Chaired by the Union Finance Minister, Smt. Nirmala Sitharaman, the 50th GST Council meeting was held on 11th July at Vigyan Bhavan, New Delhi.
The meeting commenced with the Chairperson sharing a short video film known as ‘GST Council- 50 steps towards a journey’ to mark the milestone of the 50th GST Council meeting.
The postal department also released the first set of a special cover and customized ‘My Stamp’, from the Chief Postmaster General, New Delhi, for the Chairperson as well as the members of the Council.
The key agendas included preparing various notifications, circulars, and reports such as the Second Report on Casinos, Race Courses, and Online Gaming.
In this article, we are discussing the highlights, updates, and outcomes from the 50th GST Council Meeting.
Why are GST Council Meetings Held?
In India, the Goods and Services Tax Council is a constitutional body and, therefore, the meetings are conducted in India. It is responsible for giving advice and making decisions concerning the Goods and Services Tax, which replaced all the indirect taxes of the center and states in India.
Key reasons why GST Council meetings are held in India:
The Constitution of India provides for Article 279A, which stipulates that the GST Council should deliberate on several issues on matters relating to GST such as rates, exemptions, and other matters.
India is a federal system of government where the central government and the state governments enjoy the power to tax and collect levies. Co-operative federalism is exemplified by the GST council which unites individuals from the central and state governments to deliberate on GST matters.
Uniform Taxation Across States
The GST Council plays a crucial role in ensuring uniformity in tax rates and regulations across all states and union territories, promoting the concept of “One Nation, One Tax.”
The GST council decides tax rates, and the threshold limits, and also makes amendments to the laws and rules. These decisions influence the tax structures of the nation as a whole.
Coordination and Collaboration
The representatives of the central and state governments meet and come up with ways of coordinating towards dealing with problems related to the implementation of GST.
Transparency and Accountability
Holding meetings in India ensures transparency and accountability in decision-making processes related to taxation, two important aspects of good governance. It allows for public scrutiny and awareness of the decisions taken by the GST Council.
Key Agendas Discussed in the 50th GST Council Meeting
The key agendas discussed in the 50th GST Council Meeting include:
1. Ratification of Notifications, Circulars, and Orders
Ratification of various notifications, circulars, and orders issued by the GST Council and decisions of the GST Implementation Committee.
2. Law Committee Recommendations
- Amendment of rules for E-way bill requirements for the movement of Gold/Precious stones.
- Capacity-based taxation and Special Composition Schemes in certain sectors.
- Clarifications on interest charging, interpretation of IGST Act, and e-invoice applicability.
- Resolution of refund-related issues and mechanisms for handling differences in ITC.
3. Amendments and Clarifications
- Annual Returns for FY 2022-23.
- Amendments in CGST Rules, 2017 regarding registration.
- Clarification on TCS liability in case of multiple E-commerce Operators.
- Clarification on the availability of ITC in warranty replacement and repair services.
- Amendments in CGST Rules consequent to changes in the CGST Act.
4. GST Appellate Tribunal Rules
Amendments to the Goods and Services Tax Appellate Tribunal (Appointment and Conditions of Service of President and Members) Rules, 2019.
5. Fitment Committee Recommendations
- Changes in GST rates or clarifications for goods and services.
- Deferred issues for further examination.
6. Group of Ministers (GoM) Reports
- Second Report on Casinos, Race Courses, and Online Gaming.
- Report of the 3rd Meeting of the GoM on GST System Reforms.
7. Budgetary Support Scheme
Discussion on the scheme of budgetary support under the GST regime instead of earlier excise duty exemption schemes.
8. State Coordination Committee
Proposal for the creation of a State Coordination Committee comprising GST authorities from the State and Central Tax Administrations.
9. GST AT Implementation
Implementation of GST AT consequent to the passing of the Finance Act, 2023.
10. Ad-hoc Exemptions Orders
Information on ad-hoc exemption orders issued under Section 25(2) of the Customs Act, 1962.
11. Performance Reports
Performance reports of CCI, SLSC, SC, and DGAP for the specified periods.
12. Extension Requests
Request for extension of due dates for filing GSTR-7, GSTR-1 & GSTR-3B and extension of Amnesty Schemes in the State of Manipur.
13. Review of Revenue Position
Discussion on the revenue position under Goods and Services Tax.
14. Any Other Agenda
Any additional agenda items discussed with the permission of the Chairman.
Highlights of the 50th GST Council Meeting
1. Goods – Rate Decisions and Clarifications
- Reduced GST rates on certain goods, including uncooked/unfried snack pellets, fish soluble paste, imitation zari threads/yarn, and LD slag.
- IGST exemption on specified medicines and Food for Special Medical Purposes (FSMP) used in rare disease treatment.
- Clarified taxation on the supply of raw cotton by agriculturists to cooperatives.
- Regularized issues related to raw cotton, trauma implants, desiccated coconut, GST on plates and cups made of areca leaves, and biomass briquettes for specific periods.
- Amendments to compensation cess notification for utility vehicles.
2. Services – Recommendations
- GST exemption on satellite launch services provided by ISRO, Antrix Corporation Limited, and New Space India Limited.
- Simplified compliance for Goods Transport Agencies (GTAs) regarding GST payment under forward charge.
- Clarification on non-taxability of services supplied by a director to the company in their personal capacity.
- Clarified taxation on the supply of food and beverages in cinema halls.
3. Group of Ministers (GoM) Recommendations on Casinos, Race Courses, and Online Gaming
- Uniform taxation at 28% for casinos, horse racing, and online gaming.
- GST application on face value of chips, bets placed, and online gaming bets.
4. Measures for Streamlining GST Compliances
- Rule amendments for e-way bill generation for intra-state movement of gold and precious stones.
- Special procedures and penalties for manufacturers of tobacco, pan masala, and similar items.
- Continued relaxations for FY 2022-23 in Form GSTR-9 and 9C.
- Exemption from filing GSTR-9/9A for small taxpayers (up to Rs.2 crore aggregate annual turnover).
- Various amendments for GST registration processes, verification, and Aadhaar authentication.
- Pilot project for biometric-based Aadhaar authentication in Puducherry.
5. Measures for Facilitation of Trade
- Recommendations for GST Appellate Tribunals (GSTATs) rules.
- Recommendations for continued exemptions and clarifications on various GST-related matters.
- Circulars to provide clarity on e-invoices, interest calculation under Section 50(3), and treatment of securities.
- Special procedures for verification of ITC and filing appeals against TRAN-1/TRAN-2 claims.
- Extension of amnesty schemes and due date extensions for filing returns in Manipur.
These key points encompass rate decisions, clarifications, recommendations, and measures aimed at streamlining GST compliance and facilitating trade.
Updates on the Implementation of the 50th GST Council Meeting Decisions
Extension of Amnesty Schemes
The GST Council extended the amnesty schemes for non-filers of GSTR-4, GSTR-9, and GSTR-10 returns, revocation of registration cancellation, and deemed withdrawal of assessment orders. These schemes were initially valid until March 31, 2023, and have been extended until August 31, 2023.
Relaxations in Form GSTR-9 and 9C
The Council recommended continuing the relaxations provided in FY 2021-22 in respect of various tables of Form GSTR-9 and 9C for FY 2022-23. This means that taxpayers continue to benefit from simplified reporting requirements.
Exemption from Filing GSTR-9/9A
The exemption from filing the GSTR-9/9A for small taxpayers (with an aggregate annual turnover of up to Rs. 2 crore) continues for FY 2022-23 as well. This further simplifies compliance for small businesses.
Clarification on Input Services Distributor (ISD) Mechanism
The Council recommended issuing a circular to clarify that the ISD mechanism is not mandatory for distributing input tax credit (ITC) of common input services procured from third parties to distinct persons under the current GST provisions. This clarification provides flexibility in ITC distribution.
Taxation of Online Gaming and Horse Racing
The Council recommended amending the GST law to include online gaming and horse racing in Schedule III of the CGST Act as taxable actionable claims. This decision, which has been implemented, subjects these activities to GST at a rate of 28%.
Notification of GST Appellate Tribunal Provisions
The Council recommended notifying the provisions of the GST Appellate Tribunal with effect from August 1, 2023. This notification has been issued, and the GST Appellate Tribunal has begun functioning.
Extension of E-way Bill for Gold and Precious Stones
The Council wanted to make changes to rules to allow states to enforce electronic way bills on gold and precious stones. This is still being reviewed and may be considered a future development.
Capacity-Based Taxation and Special Composition Scheme for Tobacco Products
The Council suggested a system of capacity-based taxation and a special composition scheme for tobacco, pan masala, and other related products. However, the proposal is subject to discussion and may be executed in days to come
Outcomes of the 50th GST Council Meeting Decisions
GST rate reductions
- Uncooked/unfried snack pellets: Reduced from 18% to 5%
- Fish soluble paste: Reduced from 18% to 5%
- Imitation zari thread or yarn: Reduced from 12% to 5%
- LD slag: Reduced from 18% to 5%.
- GST will not be imposed on ISRO, ASIL, and NSIL in connection with satellite launch services. Such services may be provided by other private organizations for which the exemption may also be given.
GST on online gaming, casinos, and horse racing
- A GST rate of 28% will be levied on the turnover of online gaming companies, casinos, and horse racing.
- regulation measures for past cases relating to fish-soluble paste and desiccated coconut.
- The definition of taxation of raw cotton supplies by agriculturists to cooperatives.
- Inclusion of RBL Bank and ICBC Bank in the list of specified banks for exemption from IGST on gold, silver, or platinum imports.
|Extension of Amnesty Schemes
|Increased compliance and revenue collection
|Relaxations in Form GSTR-9 and 9C
|Simplified reporting for taxpayers
|Exemption from Filing GSTR-9/9A
|Reduced compliance burden for small businesses
|Clarification on Input Services Distributor (ISD) Mechanism
|Increased flexibility in ITC distribution
|Taxation of Online Gaming and Horse Racing
|Generation of additional tax revenue
|Notification of GST Appellate Tribunal Provisions
|Streamlined dispute resolution process
|Extension of E-way Bill for Gold and Precious Stones
|Potential to enhance transparency and trackability of precious goods
|Capacity-Based Taxation and Special Composition Scheme for Tobacco Products
|Potential to simplify tax structure and reduce compliance costs for tobacco manufacturers
What Does the 51st GST Council Meeting Mean For Businesses and Taxpayers?
The outcomes of the 50th GST Council Meeting carry significant implications for businesses and taxpayers across various sectors. Notably, certain goods may see a reduction in GST rates, impacting pricing and demand dynamics. Additionally, exemptions and clarifications on services, such as satellite launch services, can directly affect businesses operating in those sectors.
The meeting addressed amendments related to compensation cess on utility vehicles, potentially impacting industries involved in their production and sale. The uniform GST rate of 28% on online gaming, casinos, and horse racing may have repercussions for businesses in these entertainment sectors. The specifics of the tax base for applying the rate will also influence financial planning for affected entities.
Furthermore, the meeting introduced measures to streamline GST compliance, including new rules for reporting excess Input Tax Credit (ITC) claims and the establishment of GST Appellate Tribunals (GSTATs). The emphasis on automating GST return scrutiny aims to simplify compliance procedures, potentially reducing the burden of manual reviews for businesses.
Businesses engaged in the transportation of gold and precious metals should take note of new e-Way bill rules, with variations in threshold limits set by state governments. Additionally, clarifications on Tax Collected at Source (TCS) in transactions involving multiple e-commerce operators can impact businesses operating in the digital commerce space.
The overall business environment may be influenced by changes in GST rates, compliance procedures, and rules discussed in the meeting. To navigate these changes effectively, businesses should stay informed on official notifications and guidelines issued by the GST Council and seek professional advice to understand specific implications for their operations.
For more information on the 50th 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