| Highlights from the 47th GST Council Meeting |
The 47th GST Council meeting was held on 28-29 June 2022 in Chandigarh. The foremost agenda of the said meeting was GST rate rationalization, withdrawal of exemption on certain supplies, and certain trade facilitation measures. The press release of the said meeting is attached herewith for your ready reference.
The rate changes recommended by the GST Council will be made effective from 18 July 2022. The key proposals made in the said meeting are captured below:
GST rate-related proposals
- GST rates rationalized on outward supplies of certain goods/services with an objective to remove the Inverted Duty Structure (IDS).
- Reduction in GST rates on specific medical appliances (related to Ostomy and Orthopedic) and tablets.
- Conditional rate reduction for specific logistic services (renting of trucks, etc.).
- Increase in GST rate on outward supplies of certain goods (like Tetra Pak, Tar, Cut & Polished diamonds).
Withdrawal of certain GST exemptions
- Renting of a residential dwelling to business entities being registered persons.
- Services provided by RBI, IRDA, SEBI, FSSAI, GSTN, etc.
- Certain goods (like cheques, maps, parts of balloons and non-powered aircrafts) and services (like passenger transportation).
- Hotels charging INR 1000 day for accommodation services to be taxed at 12% (currently Nil rated).
- Pre-packaged and pre-labeled retail pack in terms of the Legal Metrology Act, including pre-packed, pre-labeled curd, lassi and buttermilk.
- Storage or warehousing of commodities that attract tax (nuts, spices, copra, jaggery, cotton, etc.).
Changes proposed in relation to Reverse Charge Mechanism (RCM)
- For renting motor vehicles, RCM would also be applicable on services by a body corporate (currently applicable for services by other than body corporate).
- Department of Posts made liable to discharge GST under the forward charge in respect of all taxable services (currently, only a few services are liable to GST, and that too under reverse charge).
- Introduced option for Goods Transport Agency to pay tax under the forward charge at 5% (without ITC) or 12% (with ITC). Option to pay tax under the forward charge to be exercised at the beginning of each FY.
Proposed clarifications
- GST rate of 5% on Electric Vehicles, with or without a battery pack.
- No GST even if tolls collected from vehicles do not have Fastag.
- Owing to ambiguities and to avoid unnecessary litigation, GST rates on the supply of ice-cream by ice-cream parlors charged at 5% without ITC during the period July 2017 to October 2021, shall be regularized.
- Sewage-treated water is exempted from GST and is not the same as purified water. The word 'purified' is being omitted to make this amply clear.
- Clarification regarding various ambiguities and legal disputes would be provided, such as ITC eligibility, Electronic Ledgers, etc.
Beneficial proposals
- Relief to taxpayers claiming a refund due to IDS by way of amending the formula in such a way so that proportionate Input Tax Credit (ITC) on Input Services can be taken into consideration.
- Exporters supplying duty credit scrips henceforth would not be required to reverse proportionate common ITC.
- Earliest implementation suggested for transfer of cash ledger balance between distinct persons, as well as interest implications on reversal of unutilized ITC.
- Recommendation to expedite the refund disposal vide amending the rule pertaining to refund of IGST paid on goods or services exported out of India. The refund would be filed through FORM GST RFD-01, which would be transmitted directly to the jurisdictional GST officer for processing.
- The limitation period for claiming refund/issuance of demand or order for erroneous refund granted not to include period starting from 1 March 2020 to 28 February 2022.
- The limitation period for the issuance of orders or demands linked with the due date of annual return of FY 2017-18 has been extended to 30 September 2023.
Ease of doing business
- Automatic revocation of suspension of GST registration in certain cases.
- Introduction of UPI & IMPS for discharging tax liability – a step further towards digitization.
- Relaxation from registration to any person supplying goods through e-commerce platforms, undertaking intra-state supplies upto threshold limits; composition taxpayers can also make intra-state supplies through e-commerce platform (to be made effective not before 1 January 2023).
- Continuation of IGST Exemption for imports under Advance Authorisation / Export Promotion Capital Goods (EPCG) / Export Oriented Units(EOU) Schemes while e-wallet scheme not to be pursued further.
- Exemption to registered persons having aggregate turnover up to 20 million from the filing of Annual Return to be continued for
FY 2021-22.
Other recommendations
- Suspension/withholding of refund claims in case of risky exporters (viz., exporters requiring verification by GST officers or who have violated the provision of the Customs Act).
- Comprehensive changes in FORM GSTR-3B to be made post seeking suggestions from the public.
- Forming a Group of Ministers to address the States’ concerns regarding the constitution of the GST Appellate Tribunal and other recommendations for appropriate amendments in the CGST Act.
- Group of Ministers to submit a report by 15 July 2022 regarding GST on Casino, Race Course and Online Gaming.
- New FORM GST PMT-03A was introduced to enable the taxpayers to re-credit the erroneous refund amount paid back by them in their electronic credit ledger.
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