Highlights of 52nd GST Council Meet: A Comprehensive List of Recommendations of the Council

Adv Aditya Narayan

1 year ago

Introduction-Highlights of 52nd GST Council Meeting

The 52nd GST Council Meeting, held in New Delhi, concluded with several significant decisions aimed at boosting specific sectors and streamlining tax provisions. Finance Minister Ms. Nirmala Sitharaman announced the outcomes, showcasing a focus on millets, Extra Neutral Alcohol (ENA), molasses, online gaming taxes, and more. Here’s a comprehensive highlight of the decisions taken in the council meeting.

Tax Relief for Millet Floor and Products

In alignment with India’s ‘Year of Millets’ initiative, the GST Council decided to waive GST on floor containing 70% millets. Additionally, the tax rate on branded and pre-packaged millets flour preparation was reduced from 18% to 5%. This move aims to promote millet production and consumption in support of the governments’ initiative to promote millet consumption.

Tax Exemption for Extra Neutral Alcohol (ENA)

Extra Neutral Alcohol (ENA) used for the production of alcoholic beverages meant for human consumption is now excluded from GST. However, ENA intended for industrial use will continue to attract an 18% GST. This decision follows a recent Allahabad High Court ruling, reinforcing the responsibility of the GST Council and the Centre in taxing ENA for human consumption. It is declared in the meeting that, a separate tariff HS code has been created at 8-digit level in the Customs Tariff Act to cover rectified spirit for industrial use. The GST rate notification will be amended to create an entry for ENA for industrial use attracting 18 percent GST.

Reduced Tax Rate for Molasses

The tax rate on molasses, a crucial by-product of sugarcane used in alcohol production, was reduced from 18% to 5%.

Clarification on Taxation of Online Gaming, Casino & Horse racing

Concerns were raised regarding tax demands on online gaming and casino companies. The GST Council clarified that these taxes were not retrospective but had already been applicable to online games involving bets, attracting a 28% GST.

Revised Age Criteria for GSTAT Members & President

The GST Council established new criteria for the GST Appellate Tribunal. The minimum age for the president and members has been set at 50 years, with advocates requiring a minimum of 10 years of experience to become judicial members. The tenure of the president of GSTAT has been increased to 70 years of age from 67 years earlier. The Council also added that the members can hold their post till they attain the age of 67 years as opposed to 65 years earlier.

Forward Charge on Indian Railways Services

All goods and services supplied by Indian Railways will now be taxed under the Forward Charge Mechanism. This change allows Indian Railways to avail input tax credit (ITC) under GST, ultimately reducing their operational costs.

ITC on Export Remittances received in Special Rupee Vostro

The Council recommended issuing a circular to clarify the admissibility of export remittances received in Special rupee Vostro accounts for Input Tax Credit (ITC), following Reserve Bank of India guidelines.

Exemption to Foreign Vessels undertaking Coastal Run

To promote tourism in India’s coastal regions, especially the western coast, the Council granted integrated GST (IGST) exemption to foreign vessels undertaking coastal runs in India.

Future Plan to devise Cess and Surcharge

The GST Council discussed a future “perspective plan” to devise a cess or surcharge on top of GST levies after March 2026, when the GST compensation cess is expected to be phased out. The plan will detail the utilization of these surcharges.

Treatment of Corporate Loan Guarantees

A long awaited issue of the treatment of bank guarantees issued by the directors of companies for corporate loans was clarified in the meeting. It is clarified that Such guarantees by directors will not attract GST. However, guarantees issued by companies to their subsidiaries or parent companies will attract an 18% GST on 1% of the guarantee offered or the actual consideration, whichever is higher.

Amnesty Scheme to Appeal Against Demand Notice

Taxpayers have been granted an amnesty scheme until January 31, 2024, allowing them to file appeals against demand orders from the Revenue Department issued until March 2023. They can do so by paying a slightly higher proportion (12.5%) of the disputed tax levy as a “pre-deposit.”

Validity of Provisional Attachment of Property

The GST Council amended GST rules to stipulate that provisionally attached properties will be released after one year. Tax officers can provisionally attach properties, including bank accounts of GST-registered entities over non-payment of taxes, and this attachment will now be valid for a year and on expiry of one year span, that property will be free of attachment automatically.

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