In the 53rd GST Council meeting held on June 22, 2024, several measures were proposed to ease compliance and reduce litigation for taxpayers. Wait for the Notification or circulars to know the applicable dates and other changes
Read Detailed Press Release of 53rd GST Council meeting
The key highlights and clarifications are summarized below:
Key Measures Announced
- Waiver of Interest and Penalty under Section 128A of CGST Act for F.Y. 2017-18 , 2018-19, 2019-20
- New Section 128A: Provides conditional waiver of interest or penalties for demands raised under Section 73.
- Condition: Taxpayers must pay the full amount of tax demanded by March 31, 2025.
- Exclusions: Demands related to erroneous refunds are excluded.
- Reduction of Government Litigation by Fixing Monetary Limits for Filing Appeals under GST
- Monetary Limits:
- GST Appellate Tribunal (GSTAT): Rs. 20 lakhs
- High Court: Rs. 1 crore
- Supreme Court: Rs. 2 crores
- Exclusions: Certain exclusions apply to these limits.
- Monetary Limits:
- Amendment in Pre-Deposit Requirements for GST Appeals
- Reduced Pre-Deposit Amounts:
- Appellate Authority: Maximum reduced to Rs. 20 crores CGST and SGST.
- Appellate Tribunal: Reduced to 10% of disputed tax, maximum Rs. 20 crores CGST and SGST.
- Impact: Alleviates financial burdens, improves cash flow, and expedites dispute resolution.
- Reduced Pre-Deposit Amounts:
- Taxation of Extra Neutral Alcohol (ENA) under GST
- GST Exclusion: ENA excluded from GST when supplied for manufacturing alcoholic liquors.
- Amendment: Proposed amendment to sub-section (1) of Section 9 of the CGST Act, 2017.
- Reduction in Rate of TCS by ECOs
- Current Requirement: ECOs to collect 1% TCS on net taxable supplies.
- Proposed Reduction: Lowered to 0.5% (0.25% CGST + 0.25% SGST/UTGST, or 0.5% IGST).
- Time for Filing Appeals in GST Appellate Tribunal
- Amendment to Section 112: Three-month period for filing appeals starts from a Government-notified date.
- Relaxation in Condition of Section 16(4) of the CGST Act F.Y. 2017-18 , 2018-19, 2019-20
- Initial Years of GST Implementation: Time limit for ITC availing extended to November 30, 2021.
- Revoked Cancellations: Returns filed within thirty days of revocation order eligible for ITC.
- Change in Due Date for Filing FORM GSTR-4 for Composition Taxpayers
- Current Due Date: April 30th.
- Recommended Change: Extended to June 30th for financial year 2024-25 onwards.
- Amendment of Rule 88B of CGST Rules, 2017 Regarding Interest on Delayed Filing
- Proposed Amendment: ECL balance on due date excluded from interest calculation for delayed filing.
- Insertion of Section 11A in CGST Act
- New Provision: Government empowered to regularize situations where GST was not levied due to common trade practices.
- Refund of Additional IGST Paid on Upward Price Revision Post-Export
- Proposed Solution: Mechanism for claiming refunds of additional IGST due to post-export price revisions.
- Clarification on Valuation of Imported Services by Related Persons
- Valuation for Full ITC Eligibility: Value declared in the invoice by domestic entity deemed as open market value.
- ITC on Ducts and Manholes for Optical Fiber Cables
- Clarification: ITC not restricted for ducts and manholes used in the network of optical fiber cables.
- Place of Supply for Custodial Services by Banks
- Determination: Place of supply for custodial services to Foreign Portfolio Investors determined as per Section 13(2) of the IGST Act, 2017.
- Valuation of Corporate Guarantee Between Related Persons
- Amendment to Rule 28(2): Retrospective amendment effective from October 26, 2023, to clarify valuation issues for corporate guarantees.
- Applicability of Section 16(4) for RCM Invoices
- Clarification: Relevant financial year for ITC time limit under Section 16(4) is the year when the invoice is issued by the recipient.
Clarifications to Reduce Litigation and Provide Clarity
| Topic | Clarification |
|---|---|
| Taxability of ESOP/ESPP/RSU | Uniform approach to handling reimbursements of securities/shares under employee stock plans. |
| Reversal of ITC for Life Insurance Premium | Requirement for reversing ITC on premiums not included in taxable value. |
| Taxability of Wreck and Salvage Values | Clarified taxability of wreck and salvage values from motor insurance claims. |
| Warranty Services | Consistent GST application for warranty and extended warranty services. |
| ITC on Repair Expenses by Insurance Companies | ITC availability on repair expenses for motor vehicle insurance claims. |
| Taxability of Loans Between Related Persons | Clarified GST implications on financial transactions between related persons or group companies. |
| Time of Supply on Annuity Payments | Determined for Hybrid Annuity Model (HAM) projects. |
| Time of Supply for Spectrum Allotment | Timeline for GST liability on spectrum allotment. |
| Place of Supply for Goods Delivered to Unregistered Persons | Correct application of place of supply rules where delivery address differs from billing address. |
| Evidence for Compliance with Section 15(3)(b)(ii) | Mechanism for suppliers to provide evidence for post-sale discount conditions. |
| Special Procedure for Manufacturers of Specified Commodities | Clear guidelines for manufacturers of commodities like pan masala and tobacco. |
Additional Amendments and Clarifications
| Amendment | Details |
|---|---|
| Section 140(7) of CGST Act | Retrospective amendment effective from July 1, 2017, for transitional credit. |
| FORM GSTR-1A | New optional facility for taxpayers to amend or add details before filing FORM GSTR-3B. |
| Exemption from Filing Annual Return | Taxpayers with turnover up to Rs. 2 crore exempt from filing FORM GSTR-9/9A for FY 2023-24. |
| Section 122(1B) of CGST Act | Retrospective amendment clarifying penal provisions applicability. |
| Rule 142 of CGST Rules | Mechanism for adjusting amounts paid against pre-deposit for filing an appeal. |
| Biometric-Based Aadhaar Authentication | Nationwide roll-out to strengthen GST registration process and combat fraud. |
| Sections 73 and 74 of CGST Act, and Insertion of Section 74A | Common time limit for issuing demand notices and orders, effective from FY 2024-25. |
| Anti-Profiteering Provisions | Sunset clause with end date for new applications on April 1, 2025. |
| Section 16 of IGST Act and Section 54 of CGST Act | Restriction on refunds for goods subject to export duty. |
| Threshold for Reporting B2C Inter-State Supplies | Reduced from Rs. 2.5 lakh to Rs. 1 lakh. |
| Filing Requirements for FORM GSTR-7 | Mandatory monthly filing, with no late fee for Nil returns, and requirement for invoice-wise details. |
These measures aim to streamline the GST compliance process, provide clarity on various issues, and ensure consistency across the GST framework. The recommendations will be implemented through relevant circulars, notifications, and law amendments.
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