The Goods and Services Tax has been a transformative tax reform in India since its implementation in 2017. Designed to replace multiple indirect taxes with a unified, simplified, and transparent tax structure, GST has played a pivotal role in reshaping the country’s taxation landscape.
The 50th meeting of the GST Council held under the esteemed chairpersonship of Smt. Nirmala Sitharaman, the Union Finance & Corporate Affairs Minister, was a momentous occasion. This milestone gathering celebrated the journey of the GST Council and reaffirmed its commitment to driving positive changes in the tax system.
This blog will provide an insightful recap of the 50th GST Council Meeting, shedding light on the significant recommendations made, the impact of these decisions on different sectors, and the Council’s vision for a more robust and taxpayer-friendly GST regime.
Let’s embark on this journey through the intricacies and implications of the 50th GST Council Meeting, exploring the pivotal steps taken towards shaping a progressive and inclusive tax ecosystem in the nation.
The 50th GST Council Meeting made several key recommendations on changes to GST tax rates for both goods and services.The recommendations on goods and services will come into effect from July 18, 2023.
These decisions were aimed at promoting specific industries, encouraging environmental protection, supporting rare disease treatment, and simplifying tax compliance for various stakeholders.
On goods, the Council decided to reduce the GST rate on uncooked/unfried snack pellets to 5% and to exempt Dinutuximab (Quarziba) medicine and medicines and Food for Special Medical Purposes (FSMP) for rare diseases from IGST when imported for personal use. The Council also clarified the taxability of the supply of raw cotton, including kala cotton, by agriculturists to cooperatives and reduced the GST rate on imitation zari thread or yarn from 12% to 5%.
On services, the Council decided to extend GST exemption on satellite launch services to organizations in the private sector, eliminated the requirement for Goods Transport Agencies (GTAs) to file declarations for paying GST under the forward charge mechanism annually, and clarified the taxability of services supplied by a director of a company to the company in his private or personal capacity. The Council also brought clarity to the tax treatment of food and beverages supplied in cinema halls.
The 50th GST Council Meeting introduced crucial measures to streamline trade processes and enhance compliance within the GST regime. These measures aimed to ease the burden on taxpayers, provide clarity on GST liability and refunds, and strengthen registration processes. Key facilitation measures proposed by the Council include:
The Council recommended the establishment of the Goods and Services Tax Appellate Tribunal to ensure effective dispute resolution. Rules governing the appointment and service conditions of the Tribunal’s President and Members were also proposed. The provisions of Finance Act, 2023, pertaining to the Tribunal, were to be notified by the Centre from 01.08.2023.
To support taxpayers during challenging times, the relaxations provided in FY 2021-22 for various tables of FORM GSTR-9 and FORM GSTR-9C were extended to FY 2022-23. Additionally, smaller taxpayers with an annual turnover up to two crore rupees continued to be exempt from filing the annual return in FORM GSTR-9/9A for FY 2022-23.
The Council provided clarity on the ISD mechanism, confirming that distributing input tax credit of common input services from third parties to distinct persons was not mandatory under the present GST law. However, the ISD mechanism was proposed to be made mandatory prospectively for such distribution.
These measures aimed to create a more efficient and transparent GST ecosystem, fostering ease of compliance for businesses and promoting a smoother trade environment.
The GST Council proposed essential amendments to strengthen the registration process and streamline compliance under the Goods and Services Tax (GST) regime. The key measures recommended by the Council include:
To counter fraudulent registrations and ensure a robust registration process, the Council proposed amendments in CGST Rules, 2017. These amendments required registered persons to furnish their bank account details within 30 days of registration grant or before filing FORM GSTR-1/IFF (whichever was earlier). Failure to provide valid bank account details within the specified time could lead to system-based suspension of registration.
To prevent ITC mismatches and misuse, the Council recommended a system-based intimation mechanism for taxpayers who availed excess ITC in FORM GSTR-3B compared to FORM GSTR-2B beyond a certain threshold. Taxpayers would be required to explain the differences or take necessary corrective actions.
The Council proposed a system-based intimation mechanism and an auto-compliance procedure to address ITC discrepancies between FORM GSTR-2B and FORM GSTR-3B. Taxpayers would need to provide explanations or take actions to reconcile the ITC.
The Council aimed to provide clarity on the place of supply for goods supplied to unregistered persons.
To enhance coordination and knowledge sharing, the Council recommended the formation of a State-level coordination committee comprising GST officers from both State and Central administrations. This committee would work towards administrative and preventive measures.
The GST Council has continuously demonstrated its commitment to improving the GST regime for the betterment of businesses and taxpayers. As a valuable stakeholder in the GST ecosystem, we encourage you to stay informed about the latest developments and updates in the GST regime.
At Treflo, we are committed to empowering businesses with knowledge and understanding to navigate the complexities of the GST landscape effectively. Join us in this journey of staying updated and informed. Together, we can thrive in the dynamic world of GST and contribute to a robust and flourishing business environment.