On October 7, 2023, the 52nd GST Council Meeting happened, where they discussed important things and made decisions to help taxpayers. Here’s a quick summary of what they did to make taxes easier, revision in GST Rates, clear up confusing laws, and provide a chance for people to resolve old tax issues.
Changes in GST rates for goods:
For millet flour in powder form with at least 70% millets (HS 1901):
- 0% GST if not pre-packaged and labeled.
- 5% GST if pre-packaged and labeled.
- Imitation zari thread or yarn made of metallized polyester/plastic (HS 5605) will have a 5% GST rate. No refund on polyester/metallized plastic film due to inversion.
Foreign-going vessels converting to coastal run will pay 5% IGST, but they may get an exemption if they revert to foreign-going status within six months.
Other changes for goods:
- Extra Neutral Alcohol (ENA) for alcoholic liquor production will be outside GST.
- GST on molasses will be reduced from 28% to 5%, aiding mills and sugarcane farmers.
- A new tariff code for rectified spirit for industrial use will attract an 18% GST rate.
Changes in GST rates for services:
- Services to government functions by Panchayats/Municipalities will remain exempt from GST.
- Services like water supply, sanitation, and slum improvement to Governmental Authorities will also be exempt.
Other changes for services:
- Job work services for processing barley into malt will have a 5% GST rate, like food products.
- Bus transportation services via Electronic Commerce Operators (ECOs) will be GST liability of ECOs. Companies may be excluded from this rule to simplify GST compliance.
- District Mineral Foundations Trusts (DMFT) set up by State Governments will receive GST exemptions like other Governmental Authorities.
- Indian Railways will be taxed under the Forward Charge Mechanism to benefit from Input Tax Credit (ITC).
Measures to facilitate trade under GST
Amnesty Scheme for Overdue Tax Appeals
- The GST Council has announced an amnesty scheme for taxpayers who could not file an appeal against a demand order within the allowable time period.
- This scheme is applicable to demand orders passed on or before March 31, 2023.
- Under the amnesty scheme, taxpayers can file an appeal against such demand orders up to January 31, 2024.
- However, they will need to pay a pre-deposit of 12.5% of the tax under dispute, out of which at least 20% (i.e. 2.5% of the tax under dispute) should be debited from the Electronic Cash Ledger.
- This scheme will be beneficial for a large number of taxpayers who were unable to file an appeal within the specified time period in the past.
GST Council Clarifies Tax Implications of Personal and Corporate Guarantee
The GST Council has also clarified the GST implications of personal guarantees offered by directors to banks against credit limits/loans being sanctioned to the company and corporate guarantees provided for related persons, including corporate guarantees provided by holding companies to their subsidiary companies.
If a company does not pay any consideration to a director in any form, directly or indirectly, for providing a personal guarantee to a bank/financial institution on its behalf, the open market value of the said transaction/supply may be treated as zero and hence, no tax will be payable in respect of such supply of services.
The taxable value of supply of corporate guarantee provided between related parties will be one percent of the amount of such guarantee offered, or the actual consideration, whichever is higher.
This clarification is important for both companies and their directors/related persons, as it helps them to understand their GST obligations with respect to personal and corporate guarantees.
Automatic restoration of provisionally attached property after one year
- The GST Council has recommended a change to the law so that property that has been temporarily seized by the government for unpaid GST will be automatically released after one year, without the need for a separate order from the Commissioner.
- This will make it easier for businesses to get their property back.
Clarification on place of supply for certain services
The GST Council has recommended a circular to clarify the place of supply for the following services:
- Transportation of goods, including by mail or courier, where the supplier or recipient is located outside of India.
- Advertising services.
- Co-location services.
Clarification on export of services
The GST Council has recommended a circular to clarify whether export remittances received in a Special INR Vostro account, as permitted by the Reserve Bank of India, can be considered as consideration for the supply of services for the purpose of qualifying as an export of services under the IGST Act.
Allowing supplies to SEZ units/developers for authorized operations for IGST refund route
The GST Council has recommended a change to the law to allow suppliers to Special Economic Zone (SEZ) developers of SEZ units for authorized operations to make supplies of goods or services (except for certain commodities such as pan masala, tobacco, and gutkha) on payment of integrated tax and claim a refund of the tax paid.
Other law and procedure-related measures in 52th GST Council Meeting
Appointment of President and Member of GST Appellate Tribunals:
- Advocate for ten years with substantial experience in litigation under indirect tax laws
- Minimum age: 50 years
- Tenure: Up to maximum age of 70 years and 67 years respectively
- To be made mandatory prospectively for distribution of ITC in respect of input services procured by Head Office (HO) from a third party but attributable to both HO and Branch Office (BO) or exclusively to one or more BOs
- Amendments recommended in Section 2(61) and section 20 of CGST Act, 2017 as well amendment in rule 39 of CGST Rules, 2017
Moreover, If you want any other guidance relating to 52th GST Council Meeting, please feel free to talk to our business advisors at 8881-069-069.
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