Key Highlights of the 50th GST Council Meeting

The 50th GST Council meeting was held in Delhi on July 11, 2023 under the chairmanship of the Union Finance & Corporate Affairs Minister Smt. Nirmala Sitharaman. It marks the completion of 50 Council meetings since the inception of GST. 

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. 

Changes in GST Tax Rates

Other changes relating to Goods

Since the Group of Ministers (GoM), in its second report, could not reach a consensus on whether the activities of online gaming, horse racing, and casinos should be taxed at 28% on the full-face value of bets placed or on the Gross Gaming Revenue (GGR), the GST Council has made the following recommendations:

• Casinos, Horse Racing, and Online Gaming will be taxed at a uniform rate of 28%.

• For casinos, GST at the rate of 28% will be applicable to the face value of the purchased chips.

• In the case of Horse Racing, GST at the rate of 28% will be applicable to the full value of bets placed with bookmakers/totalisators.

• Online Gaming will be subject to GST at the rate of 28% on the full value of the bets placed.

• To ensure taxation, suitable amendments will be made to include online gaming and horse racing in Schedule III as taxable actionable claims.

• Annual Returns for FY 2022-23: To ease the compliance burden on smaller taxpayers, the Council has recommended the continuation of exemptions from filing annual returns (FORM GSTR-9/9A) for taxpayers with an aggregate annual turnover of up to two crore rupees for F.Y. 2022-23. Furthermore, relaxations provided in FY 2021-22 concerning various tables of GSTR-9 and GSTR-9C have also been proposed to continue FY 2022-23.
• Extension of Amnesty Schemes: The GST Council has recommended extending the last date for filing returns under the Amnesty Schemes notified on 31.03.2023 from 30th June, 2023 to 31st August, 2023.

The following Amnesty Schemes were introduced for the pending returns, with conditional waiver or reduction of late fees:

1. GSTR 4 - Annual Return of Composition Taxpayers
2. GSTR 9 - Annual Return of Regular Taxpayers
3. GSTR 10 - Final Return
4. Returns u/s 62 of the CGST Act, 2017 - Best judgment Order

Further, Amnesty scheme for filing an application for revocation of registration cancellation, initially set until 30th June, 2023, has also recommended to be be extended until 31st August, 2023.

• Easing Invoice Requirements: An amendment is proposed to rule 46 of CGST Rules, 2017, reducing the requirement to mention only the name of the State of the recipient (and not the full address) on the tax invoice in cases of supply of taxable services by or through an E-commerce operator or by OIDAR to unregistered recipient. 

• Verification of Input Tax Credit discrepancies: The benefit of Circular 183/15/2022-GST for verification of input tax credit in cases involving difference between the Input Tax Credit claimed in GSTR-3B and the available credit as per GSTR-2A through submission of ledger confirmation/CA/CMA certification has been extended till 31st December 2021.

• Extension of due dates of GST returns in Manipur: Council has recommended to further extend the due dates for filing FORM GSTR-1, GSTR-3B, and GSTR-7 for the months of April, May, and June 2023 for the registered persons of State of Manipur till 31.07.2023 from current due date of 30.06.2023.

• Special Appeal Procedures: To address specific circumstances, special procedures will be introduced to allow manual filing of appeals against orders passed by proper officers concerning TRAN-1/TRAN-2 claims of registered persons, as directed by the Hon'ble Supreme Court in the Union of India v/s Filco Trade Centre Pvt. Ltd. case.

• GST Appellate Tribunal: The Council has recommended the implementation of the Goods and Services Tax Appellate Tribunal by notifying the relevant provisions of the Finance Act, 2023, effective from August 1, 2023. To ensure a smooth constitution and functioning of the tribunal, rules governing the appointment and conditions of the President and Members of the tribunal have been recommended.

• Input Services Distributor (ISD) Mechanism: The Council has suggested clarifying through a circular that the ISD mechanism is not mandatory for distributing input tax credit of common input services procured from third parties to distinct persons under the current provisions of the GST law. Additionally, there is a recommendation to amend the GST law to make the ISD mechanism mandatory prospectively for distributing input tax credit of such common input services procured from third parties.

• Warranty replacement of parts and repair services during warranty period: Circular will be issued to clarify that no GST is chargeable by the manufacturer on such replacement of parts and/or repair service, and also, no reversal of input tax credit is required to be made by the manufacturer for replacements/repairs made without any consideration from the customers.

• TCS Liability for E-commerce Operators: A circular will be issued to clarify regarding TCS liability in cases where multiple E-commerce Operators  are involved in a single transaction.

• Issuance of e-invoice: Circular will be issued to clarify that the registered person whose turnover exceeds the prescribed threshold for generation of e-invoicing, are required to issue e-invoices under rule 48(4) of the CGST Rules for the supplies made to Government Departments or establishments / Government agencies / local authorities / PSUs, etc., registered solely for the purpose of TDS.

• Manner of calculation of interest amount u/s 50: Clarification to be issued in cases of wrong availment of IGST credit, the balance of input tax credit (ITC) in electronic credit ledger, under the heads of IGST, CGST and SGST taken together, has to be taken in consideration while calculating such interest liability as per rule 88B of CGST Rules, 2017.

• Scope of Supply: Clarification to be issued that mere holding of securities of a subsidiary company by a holding company cannot be treated as a supply of services and therefore, cannot be taxed under GST. 

• E-way bill requirement for movement of Gold/ Precious stones: GST Council has recommended recommended to insert rule 138F to mandate the generation of e-way bills for intra-state movement of gold and precious stones under Chapter 71.

• Capacity based taxation and Special Composition Scheme: Recommendations have been made to implement a special procedure for manufacturers of tobacco, pan masala, and similar items to register their machines and file special monthly returns. Non-registration of machines may attract a special penalty (insertion of section 122A). Provisions related to the restriction of IGST refund route for exports of tobacco, pan masala, similar items, and mentha oil to be notified with effect from 01.10.2023.

• Mechanisms for tax recovery and interest: In accordance with the recommendations made in the 48th GST Council meeting regarding the system-generated intimation to taxpayers in cases where the output tax liability under GSTR-1 exceeds the amount disclosed in FORM GSTR-3B, it is now recommended to introduce FORM GST DRC-01D (as per the insertion of Rule 142B) to provide guidelines for the recovery of tax and interest in relation to the amount notified under rule 88C, which has not been paid, and for which no satisfactory explanation has been provided by the registered person.

• Mechanism to deal with differences in ITC between GSTR-2B and GSTR-3B: Council has recommended a mechanism for system-based intimation in respect of the excess availment of ITC in GSTR-3B as compared to that available in GSTR-2B. Also an auto-compliance procedure to be introduced, to explain the reasons for the said difference or take remedial action in respect of such difference.  This will help in reducing ITC mismatches and misuse of ITC facility in GST.

• Amendment in GSTR-3A: Amendments will be made to GSTR-3A to issue notices to registered taxpayers who fail to furnish annual returns (FORM GSTR-9 or GSTR-9A) by due date.

• Amendment in Rule 64 and GSTR-5A: OIDAR service providers will be required to provide details of supplies made to registered persons in India in their returns (FORM GSTR-5A).

• Amendment in rule 10A: Registered persons will be required to furnish bank account details (including name and PAN) within 30 days of registration or before filing the statement of outward supplies (FORM GSTR-1/IFF), whichever is earlier.

• Amendment in rule 21A(2A): System-based suspension of registration will be implemented for registered persons who fail to provide valid bank account details within the prescribed time period.

• Insertion of 3rd proviso in rule 21A(4): Automatic revocation of system-based suspension will be initiated upon compliance with the provisions of rule 10A.

• Amendment in rule 59(6): Registered persons who haven't furnished valid bank account details under rule 10A may be restricted from providing details of outward supplies in FORM GSTR-1 or using IFF.

• Amendment in rule 9 and rule 25: The requirement for physical verification of business premises in the presence of the applicant will be eliminated. Physical verification may be conducted in high-risk cases, even if Aadhaar authentication has been completed.

• Pilot project for risk-based biometric-based Aadhaar authentication: A pilot will be conducted in the Union Territory of Puducherry to test the use of biometric-based Aadhaar authentication for registration applicants. After successful testing in Puducherry and Gujarat, the State of Andhra Pradesh has expressed its intent to join the pilot project.

• The value of goods supplied from Duty Free Shops at arrival terminals in international airports will be included in the value of exempt supplies for input tax credit reversal.

• Compounding amounts for offenses under section 132 of the CGST Act, 2017 will be prescribed.

• Rules will be introduced for consent-based sharing of information of registered persons on the common portal with other systems, along with the notification of "Account Aggregators" for sharing information.

• A new clause will be inserted in the IGST Act, 2017 to clarify the place of supply for goods supplied to unregistered persons.

• A State-level coordination committee comprising GST officers from both State and Central GST administrations will be formed for knowledge sharing and coordinated efforts on GST matters.

• The GoM on IT System Reforms has recommended measures such as strengthening the registration process, utilizing third-party data for risk management, and controlling the flow of fake Input Tax Credit in the supply chain.

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