The Goods and Services Tax (GST) Council held its 52nd Council meeting in New Delhi on Oct 7, 2023, chaired by Finance Minister Nirmala Sitharaman. The GST Council inter-alia made the following recommendations relating to changes in GST tax rates, measures for facilitation of trade and measures for streamlining compliances in GST:-
Changes in GST Tax Rates on Goods and Services:
Recommendations relating to GST rates on Goods:-
1) GST rates on “Food preparation of millet flour in powder form, containing at least 70% millets by weight”, falling under HS 1901, will be
- 0% if sold in other than pre-packaged and labelled form
- 5% if sold in pre-packaged and labelled form:-
2) 5% GST on imitation zari thread or yarn made out of metallised polyester film or plastic film (HS 5605) without refund due to inversion.
3) Foreign going vessels are liable to pay 5% IGST on the value of the vessel if it converts to coastal run. A conditional IGST exemption is given to a foreign flag and foreign going vessel when it converts to coastal run subject to its reconversion in six months.
4) The GST Council has ceded the right to tax the Extra Neutral Alcohol (ENA) used in liquor for human consumption to states.
5) GST on molasses has been reduced from 28% to 5%.
6) GST on ENA for industrial use to attract 18% by a separate tariff HS code.
Recommendations relating to GST rates on Service:-
1) GST exempted on pure and composite services to Central/State/UT governments and local authorities for Panchayat/Municipality functions.
2) GST exempted on water supply services, public health, etc., supplied to the government authorities, including composite services with up to 25% of the above services.
3) Job work services to process barley into malt attract 5% GST and not 18%, being “job work in relation to food and food products.
4) With effect from 1 January 2022, liability to pay GST on bus transportation services supplied through Electronic Commerce Operators (ECOs) has been placed on the ECO under section 9(5) of CGST Act, 2017.
5) The District Mineral Foundation Trust (DMFT) in mineral mining is eligible for the same GST exemptions as other government authorities.
6) All services provided by Indian Railways will be subjected to forward charge, with ITC available for discharging liabilities.
Measures for facilitation of trade:-
1) A GST Amnesty Scheme to extend the appeal filing time till 31.01.2024 against the 3 month time limit under the law for all the orders passed till March 2023 with 12.5% pre-deposit of tax, out of which 2.5% is paid in cash.
2) No GST would apply on personal guarantee offered by directors to the bank against the credit limits/loans sanctioned to the company.
3) Defined the taxable value for corporate guarantee provided between related persons (a holding company to its subsidiary) as 1% of the amount of such guarantee offered, or the actual consideration, whichever is higher.
4) CGST Section 159 to be amended: Automatic restoration of provisionally attached property after completion of one year.
5) The Council has recommended to issue a Circular to clarify the place of supply in respect of the following supply of services:-
- Supply of service of transportation of goods, including by mail or courier, in cases where the location of supplier or the location of recipient of services is outside India;
- Supply of advertising services;
- Supply of the co-location services
6) The Council has recommended to issues a circular to clarify the admissibility of export remittances received in Special INR Vostro account, as permitted by RBI, for the purpose of consideration of supply of services to qualify as export of services in terms of the provisions of sub-clause (iv) of clause (6) of section 2 of the IGST Act, 2017.
7) The Council has recommended to amend Notification No. 1/2023-Integrated Tax dated 31.07.2023 w.e.f. 01.10.2023 so as to allow the suppliers to a Special Economic Zone developer or a Special Economic Zone unit for authorised operations to make supply of goods or services (except the commodities like pan masala, tobacco, gutkha, etc.) to the SEZ developer or the SEZ unit for authorized operations on payment of integrated tax and claim the refund of tax so paid.
Other measures pertaining to law and procedures:-
1) Rules defined for composition of GSTAT:-
- Minimum age limit is 50 years while the maximum is 70 years for the President and 67 years for members of GSTAT.
- Advocates with 10 years’ experience in litigation under indirect tax laws can only be appointed as judicial members
2) ISD (Input Service Distributor) procedure as laid down in Section 20 of the CGST Act, 2017 may 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.
NOTE: – This article is for information only. All the recommendations shall be given effect only after the same has been notified by the CBIC (Central Board of Indirect taxes & Customs) through Notifications/Circulars in the Official Gazette.
