The 53rd GST Council meeting was held in Delhi on June 22nd, 2024 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 and services 
2. Exemption from GST on goods and services
3. Taxability of GST on goods and services
4. Time and Monetary limits fixed for filing of appeals
5. Demand and Recovery related issues
6. ITC related issues
7. Refund related issues
8. Ease of doing Business under GST
9. Removal of ambiguity and legal disputes on various GST issues (Clarifications)
10. Miscellaneous

1. Change in Rate of Tax on goods 

• All milk cans irrespective of their use – 12%
• All ‘carton, boxes and cases of both corrugated and non-corrugated paper or paper board’ (HS 4819 10; 4819 20) – 12% (Earlier rate 18%)
• All solar cookers – 12%
• All types of sprinklers including fire water sprinklers – 12%. To regularise the past practice on ‘as is where is’ basis
• IGST on Imports of ‘Parts, components, testing equipment, tools and tool-kits of aircrafts, irrespective of their HS classification – 5%

2. Exemption from GST for Goods and Services

A. Exemption for goods:

• IGST exemption on imports of specified items for defence forces for a further period of five years till 30th June, 2029
• IGST exemption on imports of research equipment/buoys imported under the Research Moored Array for African-Asian-Australian Monsoon Analysis and Prediction (RAMA) programme subject to specified conditions
• Compensation Cess on the imports in SEZ by SEZ Unit/developers for authorised operations w.e.f. 01.07.2017.
• Compensation cess on supply of aerated beverages and energy drinks to authorised customers by Unit Run Canteens under Ministry of Defence
• Adhoc IGST exemption on imports of technical documentation for AK-203 rifle kits imported for Indian Defence forces

B. Exemption for services:

• Specific services offered by Indian Railways to the general public, and for intra-railway transactions. Sale of platform tickets and services such as retiring rooms, waiting rooms, cloakroom facilities, and battery-operated car services are now exempt from GST.
• Services by way of hostel accommodation outside educational institutions up to₹ 20,000 per person per month. However, the condition will be the student must have stayed in the hostel for a continuous period of 90 days. The condition has been introduced to prevent hotels from taking advantage of the exemption.
• Services provided by Special Purpose Vehicles (SPV) to Indian Railway by way of allowing Indian Railway to use infrastructure built & owned by SPV during the concession period and maintenance services supplied by Indian Railways to SPV.

3. Applicability of GST on various Goods and Services

A. Co-insurance and Re-insurance

• Re-insurance

Reinsurance refers to the practice in which an insurance company transfers a portion of its risk to another insurance company, called a reinsurer, in exchange for a premium. In essence, it's insurance for insurers.

Herein recommended that the transaction of ceding commission/re-insurance commission between insurer and re-insurer may be declared as no supply under Schedule III of CGST Act, 2017 and past cases may be regularized on ‘as is where is’ basis.

Also, to clarify that that retrocession is ‘re-insurance of re-insurance’ and therefore, eligible for the exemption under Sl. No. 36A of the notification No. 12/2017-CTR dated 28.06.2017.

• Co-insurance

Co-insurance refers to the practice of 4-5 insurance companies providing insurance and are ready to bear the liabilities in the same proportion. The industry practice currently is for only one of the companies to pay GST.

Herein recommended that Co-insurance premium apportioned by lead insurer to the co-insurer for the supply of insurance service by lead and co-insurer to the insured in coinsurance agreements, may be declared as no supply under Schedule III of the CGST Act, 2017.

B. To clarify that statutory collections made by Real Estate Regulatory Authority (RERA) are exempt from GST.

C. To clarify that sharing of the incentive by acquiring bank with other stakeholders, where such incentive is clearly defined under Incentive scheme for promotion of RuPay Debit Cards and low value BHIM-UPI transactions and is decided in the proportion and manner by NPCI in consultation with the participating banks is not taxable.

D. No GST on Extra Neutral Alcohol used for manufacture of alcoholic liquor for human consumption. (By amending Section 9(1) of CGST Act)

4. Time and Monetary limit fixed for filing of appeals under GST

A. Monetary limit for filing appeals 

The GST Council has fixed a monetary limit for filing appeals by the tax department before the various appellate authorities to reduce government litigations. It has recommended a monetary limit of ₹20 lakh for GST Appellate Tribunal, ₹1 crore for the High Court and ₹2 crore for the Supreme Court for filing of appeals by departments before these legal forums.

B. Time limit for filing appeals in GST Appellate Tribunal: Amendment in law for providing that time limit for filing an appeal before the tribunal will start from the date government notifies GSTAT.

C. Reduction in quantum of pre-deposit for filing an appeal 

	Present Scenario	Proposed Scenario
Before Appellate Authority	CGST- 25 Crores SGST – 25 Crores	CGST- 20 Crores SGST – 20 Crores
Before Appellate Tribunal	20% with a maximum amount of Rs. 50 crores CGST and Rs. 50 crores SGST	10% of disputed tax maximum to Rs. 20 crores CGST and Rs. 20 crores SGST

5. Demand and recovery related issues:

A. Conditional Waiver of interest penalties on demand notices: It is recommended waiving interest penalties on demand notices issued under Section 73 of the GST Act for fiscal years 2017-18, 2018-19, and 2019-20. This section pertains to cases not involving fraud, suppression, or misstatement. Taxpayers who pay the full tax amount demanded in the notice by March 31, 2025, will benefit from this waiver. The waiver does not cover demand of erroneous refunds. (By inserting new section 128A).

B. Relief from retroactive GST action: To allow regularization of non-levy or short levy of GST, where tax was being short paid or not paid due to common trade practices (Insertion of new section 11A)

C. Mechanism for adjusting payments made under FORM GST DRC-03 – To recommend amending rule 142 of the CGST Rules and issuing a circular to outline a mechanism for adjusting payments made under FORM GST DRC-03 against the pre-deposit amount required for filing an appeal

D. Common time limit for issuance of demand notices u/s 73 and 74 of the CGST Act:- To recommend common time limit for issuance of demand notices and orders in respect of demands for FY 2024-25 onwards, in cases involving charges of fraud or willful misstatement and not involving the charges of fraud or willful misstatement etc.

Additionally, the time allowed for taxpayers to avail of reduced penalties by paying the tax demanded along with interest has been extended from 30 days to 60 days for FY 2024-25 onwards.

6. Ease of Doing Business under GST

A. Extension of time limit for filing return for Composition taxpayers (GSTR-4) – To recommend extending the time limit to furnish the detail and the returns in the form GSTR 4 from April 30to June 30. This will apply for returns for the Financial Year 2024- 25 onwards.

B. Reduction in Rate of TCS by E-commerce operator – To recommend to reduce the TCS rate from 1%(0.5% CGST + 0.5% SGST/ UTGST, or 1% IGST) to 0.5 % (0.25% CGST + 0.25% SGST/UTGST, or 0.5% IGST).

C. Exemption from filing Annual returns:- To recommend no annual return in FORM GSTR-9/9A for taxpayers having aggregate annual turnover upto Rs.2 crore rupees for F.Y. 2023-2024.

D. No interest to be charged on balance in Electronic Cash Ledger where filing of GSTR 3B is delayed by the taxpayer. (Amendment in Rule 88B)

E. GSTR-1A to facilitate taxpayer to amend details in FORM GSTR-1 – To recommend a new optional facility by way of Form GSTR-1A to facilitate the taxpayers to amend the details in Form GSTR-1 for a tax period and/ or to declare additional details, if any, before filing of return in Form GSTR-3B for the said tax period. 

F. Monthly Filing of GSTR-7 irrespective of any tax deducted: GSTR-7 to be filed monthly by TDS deductors without late fee for delayed filing of Nil returns.

G. Reduction in Threshold for B2C Inter-State Supplies: Threshold reduced from Rs. 2.5 lakh to Rs. 1 lakh for reporting B2C inter-State supplies invoice-wise in FORM GSTR-1.

H. Applicability of penal provisions u/s 122(1B), only for those e commerce operators, who are required to collect tax under section 52 of CGST Act, and not for other e-commerce operators. This amendment to have retrospective effect w.e.f. 01.10.2023.

7. ITC related issues:

A. Extension of availing ITC : The time limit to avail input tax credit in respect of any invoice or debit note under section 16(4) of the CGST Act filed up to the 30-11-2021 for the financial years 17-18, 18-19, 19-20 and 20-21 may be deemed to be 2011 to 30-11-2021.

Recently, the Kerala High Court in the case of M.Trade Links vide WP(C) NOS. 31559 OF 2019 AND OTHS. dated 04.06.2024, also held extension of due date to 30th November, addressing initial compliance difficulties.

B. Claim of ITC for period during registration was cancelled: To recommend retrospective amendment to Section 16(4) of the CGST Act from July 1, 2017, aims to provide conditional relief to taxpayers by allowing them to claim input tax credit (ITC) if they file all pending returns within 30 days of the order revoking the cancellation of their GST registration. This change ensures that taxpayers who comply with the specified conditions can benefit from ITC claims even after a period of registration cancellation.

C. ITC on ducts and manholes used in the network of Optical Fiber Cables: To clarify that ITC restricted in respect of ducts and manhole used in network of optical fiber cables (OFCs) u/s 17(5).

D. Time limit for availment of ITC by recipient under reverse charge mechanism for supplies received from un-registered supplier:- To clarify the relevant financial year for calculation of time limit for availment of ITC under the provisions of section 16(4) of CGST Act is the financial year in which the invoice has been issued by the recipient.

8. Refund related issues:-

1. Refund mechanism for additional IGST paid due to upward revision in price of the goods subsequent to export:- This mechanism aims to enable exporters to claim refunds of the additional IGST paid due to upward revisions in the export price of goods post-exportation.
2. IGST Refunds on Goods Subject to Export Duty: To recommend restriction on refund of IGST in cases where export duty is applicable. This restriction also to be applicable here such goods are supplied to a SEZ developer or a SEZ unit for authorized operations.

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

A. To clarify on taxability of re-imbursement of securities/shares as ESOP/ESPP/RSU provided by a company to its employees

B. To clarify requirement of reversal of ITC in respect of amount of premium in Life Insurance services, which is not included in the taxable value

C. To clarify taxability of wreck and salvage values in motor insurance claims

D. To clarify in respect of Warranty/ Extended Warranty provided by Manufacturers to the end customers

E. To clarify availability of ITC on repair expenses incurred by the insurance companies in case of reimbursement mode of settlement of motor vehicle insurance claims

F. To clarify on taxability of loans granted between related person or between group companies

G. To clarify on time of supply on Annuity Payments under HAM Projects.

H. To clarify regarding time of supply in respect of allotment of Spectrum to Telecom companies in cases where payment of licence fee and Spectrum usage charges is to be made in instalments

I. To clarify relating to place of supply of goods supplied to unregistered persons, where delivery address is different from the billing address

J. To clarify on mechanism for providing evidence by the suppliers for compliance of the conditions of Section 15(3)(b)(ii) of CGST Act, 2017 in respect of post-sale discounts, to the effect that input tax credit has been reversed by the recipient on the said amount.

K. To clarify on various issues pertaining to special procedure for the manufacturers of the specified commodities, like pan masala, tobacco etc.

10. Miscellaneous

A. Biometric-based Aadhaar authentication: To recommend to roll-out the biometric-based Aadhaar authentication of registration applicants on pan-India basis in a phased manner, following successful pilot implementations in states like Gujarat, Puducherry, and Andhra Pradesh. This will strengthen the registration process in GST and will help in combating fraudulent input tax credit (ITC) claims made through fake invoices.

B. Place of supply applicable for custodial services provided by banks: To clarify place of supply of Custodial services supplied by Indian Banks to Foreign Portfolio Investors is determinable as per Section 13(2) of the IGST Act, 2017.

C. Anti-Profiteering: Sunset clause from April 1, 2025, for new Anti-profiteering applications

D. Valuation of corporate guarantee provided between related persons: It is clarified that valuation under rule 28(2) of CGST Rules would not be applicable in case of export of such services and also where the recipient is eligible for full input tax credit.

The complete Press Release of 53rd GST Council Meeting can be accessed at https://taxo.online/wp-content/uploads/2024/06/53rd-Council-meet.pdf