There have been significant updates to the GST Regime in India after the 53rd GST Council Meeting. The major updates were related to tax amendments, Aadhaar biometric integration, and exemptions in railway services along with many GST Compliance relaxations for businesses. Here is the list of all the important updates under the 53rd GST Council Meeting for you and your business.
GST Rates Change for Goods
- On Aircraft Parts and Tools: All parts, components, and tools used in aircraft, no matter their classification, will have a flat 5% IGST rate when imported. This is to help boost maintenance and repair operations, but there are some specific rules that need to be followed.
- On Poultry Equipment: The current GST rate for machinery used in poultry-keeping is 12%. Now, this will clearly include the parts of such machinery as well, to clear up any confusion from past interpretations.
- Defense Imports: Items specifically for the defense forces will continue to be exempt from IGST when imported. This exemption has been extended for another five years, until June 30, 2029.
- Research Equipment and Buoys: The import of certain research equipment and buoys, as part of the RAMA program for studying monsoons, will also keep its IGST exemption. This will continue as long as certain conditions are met.
- On Drinks at Defense Canteens: GST won’t be charged on aerated beverages and energy drinks when they’re supplied to authorized buyers through Unit Run Canteens under the Ministry of Defence.
- On Rifle Kit Documents: Any technical documents needed for AK-203 rifle kits, which are imported for the Indian Defense forces, are also exempt from IGST.
GST Rates Change for Services
- Services for Indian Railways: Services provided by Special Purpose Vehicles (SPVs) to Indian Railways, like using infrastructure during the concession period and maintenance, will not be subject to GST. This exemption clears up issues dating back to July 1, 2017.
- Accommodation Services Exemption: Accommodation services costing up to Rs. 20,000 per month per person will be GST-free if the stay is for at least 90 days. This change also applies to past situations, helping sort out previous cases.
- Co-insurance Premiums: Payments made between a main insurer and other co-insurers are now classified as ‘non-supply’ under the GST laws, meaning they’re not subject to GST. This also regularizes past situations.
- Re-Insurance Commissions: Commissions paid for re-insurance, which is when an insurance company purchases insurance to cover their own risk, are considered ‘non-supply’ and won’t be taxed under GST. This rule has been backdated to sort out previous cases.
- Reinsurance Services: The GST liability on reinsurance services for specific insurance schemes will be regularized from July 1, 2017, to certain specified dates.
- Retrocession in Re-insurance: Retrocession, which is the reinsurance of reinsurance, is clarified to be considered as re-insurance under a specific GST notification. This helps clear up any confusion on its tax status.
- RERA Collections: The GST law specifies that any statutory collections by the Real Estate Regulatory Authority (RERA) are exempt from GST. This clarification ensures there’s no ambiguity.
- Incentives Sharing in Banking: The sharing of incentives related to certain RuPay Debit Cards and BHIM-UPI schemes won’t be taxed. This clarification was made in consultation with the National Payments Corporation of India (NPCI) and the banks involved.
GST Council on Railway Services
The GST Council in it’s 53rd GST Council Meeting has made some relaxations and exemptions related to railways services. Following Railway Services are now exempted from GST:
- Platform ticket sale
- Retiring room facility
- Waiting rooms
- Cloakroom facilities
- Battery-operated car services
- Intra-rail transactions
GST Exempted on Hostel Accommodation
Students and working professionals now don’t have to pay GST for hostel accommodation outside educational institutions. However, this amount is capped only up to 20,000 per month. Also, This exemption applies only if the student or professional stays in the hostel for up to 90 days.
12% GST on Milk Cans
In the 53rd GT Council Meeting, it has been recommended that all Milk Cans now be taxed at a GST Rate of 12% regardless of their material such as steel, iron, or aluminium.
Reduction of GST on Carton Boxes
The government has now decreased the GST Rates on Carton Boxes including boxes and cases of both corrugated and non-corrugated paper or paper-board. The new tax rate is now 12% instead of 18%.
Standard GST Rate for Sprinklers
The GST Council has proposed a consistent 12% GST rate on all sprinklers, covering both fire and water sprinklers.
No GST on Extra Neutral Alcohol (ENA)
The GST Council has advised a change to the CGST Act, 2017, to make ENA, which is used to make alcoholic beverages for human consumption, exempt from GST.
GST for Petrol and Diesel
In the 53rd GST Council Meeting, the Finance Minister has said that the central government wants to bring Petrol and Diesel under the ambit of GST. However, it is up to the state governments to decide on whether petrol and diesel has to be brought under GST.
Interest Waiver on Penalties for Tax Notices
The GST Council has suggested waiving off interest and penalties on demand notices issued under Section 73 of the CGST Act for taxpayers not involved in fraud, suppression, or willful misstatements. This waiver applies to the financial years 2017-18, 2018-19, and 2019-20, provided that the full tax demanded is paid by March 31, 2025.
Due Date Extension for availing Input Tax Credit
The GST Council has recommended extending the deadline to claim input tax credit (ITC) for invoices or debit notes under Section 16(4) of the CGST Act. This extension covers GSTR 3B GST Return Filing for the financial years 2017-18, 2018-19, 2019-20, and 2020-21, with a new deadline set for November 30, 2021. Additionally, the Council proposed a retrospective amendment to Section 16(4), effective from July 1, 2017, to facilitate this extension.
New Financial Thresholds for Legal Appeals
To minimise government litigation, the GST Council has suggested setting new monetary thresholds for the department to file appeals in various courts. These are as follows:
- A monetary limit of Rs. 20 lakh for appeals in the GST Appellate Tribunal.
- A monetary limit of Rs. 1 crore for appeals in the High Court.
- A monetary limit of Rs. 2 crore for appeals in the Supreme Court.
Also Read: How to appeal against cancellation of GST registration in India
Interest Fee Waived for Late GST Return Filing
To lessen the interest burden on taxpayers, the GST Council has recommended waiving interest charges under Section 50 of the CGST Act for late filings of returns. However, you can only avail this waiver scheme in case the due amount was already present in the Electronic Cash Ledger (ECL) by the original due date.
GST Exemption for SEZs
The GST Council has proposed that SEZ (Special Economic Zone) units and developers be exempt from paying the Compensation Cess on imports used for authorized operations, effective from July 1, 2017.
Reduction in Pre-deposit for GST Appeals
To improve cash flow and reduce working capital constraints, the Union Finance Minister has suggested amending Sections 107 and 112 of the CGST Act. This amendment aims to lower the pre-deposit amount required for filing GST appeals.
Biometric Aadhaar Authentication for GST
The GST Council plans to introduce biometric-based Aadhaar authentication for those applying for GST registration across India in stages. This measure is intended to improve the registration process and prevent fraudulent input tax credit (ITC) claims involving fake invoices.
Sunset Clause for GST Anti-profiteering
The GST Council has decided that starting April 1, 2025, they will no longer accept new applications for anti-profiteering investigations under GST. This decision introduces a sunset clause, which essentially sets a final date for initiating these investigations. The rationale behind this move is to provide businesses with clarity and predictability by informing them that the regulatory oversight related to passing on tax benefits to consumers will not last indefinitely. By 2025, the market is expected to have adjusted to the GST regime, and the need for such stringent oversight will likely decrease, allowing businesses to operate with less regulatory burden.
Ease of Doing Business Measures under 53rd GST Council Meeting
- Reducing E-commerce TCS Rates: E-commerce operators will be reducing the Tax Collected at Source rates from 1% to 0.5%. Thus, lessening the financial strain on suppliers.
- Extending GSTR-4 Filing Deadline: The deadline for filing FORM GSTR-4 will be moving from April 30th to June 30th starting in 2024-25. Hence, you have now more time to prepare for the GST Return Filing.
- Amending Interest Calculation Rules: The government will be changing Rule 88B to not include amounts in the Electronic Cash Ledger when calculating interest for late returns.
- Introducing New GST Section: Section 11A will be introduced to handle cases of non-levy or under-levy of GST, based on council recommendations.
- Setting Up Export Price Refund Mechanism: A mechanism will be in place for claiming refunds on additional IGST paid on revised export prices, helping exporters manage finances better.
- Clarifying GST Issues: The government will be clarifying rules around input tax credit, valuation, and place of supply to reduce disputes and improve compliance.
- Allowing Transitional Credit for Services: Transitional credit for input services received before the appointed date will be allowed for Input Service Distributors.
- Launching FORM GSTR-1A: This form will allow taxpayers to correct or add supply details before their final GST Return filing and thus ensuring accurate tax returns.
- Exempting Small Taxpayers from Annual Return: Taxpayers with turnover up to two crore rupees won’t need to file an annual GST return for FY 2023-24.
- Clarifying Penalties for E-commerce Operators: Only e-commerce operators collecting tax under Section 52 will be subject to specific penal provisions.
- Uniform Deadline for GST Notices: From 2024-25, there will be a consistent timeframe for issuing GST demand notices and orders.
- Restricting IGST Refunds on Export Duties: Changes will ensure IGST refunds aren’t given for goods subject to export duties.
- Lowering Threshold for B2C Reports: The reporting threshold for B2C inter-state supplies in FORM GSTR-1 will drop from Rs. 2.5 lakh to Rs. 1 lakh.
- Requiring Monthly Filing for GSTR-7: Monthly filings for FORM GSTR-7 will be required. However, there will also be provisions for no late fee on nil returns and mandatory invoice details.
Moreover, If you want any other guidance relating to 53th GST Council Meeting, please feel free to talk to our business advisors at 8881-069-069.
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