-state supply of goods by an unregistered person.
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Extension of GST Return Filing Deadline
The Council extended the deadline for filing GST returns for April, May, and June 2021, from July 31, 2021, to August 31, 2021.
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Brick Kilns under Composition Scheme
Brick kilns with a threshold limit of Rs. 20 lakhs were brought under the special composition scheme, effective from April 1, 2022. Bricks attracted GST at the rate of 6% without input tax credit under this scheme.
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Mentha Oil Supply and Exports
The supply of mentha oil from unregistered persons was brought under reverse charge. Additionally, exports of mentha oil were only allowed against LUT (Letter of Undertaking) and consequential refund of input tax credit.
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Goods and Services Tax Compensation Cess
The Council decided to extend the compensation cess collection beyond July 2022 to repay the total amounts borrowed last year and this year to pay the states. The compensation cess was extended to March 2026.
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Formation of GoMs
A Group of Ministers (GoM) was formed to look into e-way bills, compliances, FASTags, use of technology, compensation cess, plugging of loopholes, and other issues. Another GoM was formed to look into the rate rationalization of certain goods and services.
Outcomes and Updates
Outcomes
- Extension of existing concessional GST rates on COVID-19 treatment drugs until December 31, 2021.
- Reduction of GST rate to 5% on several other COVID-19 treatment drugs until December 31, 2021.
- Reduction in GST rates on fortified rice kernels for ICDS schemes from 18% to 5%.
- Reduction in GST rates on medicine Keytruda for cancer treatment from 12% to 5%.
- Reduction in GST rates on biodiesel supplied to OMCs for blending with diesel from 12% to 5%.
- Increase in GST rates on ores and concentrates of metals such as iron, copper, aluminum, zinc, and others from 5% to 18%.
- Increase in GST rates on specified renewable energy devices and parts from 5% to 12%.
- Increase in GST rates on cartons, boxes, bags, and packing containers of paper from 12%/18% to 18%.
- Increase in GST rates on waste and scrap of polyurethanes and other plastics from 5% to 18%.
- Increase in GST rates on all kinds of pens from 12%/18% to 18%.
- Approval of the draft Central Goods and Services Tax (CGST) (Amendment) Bill, 2021.
- Extension of the deadline for filing GST returns for April, May, and June 2021, from July 31, 2021, to August 31, 2021.
Updates
- Brick kilns with a threshold limit of Rs. 20 lakhs were brought under the special composition scheme, effective from April 1, 2022.
- The supply of mentha oil from unregistered persons was brought under reverse charge.
- Exports of mentha oil were only allowed against LUT (Letter of Undertaking) and consequential refund of input tax credit.
- The Council decided to extend the compensation cess collection beyond July 2022 to repay the total amounts borrowed last year and this year to pay the states.
- The compensation cess was extended to March 2026.
- A Group of Ministers (GoM) was formed to look into e-way bills, compliances, FASTags, use of technology, compensation cess, plugging of loopholes, and other issues.
- Another GoM was formed to look into the rate rationalization of certain goods and services.
Also Read:
44th GST Council Meeting Highlights, Updates, Outcome, And More
GST Return Filing-Types Of Returns And Process Of Filing
More Information
For more information on the 45th GST Council Meeting, please visit the official website of the Central Board of Indirect Taxes and Customs (CBIC) at https://cbic-gst.gov.in/ or https://gstcouncil.gov.in/gst-council-meetings
