Ministry of Finance
DATED – 17-12-2022
Union Finance Minister Smt. Nirmala Sitharaman chairs the 48th Meeting of the GST Council via virtual mode in New Delhi
GST Council recommends decriminalizing certain offenses u/s 132, increasing the threshold of the amount of tax for prosecution, and reduction in the amount of compounding in GST
Posted On: 17 DEC 2022 3:28 PM by PIB Delhi
The 48th GST Council met under the Chairmanship of the Union Minister for Finance & Corporate Affairs Smt. Nirmala Sitharaman via virtual mode in New Delhi today. The meeting was also attended by Union Minister of State for Finance Shri Pankaj Choudhary besides Finance Ministers of States & UTs (with legislature) and senior officers of the Ministry of Finance & States/ UTs.
The GST Council has inter-alia made the following recommendations relating to changes in GST tax rates, measures for facilitation of trade, and measures for streamlining compliances in GST:
|1.||The husk of pulses including chilka and concentrates including chuni/churi, khanda||5%||Nil|
|2.||Ethyl alcohol is supplied to refineries for blending with motor spirit (petrol)||18%||5%|
1. It was also decided to include the supply of Mentha arvensis under the reverse charge mechanism as has been done for Mentha Oil.
2. It was decided to clarify that:
- Rab (Rab-Salawat) is classifiable under CTH 1702 which attracts GST at the rate of 18%.
- fryums manufactured using the process of extrusion are specifically covered under CTH 19059030 and attract GST at the rate of 18%.
- The higher rate of compensation cess of 22% is applicable to motor vehicles fulfilling all four conditions, namely, it is popularly known as SUV, has an engine capacity exceeding 1500 cc, length exceeding 4000 mm, and a ground clearance of 170 mm or above
- goods falling in the lower rate category of 5% under schedule I of notification No. 1/2017-CTR imported for petroleum operations will attract a lower rate of 5% and the rate of 12% shall be applicable only if the general rate is more than 12%
3. As a relief measure, the Council decided to regularise the intervening period starting from the date of issuance of Circular (3.08.2022) in respect of GST on ‘husk of pulses including chilka and concentrates including chuni/churi, khanda’ on “ as is basis” on account of genuine doubts.
4. No GST is payable where the residential dwelling is rented to a registered person if it is rented in his/her personal capacity for use as his/her own residence and on his own account and not on account of his business.
5. Incentives paid to banks by the Central Government under the scheme for the promotion of RuPay Debit Cards and low-value BHIM-UPI transactions are in the nature of subsidy and thus not taxable.
Measures for facilitation of trade
- Decriminalization under GST: The Council has recommended to –
- raise the minimum threshold of tax amount for launching prosecution under GST from Rs. One Crore to Rs. Two Crores, except for the offense of issuance of invoices without a supply of goods or services or both;
- reduce the compounding amount from the present range of 50% to 150% of the tax amount to the range of 25% to 100%;
- decriminalize certain offenses specified under clauses (g), (j), and (k) of sub-section (1) of section 132 of CGST Act, 2017, viz.-
- obstruction or preventing any officer in the discharge of his duties;
- deliberate tempering of material evidence;
- failure to supply the information.
- Refund to unregistered persons: There is no procedure for claiming of refund of tax borne by the unregistered buyers in cases where the contract/ agreement for the supply of services, like construction of flat/house and long-term insurance policy, is canceled and the time period of issuance of credit note by the concerned supplier is over. The Council recommended an amendment in CGST Rules, 2017, along with the issuance of a circular, to prescribe the procedure for filing an application for refund by unregistered buyers in such cases.
- Facilitate e-commerce for micro-enterprises: GST Council in its 47th meeting had granted in-principle approval for allowing unregistered suppliers and composition taxpayers to make the intra-state supply of goods through E-Commerce Operators (ECOs), subject to certain conditions. The Council approved the amendments in the GST Act and GST Rules, along with the issuance of relevant notifications, to enable the same. Further, considering the time required for the development of the requisite functionality on the portal as well as for providing sufficient time for preparedness by the ECOs, Council has recommended that the scheme may be implemented w.e.f. 01.10.2023.
- Paras 7, 8(a), and 8(b) were inserted in Schedule III of CGST Act, 2017 with effect from 01.02.2019 to keep certain transactions/ activities, such as supplies of goods from a place outside the taxable territory to another place outside the taxable territory, high sea sales and supply of warehoused goods before their home clearance, outside the purview of GST. In order to remove the doubts and ambiguities regarding the taxability of such transactions/ activities during the period 01.07.2017 to 31.01.2019, the Council has recommended making the said paras effective from 01.07.2017. However, no refund of tax paid shall be available in cases where any tax has already been paid in respect of such transactions/ activities during the period 01.07.2017 to 31.01.2019.
- The Council has recommended amending sub-rule (1) of rule 37 of CGST Rules, 2017 retrospectively with effect from 01.10.2022 to provide for reversal of input tax credit, in terms of the second proviso to section 16 of CGST Act, only proportionate to the amount not paid to the supplier vis a vis the value of the supply, including tax payable.
- The Council recommended inserting Rule 37A in CGST Rules, 2017 to prescribe the mechanism for reversal of input tax credit by a registered person in the event of non-payment of tax by the supplier by a specified date and mechanism for re-availing of such credit if the supplier pays tax subsequently. This would ease the process of complying with the condition for availing of input tax credit under section 16(2)(c) of the CGST Act, 2017.
- Sub-rule (3) of rule 108 and rule 109 of the CGST Rules, 2017 to be amended to provide clarity on the requirement of submission of a certified copy of the order appealed against and the issuance of final acknowledgment by the appellate authority. This would facilitate the timely processing of appeals and ease the compliance burden for the appellants.
- Rule 109C and FORM GST APL-01/03 W are to be inserted in the CGST Rules, 2017 to provide the facility for withdrawal of an application of appeal up to a certain specified stage. This would help in reducing litigations at the level of appellate authorities.
- A Circular is to be issued to clarify that the No Claim Bonus offered by the insurance companies to the insured is an admissible deduction for the valuation of insurance services.
- A Circular is to be issued to clarify the issue of treatment of statutory dues under GST law in respect of the taxpayers for whom the proceedings have been finalized under the Insolvency and Bankruptcy Code, 2016. Rule 161 of CGST Rules, 2017, and FORM GST DRC-25 are also to be amended to facilitate the same.
- Sub-rule (3) of rule 12 of CGST Rules, 2017 to be amended to provide for facility to the registered persons, who are required to collect tax at source under section 52 or deduct tax at source under section 51 of CGST Act, 2017, for cancellation of their registration on their request.
- Circular to be issued for clarifying the issues pertaining to the place of supply of services of transportation of goods in terms of the proviso to sub-section (8) of section 12 of the IGST Act, 2017 and availability of input tax credit to the recipient of such supply. It has also been recommended that proviso to sub-section (8) of section 12 of the IGST Act, 2017 may be omitted.
- Issuance of the following circulars in order to remove ambiguity and legal disputes on various issues, thus benefiting taxpayers at large:
- Procedure for verification of input tax credit in cases involving a difference in input tax credit availed in FORM GSTR-3B vis a vis that available as per FORM GSTR-2A during FY 2017-18 and 2018-19.
- Clarifying the manner of re-determination of demand in terms of sub-section (2) of section 75 of CGST Act, 2017.
- Clarification in respect of the applicability of e-invoicing with respect to an entity.
Measures for streamlining compliances in GST
- Proposal to conduct a pilot in the State of Gujarat for Biometric-based Aadhaar authentication and risk-based physical verification of registration applicants. Amendment in rule 8 and rule 9 of CGST Rules, 2017 to be made to facilitate the same. This will help in tackling the menace of fake and fraudulent registrations.
- PAN-linked mobile number and e-mail address (fetched from CBDT database) to be captured and recorded in FORM GST REG-01 and OTP-based verification to be conducted at the time of registration on such PAN-linked mobile number and email address to restrict misuse of PAN of a person by unscrupulous elements without knowledge of the said PAN-holder.
- Sections 37, 39, 44, and 52 of the CGST Act, 2017 to be amended to restrict the filing of returns/ statements to a maximum period of three years from the due date of filing of the relevant return/statement.
- FORM GSTR-1 is to be amended to provide for reporting of details of supplies made through ECOs, covered under section 52 and section 9(5) of CGST Act, 2017, by the supplier and reporting by the ECO in respect of supplies made under section 9(5) of CGST Act, 2017.
- Rule 88C and FORM GST DRC-01B are to be inserted in CGST Rules, 2017 for intimation to the taxpayer, by the common portal, about the difference between liability reported by the taxpayer in FORM GSTR-1 and in FORM GSTR-3B for a tax period, where such difference exceeds a specified amount and/ or percentage, for enabling the taxpayer to either pay the differential liability or explain the difference. Further, clause (d) is to be inserted in sub-rule (6) of rule 59 of CGST Rules, 2017 to restrict the furnishing of FORM GSTR-1 for a subsequent tax period if the taxpayer has neither deposited the amount specified in the intimation nor has furnished a reply explaining the reasons for the amount remaining unpaid. This would facilitate taxpayers to pay/ explain the reason for the difference in such liabilities reported by them, without the intervention of the tax officers.
- Amendment in the definition of “non-taxable online recipient” under section 2(16) of IGST Act, 2017 and definition of “Online Information and Database Access or Retrieval Services (OIDAR)” under section 2(17) of IGST Act, 2017 so as to reduce interpretation issues and litigation on taxation of OIDAR Services.
Note: The recommendations of the GST Council have been presented in this release containing a major items of decisions in simple language for the 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.
RM/PPG/KMN(Release ID: 1884399)