Recommendations of 53rd GST Council Meeting on June 22, 2024 in New Delhi

Recommendations of 53rd GST Council Meeting on June 22, 2024 in New Delhi

The 53rd GST Council Meeting, chaired by Union Minister for Finance & Corporate Affairs, Smt. Nirmala Sitharaman, convened in New Delhi on June 22, 2024. The meeting saw participation from Union Minister of State for Finance, Shri Pankaj Chaudhary, various Chief Ministers, Deputy Chief Ministers, and Finance Ministers of states and UTs. The council proposed several significant changes to GST tax rates, trade facilitation measures, and compliance streamlining.

 Recommendations of the council for GST Rates on Goods:

1. Uniform IGST Rate for Aircraft Parts: A uniform rate of 5% IGST will apply to imports of parts, components, testing equipment, tools, and tool-kits for aircraft maintenance, repair, and overhaul (MRO) activities.
2. GST on Milk Cans: All steel, iron, and aluminum milk cans will attract a 12% GST rate.
3. Reduction in GST for Paper Packaging: GST on cartons, boxes, and cases made of corrugated and non-corrugated paper will be reduced from 18% to 12%.
4. Solar Cookers: All solar cookers will attract a 12% GST rate.
5. Poultry Keeping Machinery: GST for parts of poultry keeping machinery is specified to be 12%, regularizing past practices.
6. Sprinklers: All types of sprinklers, including fire water sprinklers, will attract 12% GST, regularizing past practices.
7. Defence Forces Exemption: IGST exemption on specified items for defense forces is extended until June 30, 2029.
8. Research Equipment Imports: IGST exemption on research equipment/buoys under the RAMA programme is extended.
9. SEZ Imports: Compensation Cess exemption for SEZ unit/developers for authorized operations applies retroactively from July 1, 2017.
10. Defence Canteens: Compensation Cess exemption on aerated beverages and energy drinks supplied to authorized customers by Unit Run Canteens under the Ministry of Defence.
11. Technical Documentation Imports: Adhoc IGST exemption for technical documentation imports for AK-203 rifle kits for the Indian Defence forces.

 Recommendations of the council for GST Rates on Services:

1. Indian Railways Services: Services by Indian Railways, such as platform ticket sales, retiring rooms, waiting rooms, cloak room services, and battery-operated car services, are exempt from GST. This exemption also covers intra-Railway transactions retroactively from October 20, 2023.
2. SPV Services for Indian Railways: GST exemption on services provided by Special Purpose Vehicles (SPV) to Indian Railways for using infrastructure built and maintained by SPVs during the concession period.
3. Accommodation Services: GST exemption for accommodation services up to Rs. 20,000 per month per person, provided the service is supplied for at least 90 continuous days.

 Other Service-Related Changes recommended by the council:

1. Co-Insurance Premium: Co-insurance premiums apportioned by the lead insurer to the co-insurer are declared as no supply under Schedule III of the CGST Act, 2017.
2. Reinsurance Commissions: Transactions of ceding commission/re-insurance commission between insurers and reinsurers are declared as no supply under Schedule III of CGST Act, 2017.
3. Reinsurance Services Regularization: GST liability on reinsurance services of specific insurance schemes from July 1, 2017, to January 24, 2018, and from July 1, 2017, to July 26, 2018, is regularized.
4. Retrocession Exemption: Clarification that retrocession, or re-insurance of re-insurance, is exempt under Sl. No. 36A of notification No. 12/2017-CTR.
5. RERA Statutory Collections: Clarification that statutory collections by the Real Estate Regulatory Authority (RERA) are exempt from GST.
6. Incentive Sharing for RuPay and BHIM-UPI Transactions: Further sharing of incentives by acquiring banks under the RuPay Debit Cards and low-value BHIM-UPI transactions incentive scheme is not taxable.

 Measures recommended by council for Trade Facilitation:

1. Waiver of Interest and Penalty: Section 128A in the CGST Act is to provide conditional waiver of interest or penalty for demands raised under Section 73 for fiscal years 2017-18 to 2019-20, provided the full tax amount is paid by March 31, 2025.
2. Reduction of Government Litigation: Prescribed monetary limits for filing GST appeals are Rs. 20 lakhs for GSTAT, Rs. 1 crore for the High Court, and Rs. 2 crores for the Supreme Court.
3. Reduction in Pre-Deposit for Appeals: Pre-deposit amounts for filing GST appeals are reduced to Rs. 20 crores CGST and Rs. 20 crores SGST for appellate authority, and 10% with a maximum of Rs. 20 crores CGST and Rs. 20 crores SGST for Appellate Tribunal.
4. GST on Extra Neutral Alcohol (ENA): ENA used for manufacturing alcoholic liquors for human consumption is excluded from GST.
5. Reduced TCS Rate for ECOs: Tax Collected at Source (TCS) rate for Electronic Commerce Operators (ECOs) is reduced from 1% to 0.5%.
6. Extension for Filing Appeals: The three-month period for filing appeals before the Appellate Tribunal starts from a date to be notified by the Government.
7. Relaxation in Input Tax Credit (ITC) Conditions: Time limit for availing ITC is deemed to be November 30, 2021, for fiscal years 2017-18 to 2020-21.
8. Change in Due Date for Composition Taxpayers: Due date for filing GSTR-4 for composition taxpayers extended from April 30 to June 30.
9. Interest Calculation on Delayed Returns: Amendment in rule 88B of CGST Rules to exclude amounts in Electronic Cash Ledger on the due date from interest calculation for delayed returns.
10. Non-Recovery of Duties: New Section 11A in CGST Act to allow regularization of non-levy or short levy of GST due to common trade practices.
11. Refund Mechanism for IGST on Export Price Revision: Mechanism for claiming refund of additional IGST paid due to upward price revision after export.
12. Valuation of Import Services by Related Persons: Clarification on valuation rules for services provided by foreign affiliates to related domestic entities eligible for full ITC.
13. ITC on Optical Fiber Cables Network: Clarification that ITC is not restricted for ducts and manholes used in optical fiber cables network.
14. Custodial Services by Banks: Place of supply for custodial services by Indian Banks to Foreign Portfolio Investors is determined under Section 13(2) of the IGST Act, 2017.
15. Corporate Guarantee Valuation: Amendment of rule 28(2) of CGST Rules and issuance of circulars clarifying corporate guarantee valuation between related parties.
16. RCM Invoice Issuance: Clarification that the relevant financial year for ITC availing under Section 16(4) of CGST Act is the financial year of the recipient-issued invoice under RCM.
17. Clarifications to Reduce Litigation: Various clarifications on ESOPs, life insurance premiums, motor insurance claims, warranty services, repair expenses, loans between related persons, time of supply for annuity payments and spectrum allocation, post-sale discount compliance, and special procedures for specified commodities.
18. Transitional Credit for ISD: Amendment in section 140(7) of CGST Act to provide transitional credit for invoices pertaining to pre-appointed date services.
19. Optional Facility for GSTR-1 Amendments: Introduction of FORM GSTR-1A for taxpayers to amend or add details before filing GSTR-3B.
20. Annual Return Exemption: Exemption from filing annual returns in FORM GSTR-9/9A for FY 2023-24 for taxpayers with turnover up to Rs. 2 crores.
21. Penal Provision for E-commerce Operators: Amendment in section 122(1B) of CGST Act to clarify applicability only to those required to collect tax under section 52.
22. Adjustment of Demand Payments: Amendment in rule 142 of CGST Rules to prescribe adjustment mechanism for pre-deposit payments against demand amounts.

 Other Law and Procedure Measures recommended by the council:

1. Biometric Aadhaar Authentication: Rollout of biometric-based Aadhaar authentication for GST registration applicants nationwide in phases.
2. Common Time Limit for Demand Notices: Amendments in Sections 73 and 74 of CGST Act, and insertion of Section 74A, to provide common time limits for demand notices and orders.
3. Anti-Profiteering Clause: Amendment in sections 171 and 109 of CGST Act to provide a sunset clause for anti-profiteering and handling cases by the Principal bench of GST Appellate Tribunal, effective from April 1, 2025.
4. IGST Refund Restriction for Export Duty Goods: Amendments in section 16 of IGST Act and section 54 of CGST Act to restrict IGST refunds for goods subject to export duty.
5. Export without IGST Payment: Amendment in rule 96 of CGST Rules, 2017 to prohibit exports without IGST payment for restricted commodities.

6. Centralized API for Bank Account Validation: Centralized Application Programming Interface (API) facility to validate bank accounts during GST registration.

Note:

The recommendations of the GST Council have been presented in this release containing major item of decisions in simple language for information of the stakeholders. The same would be given effect through the relevant circulars/ notifications/ law amendments which alone shall have the force of law.

Also Read: GST Rate Rationalisation Panel Reconstituted with Bihar Dy CM Samrat Chaudhary as Convenor

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