49th GST Council Meeting Highlights, Updates, Outcome, and More

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, also attended the session. They held the session 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 also 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. The participants presented multiple issues on the table to discuss and find solutions in the 49th GST Council meeting. Moreover, 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? 

The GST Council provided advice to the Center and state governments regarding issues pertaining to the Goods and Services Tax regime. 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.

The GST council conducts meetings 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 GST Council adopts the Group of Ministers (GoM) report on the GST Appellate Tribunal 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 held its meeting on the 18th of February 2023 in New Delhi and primarily 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.

1. 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. 

2. Pending Compensation Dues 

The GST council has decided to clear all the pending compensation claims of states of ₹16,982 crores. 

3. Rationalization of GST Rate 

The meeting proposes changing the tax rate of liquid jaggery from 18% to nil for loose sales and from 5% to 12% for pre-packaged and labeled items. The government proposes changing the tax rate for pencil sharpeners from 18% to 12%. The 49th GST council meeting changed the Data logger rate from 18% to nil. The changes will come into effect from March 1st.

4. 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. 

5. Late Fee Rationalization 

The government will rationalize late fees for not filing GSTR 9 on time for small taxpayers under section 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.

Particulars	Current	Proposed
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)

6. Increased Time Limit for Application for Revocation

The government proposed increasing the 30-day limit for revoking the cancellation of registration to 90 days by amending Rule 23 of Section 30.

Particular	Current	Proposed
Basic Time Limit	30 days	90 days
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

7. Amnesty Scheme For Due Returns 

The council announced an amnesty scheme to provide a conditional waiver or reduction for due GST returns after the meeting. The proposed scheme was as follows: GSTR 4 – Return filed by composition taxpayers GSTR 9 – Annual return filed under GST Also, GSTR 10 – Final return filed by the taxpayers after surrendering GST returns.

Scheme	Relief	KMA Comments
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 

1. 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. 

2. Payment of Compensation Dues 

3. Reduction in Tax Rate of Pencil Sharpeners 

The authorities reduced the GST rates of pencil sharpeners from 18% to 12%, as per Notification number: 03/2023.

4. Reduction in Tax Rate of “Rab” 

The authorities reduced the GST rate on Rab (Liquid Jaggery) 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). 

5. Scheme for Specific Items 

The GST Council introduced a proposed special composition scheme for Pan Masala, Gutkha, Tobacco, etc., 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.  

6. 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. Additionally, the scheme encouraged taxpayers to come forward and file their returns without worrying about late fees. Also Read: The Importance Of Accurate Valuation Of New Products And Services For GST Purposes

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 will also use these funds to cover this amount.

• The need for a functioning GST Appellate Tribunal to hear appeals from taxpayers has long been expressed. The 49th GST Council meeting approved the Group of Ministers (GoM) report on creating a GST Appellate Tribunal, with some changes.

• The government will not levy a tax on pan masala, gutkha, and tobacco.

• Governments implement compliance and tracking measures to prevent leaks and tax evasion.

• The government requires exporters of products like pan masala, gutka, and chewing tobacco to obtain a Letter of Undertaking (LUT) before exporting. This LUT allows for the refund of accumulated Input Tax Credit (ITC).

• The government will replace ad valorem compensation cess 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%. Also, the government lowered the 18% GST rate on pencil sharpeners to 12%.

• Unfiled GSTR-4, GSTR-9, and GSTR-10 returns receive late charge reductions or conditional waivers.

• 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

• Traders with turnover up to INR 5 crores must pay INR 50 per day in late fees. From INR 200 per day, the late cost has dropped significantly.

• If the turnover (aggregate) exceeds INR 5 crores but is less than INR 20 crores, dealers must pay INR 100 per day in late fees. However, the late fee for the category, 200/day, was higher than the amount this year.

• When the aggregate turnover exceeds INR 20 crores, it remains unchanged.

Also Read: Late Fees And Penalties For Non-Compliance In GSTR-9

Revocation for Registration Cancellation

• Traders can now request for the revocation of cancellation of registration until an increased time limit of 90 days. Also, the previous time limit for revocation was 30 days. This time limit is further extendable up to 180 days.

• Individuals who missed the deadline can also apply for reinstatement if their registration was canceled for non-filing returns. Moreover, traders in such cases can now apply within a particular date. 

Evaluation of Non-Filers of Returns

• We will extend the 30-day return deadline to 60 days to allow the presumed withdrawal of the best judgment evaluation.

• Provision of amnesty for the previous cases in which the traders could not file returns within the allotted time; however, the trader submitted the return filing along with the necessary late fee and interest. They will make the grant regardless of whether someone filed or dismissed an appeal against the evaluation or assessment.

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.

Moreover, in a nutshell, the recommendations made in the council are likely to offer facilitation in the ease of trading. Also, the proposals made will greatly relieve taxpayers. Also Read: 48th GST Council Meeting Highlights, Updates, Outcome And More

More Information

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