52nd GST Council Meeting Update: Key Highlights and Decisions

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Published Date:  08-10-2023   Author:   yash-elwadhi
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The 52nd GST Council Meeting was held recently under the Chairpersonship of Union Minister for Finance & Corporate Affairs, Smt. Nirmala Sitharaman brought forth a series of recommendations that could significantly impact various sectors of the economy. This blog will explore the significant points discussed in the meeting, their implications, and the council’s major changes and recommendations.

Essential Functions and Role of the GST Council in India

The GST Council is a decision-making body in India overseeing the Goods and Services Tax system. Comprising Union and State Finance Ministers, it determines tax rates, exemptions, and thresholds, requiring consensus.

The critical functions of the GST council are rate fixation, exemption definitions, compensation to states, procedural enhancements, and amendments to GST laws. Additionally, the Council addresses disputes, reviews GST performance, and ensures effective tax administration.

Highlights from the 52nd GST Council meeting

Increase in Upper Age Limit of Appellate Tribunals

GSTAT assumes a pivotal role by consolidating all appeals against first appeal orders from Appellate Authorities under CGST and SGST Laws.

The maximum age limit for the president of GSTATs has been raised to 70 years, up from the previous limit of 67. Similarly, the maximum age for members has been increased from 65 to 67 years. A minimum age of 50 is recommended for appointments to ensure high expertise in tribunal members. It was also stressed that individuals with at least ten years of experience as advocates should be considered for judicial membership in the tribunals.

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Enforcement of a 28% GST Tax on Online Gaming

In the 50th and 51st GST Council meetings, a 28% GST rate was established for online gaming transactions based on face value. Guidelines were formulated for its effective implementation, requiring amendments to both Central GST and State GST laws. In the current meeting, the GST Council will assess whether all states have enacted the requisite legal amendments by October 1, 2023.

Taxing Extra- Neutral Alcohol,

The Allahabad High Court has ruled that states cannot tax Extra-Neutral Alcohol (ENA) for human consumption since the 101st Constitutional Amendment. This power rests with the GST Council. Nevertheless, despite this legal provision, the GST Council has delegated the authority to tax ENA to the states.

Recommendations made by the 52 GST Council

  • No GST will be charged for loose millet flour with 70% millet content (HS1901). A 5% GST will be applied if it’s pre-packaged or labelled.
  • Imitation zari thread or yarn is taxed at a 5% GST rate. However, there won’t be any refunds granted for polyester film (metallized) or plastic film due to inversion.
  • GST on molasses has been reduced from 28% to 5%, benefiting sugarcane farmers and reducing the cost of cattle feed.
  • A separate HSN code has been introduced for rectified spirit used for industrial purposes, providing its own distinct HSN code. Authorities must now levy an 18% tax on ENA for industrial use.
  • To boost tourism in India, a conditional GST exemption has been granted to foreign-flagged/owned or foreign-going vessels travelling through our coastal areas during the upcoming winter season, exempting them from 5% GST.
  • An extension of the appeal filing deadline until January 31, 2024, has been offered as part of a GST Amnesty Scheme. The time limit for appeals related to orders passed until March 2023 has been extended from three months, with an additional 2.5% pre-deposit requirement for the extended period, which can be paid from the electronic cash ledger.
  • For clarity, job work services related to turning barley into malt are taxed at a 5% GST rate, just like other job work services involving food and food products. This is lower than the 18% rate.
  • Government Authorities are exempted from GST when they receive services related to water supply, public health, sanitation, conservancy, solid waste management, and slum improvement, including composite services involving up to 25% of these services.
  • Additionally, it’s clarified that District Mineral Foundation Trusts (DMFT) are eligible for the same exemptions as other government authorities.
  • Indian Railways will now follow the forward charge mechanism for all its services, allowing them to access Input Tax Credit (ITC) to meet their tax liabilities.
  • To simplify property release from banks after one year, the GST Rules will now include a specific one-year time limit for provisional property attachments.

Conclusion:

The 52nd GST Council Meeting was a significant step towards streamlining India’s tax system and promoting economic growth. The recommendations, ranging from changes in GST rates to trade facilitation measures and procedural improvements, are poised to impact various sectors positively. These decisions reflect the government’s commitment to creating a more business-friendly environment and fostering economic development. 

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Frequently Asked Questions(FAQs)

  1. What is the GST Appellate Tribunal?

The GST Appellate Tribunal (GSTAT) is a forum for the second appeal under GST laws. It is the primary dispute resolution body between the Central and State governments for GST-related matters.

  1. When Will the 28% GST on Online Gaming Transactions be Implemented?

The 28% GST on online gaming transactions is scheduled for implementation from October 1, 2023. It will undergo a review after six months of its enactment.+

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Yash Elwadhi

Yash Elwadhi is a highly skilled and experienced finance content writer with a proven track record of providing insightful and engaging content to a wide range of clients in the financial industry. He has collaborated with prominent financial institutions, fintech companies, and wealth management firms, and is known for his ability to convey complex financial concepts in a clear and engaging manner. Yash is committed to delivering high-quality content that adds value to his clients' target audience and helps them achieve their financial goals.

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