The 49th GST Council meeting led by the Honorable Finance Minister of India Nirmala Sitharaman was successfully conducted on 18th February 2023. The finance minister updated about this meeting soon after the completion of the 48th GST council meeting held on 17th December 2023.
Finance ministers from all the states and union territories along with a few top officials from the finance department attended the session. The session was held in New Delhi at Vigyan Bhawan.
This meeting is a joint forum of the Centre and State to discuss issues related to Goods and Service Tax. The members of the GST Council include the Union Finance Minister as the chairperson, the minister of state(finance), and the nominated minister-in-charge of finance or taxation from all states.
Multiple issues were presented on the table to discuss and find solutions in the 49th GST Council meeting. Major issues were concerned with the need for GST appellate tribunals to resolve the existing disputes in different regions. Also, the council made decisions related to making changes in the rates of some items.
What is the Need for the GST Council?
In order to provide advice to the Center and state governments regarding issues pertaining to the Goods and Services Tax regime, the GST Council was established. This includes suggestions regarding the kinds of goods and services that could be liable to GST, the rates of GST that apply to different kinds of goods and services, and the exemptions provided by the regime. Here’s a closer look at the functions of the GST Council.
- Providing advice and recommendations regarding the general GST model and the principles of GST levies.
- Recommending products and services that will be exempt from GST. Also, the products and services subject to GST shall be recommended.
- Resolving conflicts between the Center and one or more state governments, or between two or more state governments, regarding GST issues.
- Making recommendations regarding any other issue related to GST.
GST council meetings are conducted by the GST council every few months to make new changes in the GST law. These meetings are very crucial for the smooth functioning of businesses in India. The GST council meetings make final decisions related to changes in GST rates, filing overdue taxes, major tax laws, and other tax rules prevailing in all the states of the country and announce them to the public with the help of the media.
Recommendations of the 49th GST Council Meeting
Here are the major recommendations of the 49th GST Council meeting:
- The Indian government will pay the outstanding balance of Rs. 16,982 crore in GST compensation by June 2022.
- The Group of Ministers (GoM) report on the GST Appellate Tribunal is adopted by the GST Council with some changes.
- GoM report on approved GST’s capacity-based taxation and special composition scheme for specific industries.
- Modifications to the “Rab” and pencil sharpener GST rates.
Highlights of the 49th GST Council Meeting
The 49th GST Council meeting held on the 18th of February 2023 in New Delhi was majorly focused on resolving the rising number of disputes due to the older tax regimes. However, the council made announcements regarding compensation dues, new tax rates for some commodities, and many more.
GST Appellate Tribunal
Earlier GoM suggested setting up the GST Appellate Tribunal in different parts of the country. The council accepted the proposal in the 49th session with some amendments. The national tribunal mechanism will have state benches for resolving disputes.
Pending Compensation Dues
The GST council has decided to clear all the pending compensation claims of states of ₹16,982 crores.
Rationalization of GST Rate
Change in the tax rate of item Rab(Liquid jaggery) from 18% to nil(for selling loose) and 5%(for pre-package and labeling) and 18% to 12% on pencil sharpener is proposed in this meeting. Reduction in the rate of Data logger from 18% to nil has also been changed in the 49th GST council meeting.
It was announced that the above-mentioned changes will come into effect from 1st March 2023
Special Composition Scheme
A new special composition scheme was launched for a particular business industry that deals in Pan Masala, Gutkha, Tobacco, etc. It has been decided to change the ad valorem basis to a specific system for compensation cess charged on Pan Masala, Gutkha, and Tobacco.
Late Fee Rationalization
The rationalization of the late fees for not filing GSTR 9 on time for small taxpayers will be done u/s 47. The following changes are proposed for the FY 2022-2023:
- ₹50(₹25 SGST+ ₹25 CGST) per day will be charged to the taxpayers with Aggregate Annual Turnover(AAT) up to ₹5 Crores.
- ₹100( ₹50 SGST + ₹50 CGST) per day will be charged to taxpayers with AAT between ₹5 Crores to ₹20 Crores.
|Late fee for filing (turnover up to INR 5 crores)
|INR 200/day (INR 100 CGST + INR 100 SGST)
|INR 50/day (INR 25 CGST + INR 25 SGST)
|Late fee for filing (turnover more than 5 crores up to INR 20 crores)
|INR 200/day (INR 100 CGST + INR 100 SGST)
|INR 100/day (INR 50 CGST + INR 50 SGST)
Increased Time Limit for Application for Revocation
The normal time limit of 30 days for the application to revoke the cancellation of registration has been proposed to be increased to 90 days by making amendments to Rule 23 of Section 30.
|Basic Time Limit
|Time limit after extension by Joint/additional commissioner
|Extra 30 days
|Time limit as extended by the commissioner or an authorized officer by the commissioner
|Extra 30 days after days
|60 extra days after the basic 90 days
Amnesty Scheme For Due Returns
To provide conditional waiver or reduction for due GST returns, the amnesty scheme was announced after the council meeting. The proposed scheme was as follows:
GSTR 4 – Return filed by composition taxpayers
GSTR 9 – Annual return filed under GST
GSTR 10 – Final return filed by the taxpayers after surrendering GST returns.
|Cancellation of registration due to non-filing of return although an application could not be filed within the given timeline
|To permit a single application for revocation until a particular date
|Significant relief for GST registration that has been canceled only because of non-filed returns. There is no reason to extend the benefit for all circumstances.
|Failure to file GST returns within 30 days as required by Section 62(2)
|Conditional deemed withdrawal of best judgment assessment order us 62 in previous cases if the paid GST and returns and filed returns along with fees for late filing until a particular date
|Returns pending in FORM GSTR-10, GSTR-9, and GSTR-4
|Conditional waiver or concession in late fee
Updates on the Implementation of the 49th GST Council Meeting
Setting Up of GST Appellate Tribunals
The process of setting up GST Appellate Tribunals has started. The main motive behind setting up the GST tribunals is to lessen the pressure from high courts by taking the GST regime-related disputes into their own hands.
Payment of Compensation Dues
The pending compensation amount of ₹16,982 crores for June 2022 has been cleared by the council. Also, the council decided to provide compensation of 16,524 crores to the following States/UTs; Karnataka, Odisha, Delhi, Tamil Nadu, Telangana, and Puducherry.
Reduction in Tax Rate of Pencil Sharpeners
A reduction of 18% to 12% was made on GST rates of pencil sharpeners (Notification number: 03/2023).
Reduction in Tax Rate of “Rab”
The GST rate on Rab(Liquid Jaggery) was reduced from 18% to nil(if sold loose). The rate on Rab was reduced from 18% to 5%(if sold packaged or pre-labeled, notification number. 04/2023).
Scheme for Specific Items
The proposed special composition scheme for Pan Masala, Gutkha, Tobacco, etc has been introduced by the GST Council to enhance the first stage collection process. Also, the council made a decision to allow the exports of such items only if they present letters of undertaking with GST compliance.
Lowered Penal Charges
The amnesty scheme was announced for taxpayers who are unable to file three returns and want waivers or reductions in such returns. The scheme encouraged taxpayers to come forward and file their returns without worrying about late fees.
Outcomes of the 49th GST Council Meeting
The decisions taken during the 49th GST Council meeting were very crucial for the smooth functioning of existing GST regimes. Have a look at the outcomes of the 49th GST Council meeting in brief.
- The Indian government has made the decision to pay the states’ outstanding GST compensation obligations. ₹16,982 crores is the total amount that is due. The government’s funds are to be used to cover this amount.
- The need for a functioning GST Appellate Tribunal to hear appeals from taxpayers has long been expressed. The Group of Ministers (GoM) report on creating a GST Appellate Tribunal was approved at the 49th GST Council meeting, albeit with some changes.
- No capacity-based levy is to be implemented for pan masala, gutkha, and tobacco.
- To prevent leaks and tax evasion, compliance and tracking measures are set for implementation.
- Products such as pan masala, gutka, and chewing tobacco can only be exported with a Letter of Undertaking (LUT) in place, and the accumulated Input Tax Credit (ITC) will then be refunded.
- Ad valorem compensation cess is to be replaced with a specified tax basis for commodities like pan masala, gutkha, and tobacco.
- Rab now has a lower GST rate of 5% (if sold labeled and prepackaged) or 0% (if sold in any other form), as opposed to the previous rate of 18%. Additionally, the 18% GST rate on pencil sharpeners was lowered to 12%.
- Amnesty for unfiled GSTR-4, GSTR-9, and GSTR-10 returns in the form of a reduction in the late fee or a conditional waiver.
- There is “nil” IGST treatment available for containers with tag-tracking devices or data loggers attached to them, and there is no separate IGST on these items.
How Does the 49th GST Council Meeting Facilitate Trade?
The Late Fee For GSTR-9 Will Be Rationalized From FY 2022-23 Onwards
- For the aggregate turnover up to INR 5 crores, traders will now have to pay INR 50 for each day as the late fee. There has been a significant cut down in the late fee as it used to be INR 200 per day earlier.
- If the turnover (aggregate) exceeds INR 5 crores but remains less than INR 20 crores, the late fee to be paid by the traders shall increase to INR 100 for per day. However, the amount is still less when compared to the previous year’s late fee for the category, which was 200/day.
- When the aggregate turnover exceeds INR 20 crores, it remains unchanged.
Revocation for Registration Cancellation
- Traders can now request for the revocation of cancellation of registration until an increased time limit of 90 days. The previous time limit for revocation used to be 30 days only. This time limit is further extendable up to 180 days.
- Amnesty for previous cases in which registration was revoked due to non-filing of returns but it was not possible to make the application within the statutory time frame. Traders in such cases can now file an application within a particular date.
Evaluation of Non-Filers of Returns
- The period of 30 days to file a return will be extended to 60 days with the purpose of enabling the presumed withdrawal of the order of best judgment assessment.
- Provision of amnesty for the previous cases in which the traders could not file returns within the allotted time; however, return filing was done by the trader along with the necessary late fee and interest. The grant will be made regardless of the filing of an appeal against the evaluation or assessment, or if the appeal was ultimately dismissed.
Amnesty Scheme in Case of Pending Returns
- A conditional waiver or exemption from the late fee will be given to the trader for return in Forms GSTR-4, GSTR-9, and GSTR-10, annual return, and pending composition scheme return.
In a nutshell, the recommendations made in the council are likely to offer facilitation in the ease of trading. Also, taxpayers will be greatly relieved by the proposals made.
For further details regarding the 49th GST Council Meeting, you can visit the official website of the Central Board of Indirect Taxes and Customs (CBIC) at https://www.cbic.gov.in/ or GST Council Meetings | Goods and Services Tax Council