The 50th GST Council meeting was held in Delhi on July 11, 2023 under the chairmanship of the Union Finance & Corporate Affairs Minister Smt. Nirmala Sitharaman. The GST Council has inter-alia made the following recommendations relating to changes in GST rates on Goods and Services and other measures for facilitation of trade. The key highlights of the meeting are as under:

1. Rate of Tax on Goods 
2. Rate of Tax on Services 
3. Rate of Tax on Casinos, Race Courses and Online gaming
4. Exemption from GST
5. Reverse charge mechanism
6. Extension of Amnesty Schemes
7. Ease of doing business
8. Removal of ambiguity and legal disputes on various GST issues
9. Streamlining compliances under GST
10. Miscellaneous

 

1. GST Rate on Goods

A. Changes in GST rates:

S.No.	Description of goods	From	To
1.	Uncooked/unfried snack pellets	18%	5%
2.	Imitation Zari thread or yarn	12%	5%
3.	LD slag	18%	5%
4.	Fish soluble paste	18%	5%

B. Clarification on GST rates:

1. Pan masala, tobacco products etc: In case where it is not legally required to declare the retail sale price, the earlier ad valorem rate as was applicable on 31st March 2023 may be notified in order for levy of Compensation Cess.
2. Multi-utility vehicles: To clarify that all multi-utility vehicles, whether sports utility vehicles (SUVs) or XUVs, would attract 22 percent cess provided they meet three parameters i.e. length greater than 400mm, engine capacity greater than 1500 cc, and ground clearance more than 170 mm.

2. GST rate on services

A. To clarify that GST rate on supply of food and beverages in cinema halls is taxable as taxable in restaurants i.e. 5%. Also, where sale of cinema ticket and supply of food and beverages are clubbed together satisfying the test of composite supply, then GST rate applicable to service of exhibition of cinema would be applicable on entire supply.

3. GST rate on Casinos, Race Courses and Online gaming:

The Group of Ministers (GoM) in its second report has recommended that since no consensus could be reached on whether the activities of online gaming, horse racing and casinos should be taxed at 28% on the full-face value of bets placed or on the GGR. The GST Council recommended the following:

2. Casinos, Horse Racing and Online gaming to be taxed at the uniform rate of 28%.
3. GST at the rate 28% will be applicable on the face value of the chips purchased in the case of casinos.
4. GST at the rate 28% will be applicable on the full value of the bets placed with bookmaker/totalisator in the case of Horse Racing.
5. GST at the rate of 28% on the full value of the bets placed in case of the Online Gaming.
6. To include online gaming and horse racing in schedule III as taxable actionable claims by making suitable amendments under law.

4. Exemption from GST

1. IGST on Dinutuximab (Quarziba) medicine when imported for personal use.
2. IGST on 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
3. To extend GST exemption on satellite launch services to private sector organisations, in order to promote start-ups.

5. Reverse charge mechanism:

1. Goods Transport Agencies (GTAs) not required to file declaration under Annexure V for paying GST under forward charge every year. If option to pay tax under forward charge opted for a particular year, then it would be deemed to be exercised for future years unless declaration has been filed to revert to reverse charge mechanism. Also, last date of exercising option to pay tax on forward charge mechanism extended from 15^th March to 31^st March of preceding financial year.
2. To clarify that reverse charge mechanism not applicable on services supplied by a director of a company to the company in his private or personal capacity such as supply of renting of immovable property.
3. To clarify that supply of raw cotton, including kala cotton, by agriculturists to cooperatives is taxable under reverse charge mechanism

6. Extension of Amnesty Schemes:

A. To extend the last date of filing the returns under Amnesty Schemes notified on 31.03.2023 from 30^th June, 2023 to 31^st August, 2023

i. Amnesty schemes was in respect of following pending returns, by way of conditional waiver/ reduction of late fees

• GSTR 4 – Annual Return of Composition Taxpayers (Notification No. 02/2023-Central Tax dated 31.03.2023)
• GSTR 9 – Annual Return of Regular Taxpayers (Notification No. 07/2023-Central Tax dated 31.03.2023)
• GSTR 10 – Final Return (Notification No. 08/2023-Central Tax dated 31.03.2023)

ii. Amnesty schemes for filing return under Section 62 of the CGST Act, 2017 i.e. Best judgment Order (Notification No. 06/2023-Central Tax dated 31.03.2023)

B. Amnesty scheme for filing application for revocation of cancellation of registration upto 30^th June, 2023 extended till 31^st August, 2023 (Notification No. 03/2023-Central Tax dated 31.03.2023)

7. Ease of doing business with GST

i. Relaxation in GST Annual return for F.Y. 2022-23:

1. Relaxation provided in F.Y. 2021-22 in respect of various tables of FORM GSTR-9 and FORM GSTR-9C to be continued for F.Y. 2022-23.
2. No annual return in FORM GSTR-9/9A for taxpayers having annual turnover upto Rs.2 crore rupees.

ii. Amendment in Rule 46(f) of the CGST Rules: Only name of the state of recipient required to be mention on the tax invoice, and not the name and full address of recipient in cases of supply of taxable services by or through an e-commerce operator or by OIDAR to unregistered recipient.

iii. Procedure for verification Input Tax Credit discrepancies: Issuance of circular to provide procedure for verifying input tax credit discrepancies between the credit availed in FORM GSTR-3B and the available credit as per FORM GSTR-2A during the period from 01.04.2019 to 31.12.2021.

Earlier, vide Circular No. 183/15/2022-GST dated 27.12.2022, procedures were provided for verifying input tax credit discrepancies between the Input Tax Credit claimed in FORM GSTR-3B and the available credit as per FORM GSTR-2A for the financial years 2017-18 and 2018-19.

iv. Procedure for manual filing of appeals against orders concerning the TRAN-1/TRAN-2 claims of registered individuals to be introduced.

v. To allow manual filing of Appeal under certain specified circumstances.

8. Removal of ambiguity and legal disputes on various GST issues:

1. TCS liability under Sec 52 of the CGST Act, 2017: To clarify regarding TCS liability in cases where multiple E-commerce Operators (ECOs) are involved in a single transaction of supply of goods or services or both.
2. Issuance of E-invoice: To clarify that the registered person whose turnover exceeds the prescribed threshold for generation of e-invoicing, are required to issue e-invoices under rule 48(4) of the CGST Rules for the supplies made to Government Departments or establishments / Government agencies / local authorities / PSUs, etc., registered solely for the purpose of TDS.
3. Manner of calculation of interest amount u/s 50 of the CGST Act, 2017: To clarify in cases of wrong availment of IGST credit, the balance of input tax credit (ITC) in electronic credit ledger, under the heads of IGST, CGST and SGST taken together, has to be taken in consideration while calculating such interest liability as per rule 88B of CGST Rules, 2017.
4. Scope of Supply: To clarify that mere holding of securities of a subsidiary company by a holding company cannot be treated as a supply of services and therefore, cannot be taxed under GST.
5. Warranty replacement of parts and repair services during warranty period without consideration: To clarify that no GST is chargeable by the manufacturer on such replacement of parts and/ or repair service and also, no reversal of input tax credit is required to be made by the manufacturer.
6. Input Services Distribution (ISD) mechanism for distribution of ITC for services received from third party: To clarify issues regarding taxability of internally generated services provided by one distinct person to another distinct person. Also, amendment may be made in GST law to make ISD mechanism mandatory prospectively for distribution of input tax credit of such common input services procured from third parties.
7. Refund related issues: To clarify that the refund of accumulated ITC for a tax period to be restricted to ITC on inward supplies reflected in FORM GSTR-2B of the said tax period or any previous tax period. Also, to clarify regarding admissibility of refund in cases where export of goods, or the realization of payment for export of services is made after the time limit provided under rule 96A of CGST Rules, 2017.
8. Place of Supply: To clarify on the place of supply for the supply of goods to unregistered individuals by inserting new clause under Section 10 of the IGST Act, 2017.

9. Streamlining compliances under GST

1. Compounding of offences u/s 132: Insertion of new rule to specify the compounding amount for various offences under section 132 of CGST Act, 2017.
2. Amendment in Rule 64 and FORM GSTR-5A: To make mandatory for the OIDAR service providers to provide details of supplies made to registered individuals in India in their return filed in FORM GSTR-5A. This aims to track g due payment of tax on reverse charge basis by such registered persons in India in respect of supplies received from OIDAR service providers.
3. Amendment in FORM GSTR-3A: To issue notice to the registered taxpayers for their failure to furnish Annual Return in FORM GSTR-9 or FORM GSTR-9A by due date. This aims to ensure the timely submission of annual returns by registered taxpayers.
4. Mechanism to deal ITC differences between GSTR-2B and GSTR-3B: Under this the taxpayer will get System based intimation in respect of the excess availment of ITC in FORM GSTR-3B as compared to that available in FORM GSTR-2B. Also, an auto-compliance procedure would be introduced on the part of the taxpayers, to explain the reasons for the said difference or take remedial action in respect of such difference. This aims to reduce the ITC mismatches and misuse of ITC facility in GST.
5. Manner of recovery of tax and interest under Rule 88(c): In line with the recommendations made in 48^th GST council meeting, in respect to system generated intimation to taxpayers in case where output tax liability under GSTR-1 is in excess to what disclosed in FORM GSTR-3B. Now, recommended to insert FORM GST DRC-01D to provide the manner of recovery of 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.
6. Amendments in GST registration rules:

1. Requiring the registered person to furnish bank account details, including the name and PAN within 30 days of grant of registration or before filing of statement of outwards supply under section 37 of CGST Act in FORM GSTR-1/ IFF, whichever is earlier. (Amendment in Rule 10A)
2. System-based suspension of GST registration, where the registered person fails to provide valid bank account no. within time prescribed under Rule 10A i.e. 30 days of grant of registration. (Amendment in Rule 21A(2A))
3. Automatic revocation of the system-based suspension upon compliance with the provisions of Rule 10A. (Insertion of 3rd proviso in rule 21A(4))
4. Registered persons may not be permitted to furnish details of outward supplies in FORM GSTR-1 or through the Invoice Furnishing Facility (IFF), where failure to provide valid bank account no. under Rule 10A. (Amendment in Rule 59(6))
5. Requirement or physical verification of business premises in the presence of the applicant to be removed. Also, physical verification may still be conducted even if Aadhaar authentication has been completed in high risk cases. (Amendments in Rule 9 and Rule 25)

10. Miscellaneous: 

1. Formation of GST Appellant Tribunal: The Rules governing appointment and conditions of President and Members of the proposed GST Appellate Tribunal has been recommended. Also, recommended to notify the provisions pertaining to GST Appellant Tribunal as prescribed under the Finance Act, 2023 to be effective w.e.f. 01.08.2023. Also, GST Appellant Tribunal will be started in a phased manner.
2. Extension of due dates of GST returns in Manipur: To further extend the due dates for filing FORM GSTR-1, FORM GSTR-3B, and FORM GSTR-7 for the months of April, May, and June 2023 for the registered persons of State of Manipur till 31.07.2023. (Earlier extended upto 30.06.2023)
3. Requirement for generating E-way bill for movement of gold: Insertion of new rule both under Central Rules,2017 and States Rules, 2017 of the States who want to mandate requirement of generating e-way bills for intra-State movement of gold and precious stones under Chapter 71 within their States.
4. Capacity based taxation and Special Composition Scheme: In line with the recommendation of Group of Ministers following recommendations are made:

1. To prescribe Special procedure to be followed by the manufacturers of tobacco, pan masala & other similar items for registration of machines and for filing of special monthly returns;
2. To provide for special penalty for non-registration of machines by such manufacturers;
3. The provisions of Section 123 of the Finance Act, 2021, which amends Section 16 of the IGST Act, will be notified and implemented from 01.10.2023;
4. To provide for restriction of IGST refund route in respect of exports of tobacco, pan masala & other similar items as well as mentha oil.

    v. Formation of State-Level Coordination Committee for GST knowledge sharing and coordinated efforts towards administrative and preventive measures.

  vi. Measures to curb frauds in GST through System based measures for strengthening registration process in GST, more use of third-party data for risk management and controlling flow of fake Input Tax Credit down the supply chain.

  vii. Pilot based program to take place in the Union Territory of Puducherry for risk-based biometric-based Aadhaar authentication of registration applicants.

The Press release can be accessed at https://www.pib.gov.in/PressReleasePage.aspx?PRID=1938812