The role of the GST Council Meetings under GST has been envisioned as a critical forum for laying down the law. The regular meetings have been playing an instrumental role in addressing the concerns of the taxpayers within all industries in a designated timeframe.
The delay in convening the 53rd GST council meeting was owing to the budgetary obligations and the code of conduct enforced by the Election Commission. With the formation of new coalition Government, the hopes from the next GST Council Meeting are certainly high.
Just to recap, some major decisions were taken in the last meeting which encompassed recommending ENA to be kept outside ambit of GST, amendments made to the ISD provisions, and introduction of Amnesty Schemes, exuding a sense of great relief to various taxpayers.
In this article, the authors will be discussing the issues which are likely in the pipeline for upcoming GST council meetings.
Corporate Guarantee
Notably, one of the decisions that was taken in the 52nd GST council meeting was introduction of sub-rule (2) under Rule 28 of the CGST Rules w.e.f. 26.10.2023 wherein the value of supply of corporate guarantee was fixed to be higher of either 1% of amount of guarantee offered or the actual consideration. The said amendment was introduced in response to industry concerns particularly amid the investigations initiated by the tax authorities.
However, the point to ponder is whether the above amendment has truly allayed the concerns of industry? Unfortunately, it has not!
Shortly after the above amendment was introduced, the gaps were identified, and the taxpayers reached out to the Government to iron out the hardships caused by the amendment. Hence, the industry is expectantly looking forward to some relief especially concerning the following aspects:
- Fixation of value of supply basis the actual amount utilized by the beneficiary
- Applicability of rule wherein full ITC is available, owing to ITC accumulation
- Clarity regarding applicability of the provision one-time or periodically
Since the above areas are already under the radar of the GST authorities, the industry is eagerly awaiting some clarity and relief from the Government.
Petroleum products under GST?
The discussions regarding inclusion of petrol, diesel, ATF, natural gas, and selected petroleum products under the umbrella of GST are just around the corner, as hinted by the Finance Minister as well. Infact, the industry has also been demanding inclusion of natural gas under GST, and therefore, reducing the rates on CNG-powered vehicles to 5% and thus, at par with electric vehicles. How far these requests will be met, however, will depend upon onboarding of the states.
Online Gaming
The roll out of 28% GST in online gaming sector was a significant step which was supposed to be reviewed after six months of its implementation i.e. till 30th March 2024. Since its introduction, the industry has been struggling hard to sustain the business, with negative margins on one hand and the retrospective tax demands on other hand which are currently pending before the Hon’ble Supreme Court. Since the said matter was deferred in the last GST council meeting as well, the clarifications and the solutions in this sphere of taxation are hungrily awaited by the industry.
Rate rationalization
A committee of seven members has been working on rate rationalization which aims to simplify the tax structure and enhance ease of doing business. The revision of rates in footwear, textile and FMCG Industry are to be looked out for. The industry is also expecting clarification with respect to taxability of multi-purpose vouchers. Whether these proposals will be further delayed due to the formation of Government remains to be seen.
Real Estate
The applicability of GST on development rights and transfer of leasehold rights by developer are the two areas which are under the watch of authorities. Also, relief/clarification in context of availability of ITC in infrastructure sector is also something which the industry is looking forward to. While the issue of taxability in case of transfer leasehold rights and ITC in infrastructure sector has already reached the attention of judiciary, the industry is still expecting some intervention of the Government to provide early resolution.
Certainly, the industries are eagerly anticipating positive outcomes and clarifications in the upcoming GST Council Meetings and hold high hopes from the new Government. One can just hope that the concerns are addressed in a timely and efficient manner.
[The authors are Executive Partner and Senior Associate, respectively, in Indirect Tax Advisory at Lakshmikumaran & Sridharan Attorneys, New Delhi]
