48th GST Council Meeting – Latest GST Updates and Highlights

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On December 17, 2022, a Saturday, the 48th GST Council meeting was virtually held in New Delhi. The meeting was presided over by Smt. Nirmala Sitharaman, the Union Finance Minister, and included the Finance Ministers of the states and Union Territories.

The 48th GST Council meeting had a packed agenda because it was held after a gap of five to six months. In June 2022, the GST Council had its 47th meeting. Discover the highlights,  updates, and important concepts of the 48th GST Council Meeting from this article.

Highlights of the 48th GST Council Meeting

The Council discussed eight of the fifteen themes on its agenda, including issues relating to data-sharing. The remaining issues include those related to revenue enhancement, the creation of a GST appellate tribunal, and the GST on gutkha and pan masala. The majority of the GST Council members reported a need to end the meeting early owing to time constraints.

The following is a summary of the 48th GST Council meeting’s major points:

  • Decriminalization of three types of GST offences:
    • Obstruction of an officer’s performance of duties;
    • Increase in the tax threshold amount for launching a criminal GST offence from the current limit of Rs. 1 crore to Rs. 2 crores, except where fake invoices are involved;
    • and decriminalisation of compounding of offence up to a certain limit in order to lessen the workload of courts;
  • GST on pulse husks for cow feed (including chilka and concentrates) was decreased from 5% to 0% as part of a few rate rationalisation issues.
  • The 5% GST on ethyl alcohol that was previously paid at a concessionary 18% rate was also extended to refineries for the purpose of mixing with gasoline.
  • A few tax-related issues were clarified, including the GST on equipment used by oil companies for exploration and how to handle invoice mismatches in GSTR-1 and GSTR-3B in the early years.
  • To make e-commerce more accessible to all micro-businesses, e-commerce operators can let suppliers to be both have GST Registration under the composition system and unregistered vendors.
  • The 48th meeting’s agenda did not include the second report on casinos and online gaming because it was not distributed.
  • Regarding a GST rate increase, no decision has been made.
  • Cess on SUV at 22% clarified: Apply if 4 conditions are met
    • Popularly referred to as an SUV, these vehicles have an engine with a displacement of at least 1500 cc, a length of at least 4000 mm, and a ground clearance of at least 170 mm.
  • Furthermore, the Council made it clear that the No-claim incentive provided by insurance firms is not subject to the  GST on insurance, making it deductible from the premium without a GST charge.

GST changes to facilitate trade and business

(1) GST decriminalisation:

The following three offences in violation of the GST legislation have been decriminalised by the Council:

With the exception of fraudulent invoices, the tax threshold for starting a GST prosecution or pursuing criminal action has been raised from Rs. 1 crore to Rs. 2 crore. In other words, if the tax amount exceeds Rs. 1 crore, offences involving the issuance of bills without the sale of goods or services, or both, or dealing with phoney invoices continue to be prosecuted.

reduction of the compounding amount to 25%–100% from the present tax range of 50%–150%

There are some offences covered under Section 132(1) Clauses (g), (j), and (k) of the CGST Act, such as hindering an official from carrying out their duties, purposefully tampering with important evidence, and failing to deliver the information.

(2) New rules for GST refunds apply to unregistered individuals:

When a contract or agreement for the sale of services like flat or house construction and long-term insurance policy was cancelled and the supplier’s deadline for issuing credit notes passed, there was previously no clear method for refund claims from customers who were not registered under GST.

The GST Council resolved to amend the CGST Rules and instructed CBIC to issue a circular outlining the process for such unregistered buyers to submit a refund application.

(3) Make e-commerce easier for small businesses starting on October 1st, 2023:

Suppliers, dealers, and composition taxpayers who have not registered for GST will be permitted to sell items through state-licensed e-commerce companies beginning on October 1st, 2023, subject to certain restrictions.

Within the timeframe specified, CBIC and GSTN will prepare the GST portal for the new functionality, modify the Act, and make the appropriate changes to the Rules via notifications.

(4) Clarifying the effective date for new Schedule III GST entries:

Beginning on February 1, 2019, new entries were added to Schedule III (Items not subject to GST), including paragraphs 7 (sale from one non-taxable territory to another, such as high sea sales), 8(a) (sale of warehoused goods prior to clearance for domestic consumption), and 8(b) (Sale of goods by the consignee to any other person where goods are dispatched from the foreign port but before clearance for home consumption).

The GST Council suggested that these additions be made effective as of the beginning of the GST because there was uncertainty over their taxability from 1 July 2017 through 31 January 2019. However, there would be no reimbursement of already paid taxes.

(5) Input Tax Credit (ITC) Reversal for Invoices Not Paid Within 180 Days:

According to the second proviso of Section 16 of the CGST Act, CGST Rule 37(1) will be retroactively amended on October 1, 2022, to allow for the reversal of input tax credits. However, this will only apply to the extent that the invoice amount owed to the supplier is less than the value of the supply, along with any tax due.

(6) New CGST Rule 37A for ITC reversal where supplier does not make tax deposit:

The GST Council voted to add Rule 37A to the CGST Rules, which would outline how to reverse ITC claims made on taxes that the supplier failed to deposit by a given deadline. Additionally, the procedure for reclaiming such ITC in cases when the supplier pays it later will be made available.

The need for obtaining an input tax credit under Section 16(2)(c) of the CGST Act is made simple to comply with.

(7) Changes for quicker and more efficient processing of GST appeals:

A certified copy of the order against which the appeal is filed and the final acknowledgment issued by the appellate body must be submitted, according to changes made to CGST Rules 108(3) and 109.

New form GST APL-01/03 W and modification to CGST Rule 109C: provides the option to withdraw an appeal application up to a specific determined point, preventing disputes with appellate authority.

(8) Insurance

No Claim Bonus (NCB) provided by insurance firms is permitted as a deduction from the taxable premium amount for valuation reasons, particularly in motor vehicle insurance.

(9). The following topics will be covered in new GST Circulars:

  • Treatment of outstanding GST due from bankrupt firms where Insolvency and Bankruptcy Code, 2016 proceedings are filed (IBC). Form DRC-25 and Rule 161 of the CGST Rules will be updated as a result.
  • Location of the provision of mail/courier services for the transportation of goods to locations outside of India pursuant to the proviso of Section 12(8) of the IGST Act and the recipient’s accessibility to ITC. The Council additionally advises that the law’s proviso be removed.
  • Procedure for confirming ITC discrepancies for FY 2017–18 and 2018–19 between GSTR-3B and GSTR-2A. It would lessen the need for legal action and provide taxpayers and officers with much-needed clarity.
  • Redetermination of the demand in accordance with Section 75(2) of the CGST Act. Consider a scenario in which the tax officer alleges that there has been tax evasion, return suppression, or fraud but has not provided any evidence to support this. The taxes must be recalculated in accordance with Section 73 and not Section 74.
  • E-suitability invoicing for a business entity. For instance, if the turnover for FY 2022–23 surpasses the Rs. 10 crore threshold limit, it will depend on whether e-invoicing begins on April 1, 2023, the start of the following fiscal year, or on January 1, 2023, the start of the present fiscal year.

(10). Granting TDS deductors and TCS collectors GST registration:

A facility for the GST-registered TDS deductor and TCS collectors to seek for the revocation of GST registration will be added to CGST Rule 12(3).

Important Note: Notifications and circulars announcing the aforementioned modifications have not yet been released by CBIC. The modifications will take effect as of the notification date or the date specified in the notification.

GST Compliance Streamlining

  • A pilot programme in Gujarat is being suggested to implement biometric-based Aadhaar authentication and risk-based physical verification of GST registration applicants in order to reduce fictitious and fraudulent registrations.
  • To prevent the misuse of a person’s PAN and to stop identity theft and fraud, Form REG-01 will collect PAN-linked cellphone numbers and email IDs (from the CBDT database).
  • With this amendment, no GST Return Filing or statements—including GSTR-1, GSTR-3B, GSTR-4, GSTR-9, GSTR-9C, and others—may be filed more than three years after the due date.
  • CGST Act Sections 52 and 9(5) have been amended to allow e-commerce operators and sellers to declare sales made through e-commerce operators.
  • Insertion of CGST Rule 88C and form DRC-01B for notification to the taxpayer by the GST portal for any tax liability variations between GSTR-1 and GSTR-3B for a tax period above a set amount and/or percentage, to either pay the difference or explain it.
  • Additionally, if the taxpayer has not deposited the tax specified in the intimation, a new clause (d) will be added to CGST Rule 59(6) to restrict the filing of GSTR-1 for upcoming tax months. Additionally, if he didn’t respond to the notification of the pending unpaid tax without the help of the tax officials, the restriction might still be in effect.
  • To reduce ambiguities in interpretation and legal disputes regarding the taxation of OIDAR Services, the definitions of “non-taxable online recipient” under section 2(16) of the IGST Act, 2017 and “Online Information and Database Access or Retrieval Services (OIDAR)” under section 2(17) of the same act have been modified.

Notifications and circulars announcing the aforementioned modifications have not yet been released by CBIC. The modifications will take effect as of the notification date or the date specified in the notification.

Shri Sanjay Malhotra, the Revenue Secretary, and the Honorable Union FM, Smt. Nirmala Sitharaman spoke to the media about the aforementioned results. Additionally, they made it clear that GST on horse races, gambling, and other forms of online gaming would be discussed at future meetings since the issue or GoM report couldn’t be distributed before Saturday.

The GoM’s report on GST and the taxes of online gambling may be discussed during the 49th GST Council meeting, which may be set for February 2022.

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