On February 18, 2023, the 49th GST Council convened in New Delhi under the leadership of Smt. Nirmala Sitharaman, the Union Minister for Finance and Corporate Affairs.
In attendance were Union Minister of State for Finance Shri Pankaj Chaudhary, finance ministers from states and union territories with legislatures, as well as senior officials from the Ministry of Finance and states/union territories.
Several proposals were put forward by the Council, which included recommendations on GST compensation, the GST Appellate Tribunal, capacity-based taxation, and special composition schemes designed for specific sectors.
Let’s understand the latest changes and key decisions of the 49th GST Council Meeting.
Govt of India to Clear Outstanding GST Compensation Balance for June 2022
- The Government of India has made the decision to settle the outstanding balance of GST compensation for June 2022, which amounts to Rs. 16982 crore as displayed in the table below.
- As there is no remaining amount available in the GST compensation Fund, the central government will use its own resources to provide this amount and will recover it from future compensation cess collections.
- By making this payment, the central government will have fulfilled its obligation to pay the provisionally admissible compensation for five years as per the GST (Compensation to States) Act 2017.
- Furthermore, the central government will also clear the final admissible GST compensation for those states who have provided revenue figures that have been certified by the Accountant General of the States, and this amount comes to a total of Rs. 16,524 crore.
| S. No. | Name of State/UT | Balance GST compensation pending for June 2022 (Rs. In crore) |
| 1 | Andhra Pradesh | 689 |
| 2 | Bihar | 92 |
| 3 | Chhattisgarh | 505 |
| 4 | Delhi | 1212 |
| 5 | Goa | 120 |
| 6 | Gujarat | 865 |
| 7 | Haryana | 629 |
| 8 | Himachal Pradesh | 229 |
| 0 | Jammu and Kashmir | 210 |
| 10 | Jharkhand | 342 |
| 11 | Karnataka | 1934 |
| 12 | Kerala | 780 |
| 13 | Madhya Pradesh | 730 |
| 14 | Maharashtra | 2102 |
| 15 | Odisha | 529 |
| 16 | Puducherry | 73 |
| 17 | Punjab | 995 |
| 18 | Rajasthan | 815 |
| 19 | Tamil Nadu | 1201 |
| 20 | Telangana | 548 |
| 21 | Uttar Pradesh | 1215 |
| 22 | Uttarakhand | 345 |
| 23 | West Bengal | 823 |
| Total | 16,982 |
Council Adopts Report of GoM on GST Laws with Amendments
- The report of the Group of Ministers was approved by the Council with some alterations.
- The proposed amendments to the GST laws will be shared with Members for their input in the form of a final draft.
- The responsibility of finalising the amendments has been delegated to the Chairperson.
Council Approves Measures to Increase Revenue Collection and Tackle Evasion for Pan Masala, Gutkha, and Chewing Tobacco
- The Council has given its approval to the recommendations put forth by the Group of Ministers to increase revenue collection and prevent leakage for commodities like chewing tobacco, gutkha, and pan masala.
- The suggestions include
- Discontinuing the capacity-based levy,
- Taking compliance and tracking measures to prevent evasion,
- Allowing exports only with LUT and subsequent refund of accumulated ITC,
- Changing the compensation cess levy for these commodities from ad valorem to a specific tax-based levy in order to boost the initial stage of revenue collection.
- Due to uncertainty regarding the classification and applicable GST rate for ‘rab’ during the past period, it has been decided to regularise its GST payment on an “as-is basis.”
- Notification No. 104/94-Customs dated 16.03.1994 will be amended to exempt tag-tracking devices or data loggers already attached to containers from separate IGST levies. Such devices will now receive the same “nil” IGST treatment as the containers themselves, subject to existing conditions.
- The entry at Sl. No. 41A of notification No. 1/2017-Compensation Cess (Rate) will be amended to provide exemption benefits for both coal rejects supplied to and by a coal washery, on which compensation cess has been paid, and for which no input tax credit has been claimed by any party.
- The exemption available to educational institutions and Central and State educational boards for the conduct of entrance examinations will now extend to any authority, board or body set up by the Central or State Governments, including the National Testing Agency, for admission to educational institutions.
- The dispensation available to the Central Government, State Governments, Parliament, and State Legislatures for payment of GST under the reverse charge mechanism (RCM) will now extend to Courts and Tribunals, who will not have to pay GST on taxable services supplied to them, such as renting premises to telecommunication companies for tower installation or renting chambers to lawyers, under RCM.
Extension in Time Limit for Application of Revocation of Cancellation of GST Registration
- The Council has proposed amendments to Section 30 of the CGST Act, 2017, and Rule 23 of the CGST Rules, 2017. The changes are intended to increase the time limit for submitting an application for revocation of cancelled GST registration from 30 days to 90 days.
- In case the registered person fails to apply for revocation within 90 days, the Commissioner or an authorised officer may extend the time period by up to 180 days.
- Furthermore, an amnesty provision has been recommended for past cases where registration was cancelled due to evading GST Return Filing but the application for revocation could not be submitted within the time limit specified in Section 30 of the CGST Act. These individuals will be allowed to file an application for revocation by a specified date, subject to certain conditions.
Changes to the CGST Act to allow for conditional withdrawal of assessment orders
- According to subsection (2) of section 62 of the CGST Act, 2017, the issuance of a best judgement assessment order under subsection (1) of the same section will be considered withdrawn if the appropriate return is filed within 30 days of receiving the assessment order.
- The Council has recommended an amendment to extend the time period for filing such returns to 60 days, with an option to further extend it by another 60 days, subject to certain conditions.
- In addition, the Council has suggested an amnesty scheme to conditionally withdraw assessment orders in past cases where the relevant return could not be filed within 30 days of the assessment order, but has since been filed along with interest and late fees up to a specific date, regardless of whether an appeal has been filed or not, or whether the appeal has been resolved.
Late Fee Structure for Delayed Filing of Annual Return in FORM GSTR-9
- At the moment, there is a late fee of Rs 200 per day (Rs 100 CGST + Rs 100 SGST) for delayed filing of annual return in FORM GSTR-9, which cannot exceed 0.5% of the turnover in the State or UT (0.25% CGST + 0.25% SGST).
- However, for the fiscal year 2022-23 onwards, the Council has recommended a revised late fee structure for registered persons with an aggregate turnover up to Rs 20 crore.
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- For those with an aggregate turnover up to Rs 5 crore, the late fee will be Rs 50 per day (Rs 25 CGST + Rs 25 SGST), subject to a maximum of 0.04% of their turnover in the State or Union territory (0.02% CGST + 0.02% SGST).
- For registered persons with an aggregate turnover between Rs 5 crore and Rs 20 crore, the late fee will be Rs 100 per day (Rs 50 CGST + Rs 50 SGST), subject to a maximum of 0.04% of their turnover in the State or Union territory (0.02% CGST + 0.02% SGST).
Amnesty Schemes for Pending Returns in FORM GSTR-4, GSTR-9, and GSTR-10
- The Council proposed amnesty schemes, which include a conditional waiver or reduction of late fees, to alleviate the burden of pending returns in FORM GSTR-4, FORM GSTR-9, and FORM GSTR-10 for a considerable number of taxpayers.
Rationalisation of Place of Supply Provision for Transportation of Goods Services
- The Council suggested the removal of section 13(9) of the IGST Act, 2017 to rationalise the place of supply for transportation of goods services.
- The proposed change would mandate that the location of the recipient of services be the place of supply for transportation of goods/services when either the supplier or the recipient of the services is located outside India.
Important Note for 49th GST Council Meeting – Latest GST Updates and Highlights
It is important to note that the recommendations above will only be legally binding once they are implemented through relevant circulars, notifications, or amendments to laws.
Conclusion
The 49th GST Council meeting was held on February 18, 2023, in New Delhi under the leadership of Smt. Nirmala Sitharaman. Proposals were made regarding GST compensation, the GST Appellate Tribunal, capacity-based taxation, and special composition schemes for specific sectors.
48th GST Council Meeting – Latest GST Updates and Highlights
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