The GST Council recently held its 50th Meeting on 11 July 2023. The meeting held after approximately 5 months saw many important decisions on various topics, including that on taxing online gaming and that on GST Appellate Tribunal. The Council has also attempted to tackle several complex and controversial issues that have plagued the industry with uncertainty for the last six years.
Some of the important decisions are highlighted below.
Changes relating to goods:
- Utility vehicles, having length exceeding 4000 mm, engine capacity exceeding 1500 cc and unladen ground clearance of 170 mm & above, to be covered under Sl. No. 52B of Notification No. 1/2017-Compensation Cess (Rate) and be taxed at 22%
- Medicines and Food for Special Medical Purposes (FSMP) used in the treatment of rare diseases enlisted under the National Policy for Rare Diseases, 2021 when imported for personal use – IGST to be exempted
- FSMP when imported by Centres of Excellence for Rare Diseases or any person or institution on recommendation of any of the listed Centres of Excellence – IGST to be exempted
- Dinutuximab (Quarziba) medicine imported for personal use to be exempted from IGST
- Raw cotton including kala cotton supplied by agriculturists to cooperatives to be taxed under reverse charge mechanism
- Uncooked/unfried snack pellets – GST rate to be reduced to 5%
- Imitation zari thread or yarn – GST rate to be reduced to 5%
- LD slag – GST rate to be reduced to 5%
- Fish soluble paste – GST rate to be reduced to 5%
Changes relating to services:
- Supply of food and beverages in cinema halls to be taxable as restaurant service as long as they are supplied by way of or as part of a service and supplied independently of the cinema exhibition service – Clarification to be issued
- GTAs will not be required to file declaration for paying GST under forward charge every year. Last date of exercising the option shall be 31 March of preceding Financial Year.
- Services supplied by a director of a company to the company in his private or personal capacity are not taxable under Reverse Charge Mechanism – Clarification to be issued
- Satellite launch services by private sector organisations to be exempted from GST
Online gaming, casinos, race courses:
- Casino, horse racing and online gaming to be taxed at 28%
- Tax to be paid on the face value of the chips or full value of bets
Trade facilitation measures:
- Warranty replacement of parts and repair services during warranty period – GST is not chargeable by the manufacturer, and input tax credit is not to be reversed
- Goods and Services Tax Appellate Tribunal (Appointment and Conditions of Service of President and Members) Rules, 2023 recommended
- Annual returns – Relaxations in respect of various tables of Form GSTR-9 and Form GSTR-9C, and exemption from filing of annual return (in FORM GSTR-9/9A) for taxpayers having aggregate annual turnover upto INR two crore, to be continued for FY 2022-23
- Input Service Distribution (ISD) mechanism will be made mandatory prospectively for distribution of input tax credit of common input services procured from third parties
- Supply by or through an ECO or by a supplier of OIDAR services to an unregistered recipient – Rule 46 to be amended to provide for only name of the State of the recipient on the tax invoice
- Procedure to be provided to enable manual filing of appeal against the orders passed by proper officers in respect of TRAN-1/ TRAN-2 claims
- Manual filing of appeal under certain specified circumstances - Rule 108(1) and Rule 109(1) to be amended
- Amnesty schemes for non-filers of Form GSTR-4, Form GSTR-9 & Form GSTR-10 returns, revocation of cancellation of registration and deemed withdrawal of assessment orders, to continue till 31 August 2023
Circulars to be issued regarding following measures:
- Refund of accumulated ITC under Section 54(3) of the CGST Act to be restricted to the ITC reflected in Form GSTR-2B for a particular tax period
- Refund of ITC in case of exports – Value of export goods to be included while calculating “adjusted total turnover” in the formula under Rule 89(4)
- Refund where export of goods, or the realization of payment for export of services, is made after the time limit provided under Rule 96A
- TCS liability where multiple E-commerce Operators (ECOs) are involved in a single transaction of supply of goods or services or both
- E-invoices for the supplies made to Government Departments or establishments / Government agencies / local authorities / PSUs, etc., registered solely for the purpose of TDS
- Manner of calculation of interest amount in case of wrongly availed and utilized IGST credit
- Mere holding of securities of a subsidiary company by a holding company cannot be treated as a supply of services
- Verification of input tax credit in cases involving difference in Input Tax Credit availed in Form GSTR-3B vis-a-vis that available as per Form GSTR-2A during the period 1 April 2019 to 31 December 2021
Streamlining compliance
- Mandatory generation of e-way bills for intra-State movement of gold and precious stones
- Special procedure to be followed by manufacturers of tobacco, pan masala & other similar items inter alia for registration of machines and for filing of special monthly returns
- Various amendments have been proposed in CGST Rules to strengthen the registration process and to effectively deal with the menace of fake and fraudulent registrations in GST
- Manner of recovery of the tax and interest in respect of the amount intimated under Rule 88C, which has not been paid and for which no satisfactory explanation has been furnished by the registered person, to be prescribed
- Mechanism to deal with differences in Input Tax Credit between Form GSTR-2B and Form GSTR-3B, to be notified
- Form GSTR-3A is to be amended to provide for issuance of notice to the registered taxpayers for their failure to furnish Annual Return by due date
- OIDAR service providers to provide the details of supplies made to registered persons in India in his return in Form GSTR-5A
- Supply from Duty Free Shops at arrival terminal in international airports to the incoming passengers to be included in exempt supplies
- Consent-based sharing of information of registered persons available on the common portal with other systems to be provided
- Place of supply in respect of supply of goods to unregistered persons – Section 10(1) to be amended