20 Important Decisions of 50th GST council meeting

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50TH GST COUNCIL MEETING WAS HELD ON 11 JULY 2023 AT VIGYAN BHAWAN NEW DELHI AND ANNOUNCED MAJOR CHANGES IN GST RELATED TO RATE, AND PROCEDURES.

1. Reverse Charge Mechanism:

No RCM on services supplied by Directors to Company in Personal or Private Capacity: It has been decided to clarify that services supplied by a director of a company to the company in his private or personal capacity such as supplying services by way of renting of immovable property to the company or body corporate are not taxable under RCM.

Only those services supplied by a director of company or body corporate, which are supplied by him as or in the capacity of director of that company or body corporate shall be taxable under RCM in the hands of the company or body corporate under notification No. 13/2017-CTR (Sl. No. 6) dated 28.06.2017.

It means company responsible under RCM only for services supplied in the professional capacity of the Director.

Detailed Circular will be issued soon

2. Relief to Transporters (GTA):

Transporters will not be required to file Annexure-V to opt GST under forward charge every year

it has been decided that GTAs will not be required to file declaration for paying GST under forward charge every year. If they have exercised this option for a particular financial year, they shall be deemed to have exercised it for the next and future financial years unless they file a declaration that they want to revert to reverse charge mechanism (RCM).

It has also been decided that the last date of exercising the option by GTAs to pay GST under forward charge shall be 31st March of preceding Financial Year instead of 15th March. 1st January of preceding Financial Year shall be the start date for exercise of option.

Notification will be issued soon

3. New Forms/Returns announced for Mismatch in GSTR-3B VS 2B Vs 1

Form DRC-01C: New Rule 88D inserted and a new Form DRC-01C announced to provide for system-based intimations to taxpayers in respect of the excess ITC claims in their GSTR-3B vis a vis the ITC available in the GSTR-2B above a certain threshold limit.

Form GST DRC-01D: New Form DRC-01D announced in case of Recovery of tax and Interest as per rule 88C in case taxpayer not paid or reply to mismatch in liability in GSTR-1 and GSTR-3B via intimation in DRC-01B

Notification will be issued soon

4. Mandatory E-way bill for Intra-state movement of Gold &  precious stones:

New Rule 138F inserted:

The Council has recommended to insert rule 138F in CGST Rules, 2017, as well as in SGST Rules, 2017 of the States, who want to mandate the requirement of generation of e-way bills for intra-State movement of gold and precious stones under Chapter 71 within their States.

This change will applicable statewise as states have power to do so, if they want.

Notification will be issued soon

5. GST on online Gaming, casino and Horse Racing:

28% GST on Online Gaming was the most discussed topic on the day of GST council meeting.

28% GST on the value of the chips purchased in casinos
28% GST on the full value of the bets placed in Online Gaming
28% GST on full value of bets placed with bookmaker/totalisator in case of Horse Racing

Suitable amendments to be made to law to include online gaming and horse racing in schedule III as taxable actionable claims.

Notification will be issued soon

6. Change in ISD (Input Service Distributor Mechanism)

ISD mechanism is not mandatory for distribution of ITC of common input services procured from third parties to the distinct persons (i.e. businesses with different GSTINs
but under the same PAN) as per the present provisions of GST law.

Amendment may be made in GST law to make ISD mechanism mandatory prospectively

Detailed circular will be issued soon

7. Changes in Refund

Refund of Accumulated input tax credit claim

GSTR-2B is now your most important document: Refund of accumulated input tax credit (ITC) to be restricted to ITC appearing in FORM GSTR-2B

w.e.f 1st January 2022, refund of accumulated ITC (as claimed under Section 54(3) of the CGST Act, 2017) for a tax period is to be restricted only to the ITC on inward supplies reflected in the GSTR-2B of the said tax period or any previous tax period

Explanation to Rule 89(4)

The value of export goods should be included in “adjusted total turnover” while calculating the refund of accumulated ITC in case of zero-rated supply of goods or services or both without payment of tax under bond or letter of undertaking.

Admissibility of refund after the time limit provided under rule 96A

It is clarified that in the case of the export of goods or services under the bond or letter of undertaking, taxpayers can claim a refund only after the expiry of the time limit mentioned under rule 96A of CGST Rules, 2017. The time limit is 15 days after 3 months in case of export of goods and 15 days after 1 year in case of export of service, respectively, from the date of the export invoice.

Detailed circular will be issued soon

8. Exemption for GSTR-9 and GSTR-9C for FY 2022-23 & Notice in case of non compliance

Relaxations provided in FY 2021-22 in respect of various tables of FORM GSTR-9 and 9C to be continued for FY 2022-23

Exemption from filing of annual return (in FORM GSTR-9/9A) for taxpayers having aggregate annual turnover upto two crore rupees, to be continued for FY 2022-23 also

System Based Notice (GSTR-3A) in case taxpayers not filed GSTR-9/9A by Due date

Notification will be issued soon

9. GST Appellatte Tribunal:

GST Appellate tribunal will be started in a phased manner

Provisions of Finance Act, 2023 pertaining to GST Appellate Tribunal may be notified by the Centre with effect from 01.08.2023, so that the same can be brought into operation at the earliest.

Further the council has recommended the Chief Secretary of Maharashtra to be nominated as one of the members of the Search cum selection committee as per Section 110(4)(b)(iii) of CGST Act 2017. Regarding the number of State Benches, it was decided to start them in a phase wise manner.

Notification will be issued soon

10. GST levy on parts replacement and repairs during warranty period

GST liability and Reversal of ITC in cases involving warranty replacement of parts and repair services during warranty period without any consideration from the customers, clarifying inter alia that no GST is chargeable by the manufacturer on such replacement of parts and/ or repair service and also, no reversal of input tax credit is required to be made by the manufacturer.

Detailed Circular will be issued soon

11. TCS liability under Section 52

TCS liability under Sec 52 of the CGST Act, 2017 in cases where multiple E-commerce Operators (ECOs) are involved in a single transaction of supply of goods or services or both.

Open Network for Digital Commerce (ONDC) is a new initiative of the department for promotion of industry and internal trade (DPIIT). So far, there is no clarity on who should be liable for TCS compliance under GST laws.

The confusion regarding liability of TCS deduction arises in the case of the market place model — where two intermediaries are involved in a single transaction.

Here, a buyer places an order on an e-commerce platform (buyer app) who then sources it from another e-commerce entity (seller app). The seller app then procures the goods from the actual supplier.

Detailed Circular will be issued soon

12. Change in Invoice Rules of ECO Rule 46(f):

Only Name of state of Recipient on tax invoice is required, not the name and full address of the recipient, in cases of supply of taxable services by or through an ECO or by a supplier of OIDAR services to an unregistered recipient.

Detailed Circular will be issued soon

13. Amendment in GST Registration Rules:

Blocking of GSTR-1 and Suspension of Registration in case Bank Details not provided within the new time limit after getting New GST number

Amendment in rule 10A to provide that the details of bank account twithin 30 days of grant of registration or before filing FORM GSTR-1/ IFF, whichever is earlier.
Amendment in rule 21A(2A) to provide for system-based suspension of the registration in respect of such registered persons who do not furnish the details of valid bank account under rule 10A with the time period prescribed under the said rule.
Insertion of 3rd proviso in rule 21A(4) to provide for automatic revocation of such system-based suspension upon compliance with provisions of rule 10A.
Amendment in rule 59(6) to provide that where a registered person has not furnished details of a valid bank account under rule 10A, the said registered person may not be allowed to furnish FORM GSTR-1/IFF.

Physical Verification of Principal place of business for a person applied for New GST Registrations

Amendment in rule 9 and rule 25:
- Physical verification of business premises is to be conducted in the presence of the applicant and
- Physical verification in high risk cases even where Aadhaar has been authenticated.

Risk Based Bio Metirc Authenticaton

Pilot to be conducted in U.T. of Puducherry for risk-based biometric-based Aadhaar authentication of registration applicants. The State of Andhra Pradesh also expressed its intent to join this pilot after the system’s readiness is tested in the state of Gujarat and U.T. of Puducherry.

Notification will be issued soon

14. Tran-1 & Tran-2

The GST Council has recommended that the GST authorities set up special procedures for manual filing of appeals against the orders passed by proper officers in respect of TRAN-1 and TRAN-2 claims filed by taxpayers

Rule 108(1) and rule 109(1) of CGST Rules, 2017 to be amended to provide for manual filing of appeal under certain specified circumstances

This needed because In some cases, taxpayers even received notices from the GST department in this regard. This change will benefit such taxpayers who wish to appeal against these notices.

Detailed Circular will be issued soon

15. GST Amnesty Scheme

Extend the amnesty schemes notified vide notifications dated 31.03.2023 regarding non-filers of FORM GSTR-4, FORM GSTR-9 & FORM GSTR-10 returns, revocation of cancellation of registration and deemed withdrawal of assessment orders issued under Section 62 of CGST Act, 2017, till 31.08.2023

Notification to change the earlier notification issued in March 2023 will be issued soon

16. Special procedure, Special Penalty, Special Refund Route & Special Monthly Returns for manufacturers of tobacco, pan masala & other similar items

Issuance of notification under section 148 of CGST Act, 2017 prescribing a special procedure to be followed by the manufacturers of tobacco, pan masala & other similar items for Registration of machines and for filing of special monthly returns;
Insertion of New section 122A in CGST Act, 2017 providing for special penalty for non-registration of machines by such manufacturers
provisions of section 123 of Finance Act, 2021, amending section 16 of IGST Act, to be notified with effect from 01.10.2023 and notification to be issued under section 16(4) of IGST Act. 2017 to provide for restriction of IGST refund route in respect of exports of tobacco, pan masala & other similar items as well as mentha oil.

Notification will be issued soon

17. Change In GSTR 5A (Return of OIDAR)

Rule 64 and FORM GSTR-5A of CGST Rules, 2017 to be amended to require OIDAR service providers to provide the details of supplies made to registered persons in India in his return in FORM GSTR-5A.

This will help in tracking due payment of tax on reverse charge basis by such registered persons in India in respect of supplies received from OIDAR service providers.

18. Extended the special procedure regarding mismatch in ITC availed in GSTR-3B&  2A for two more years

As per the recommendations of the Council in its 48th meeting, Circular No. 183/15/2022-GST dated 27th December, 2022 was issued to provide for the procedure for verification of input tax credit in cases involving difference in Input Tax Credit availed in FORM GSTR-3B vs available as per FORM GSTR-2A during FY 2017-18 and 2018-19.

To provide further relief to the taxpayers, the Council recommended for further issuance of a circular to provide for similar procedure for verification of input tax credit in cases involving difference in Input Tax Credit availed in FORM GSTR-3B vs available as per FORM GSTR-2A during the period 01.04.2019 to 31.12.2021. (for 2019-20 & 2020-21)

Detailed Circular will be issued soon

19. Change in GST Rate for Food supplied in Cinema Hall

It has been decided to clarify that supply of food and beverages in cinema halls is taxable as restaurant service as long as

(a) they are supplied by way of or as part of a service and

(b) supplied independently of the cinema exhibition service.

Where the sale of cinema ticket and supply of food and beverages are clubbed together, and such bundled supply satisfies the test of composite supply, the entire supply will attract GST at the rate applicable to service of exhibition of cinema, the principal supply

Supply of food and beverages in cinema halls is taxable at 5%

Notification will be issued soon

20. Other Clarifications:

To clairify Requirement of E-Invoice for the supplies made to Government Departments or establishments / Government agencies / local authorities / PSUs, etc., registered solely for the purpose of TDS.

To clarify the manner of calculation of interest amount u/s 50(3) in respect of wrongly availed and utilized IGST credit, clarifying inter alia that in cases of wrong availment of IGST credit, the balance of input tax credit (ITC) in electronic credit ledger, under the heads of IGST, CGST and SGST taken together, has to be taken in consideration while calculating such interest liability as per rule 88B of CGST Rules, 2017

To clarify that mere holding of securities of a subsidiary company by a holding company cannot be treated as a supply of services and therefore, cannot be taxed under GST

Other Changes in GST Rates of Goods & Services: https://taxupdates.cagurujiclasses.com/changes-in-gst-rates-of-goods-services-announced-in-50th-gst-council-meeting/