July 1, 2022, marked the completion of five years of India’s ambitious Goods and Services Tax (GST) law. The same week also witnessed the 47th GST Council meeting scheduled at Chandigarh for two days- the 28th and 29th of June 2022.
Smt Nirmala Sitharaman chaired the meeting in the presence of the Minister of State for Finance and state ministers, including the MoF (state) Shri Pankaj Chaudary. It was a significant meeting held after several months with many crucial matters, including modification to Form GSTR-3B, rate revisions and withdrawal of exemptions, inversion corrections, and IT-related measures.
The FM also announced that the 48th GST Council meeting is expected to be held in Madurai, Tamil Nadu during the first week of August 2022. The agenda would include the setting up of GST Appellate Tribunals and fixing the GST rate on casinos, online gaming, etc based on the GoM’s report.
Highlights of the 47th GST Council meeting
FM began to brief the media around 4 p.m. She began by appreciating the efforts of the Chandigarh administration in organising a smooth two-day conference. Four Group of Ministers (GoM) reports were discussed in detail at the meeting. These formed the core agenda of the 47th GST Council meeting. The reports tabled included-
- Interim report on rate rationalisation, exemptions and correction of inversion nature
- Betting, gambling, horse racing, online gaming and lottery
- IT-related matters
- Movement of precious items such as gold, etc
GSTR-3B amendments to be allowed
GST Council allowed amendments in GSTR-3B (Monthly GST return for taxpayers). Further, it permitted auto-population of most details in Form GSTR-3B and annual returns in Form GSTR-9 for better compliance and ease in compliance. The Council was clear that the new GST return system would be withdrawn as it is no longer relevant. A proposal for comprehensive alterations in GSTR-3B will be placed before the public for seeking input.
GSTR-9 to continue with some relaxations
Annual returns for FY 2021-22 may be notified with minimal changes.
- It shall continue to apply with some relaxations and modifications.
- GSTR-9 and GSTR-9A continue to not be applicable to those with threshold turnover below Rs.2 crore for FY 2021-22.
- The limitation under Section 73 of the CGST Act for FY 2017-18 for issuance of orders relating to demands linked with the due date of annual return, is extended till 30th September 2023.
Relief to e-commerce suppliers
- GST Council agreed to ease compliance bottlenecks for e-commerce suppliers.
- It allowed the e-commerce suppliers to register under the composition scheme for intrastate supplies easing their registration hassles and for reducing tax outgo.
- The new composition scheme for e-commerce suppliers for intrastate online sales will be implemented on 1st Jan 2023 once the IT system is set up.
- It means that such intrastate e-commerce suppliers will no longer need to obtain mandatory GST registration if their turnover does not exceed the limit of Rs.40 lakh (goods) or Rs.20 lakh (services) or such lower limits defined for some states/UTs.
- Interstate suppliers on e-commerce platforms shall have to obtain registration irrespective of turnover, compulsorily.
Deadline extensions to composition taxpayers
- GSTR-4 for FY 2021-22 to get a waiver of late fee for filing up to 28th July 2022 as against earlier extension of up to 30th June 2022.
- CMP-08 deadline for Apr-Jun 2022 (Q1 of FY 2022-23) to get an extension up to 30th July 2022 from 18th July 2022.
Pruning of GST Rate and Exemption List
The GST Council accepted the interim report of GoM on rate rationalisation
in totality and most of the recommendations by the Fitment Committee.
Correction of Inverted tax structure
| Description of goods or services | Old Rate | New Rate |
|---|---|---|
| Solar water heaters and systems | 5% | 12% |
| Prepared or finished leather or chamois leather or composition leathers | 5% | 12% |
| Job work for processing of hides, skins, leather, making of leather products including footwear, and clay brick manufacturing | 5% | 12% |
| Earthwork works contracts and sub-contracts to the Central and state governments, Union Territories and local authorities | 5% | 12% |
| Pawan Chakki being air-based atta chakki, wet grinder, cleaning, sorting or grading machines for seeds and grain pulses, and milling machines or cereal making machines, etc; | 5% | 18% |
| Ink for drawing, printing, and writing | 12% | 18% |
| Knives with paper knives, cutting blades, pencil sharpeners and its blades, skimmers, cake-servers, spoons, forks, ladles, etc | 12% | 18% |
| Centrifugal pumps, submersible pumps deep tube-well turbine pumps, bicycle pumps that are power-driven mainly for handling water | 12% | 18% |
| Milking machines and dairy machinery, cleaning, sorting or grading machines and its parts for eggs, fruit or other agri produce | 12% | 18% |
| Lights and fixture, LED lamps, their metal printed circuits board | 12% | 18% |
| Marking out and drawing instruments | 12% | 18% |
| Services by foreman to chit fund | 12% | 18% |
| Works contract for railways, metro, roads, bridges, effluent treatment plant, crematorium, etc. | 12% | 18% |
| Works contract and sub-contract to the Central and state governments, local authorities for canals, dams, pipelines, plants for water supply, historical monuments, educational institutions, hospitals, etc | 12% | 18% |
| Refund of accumulated ITC for edible oils and coal is disallowed. | ||
| *The rates will come into effect from 18th July 2022 subject to CBIC notification | ||
GST rate hikes and cuts
| Description of goods or services | Old Rate | New Rate |
|---|---|---|
| What's costlier | ||
| Cut and Polished diamonds | 0.25% | 1.50% |
| Tetra Pack (Aseptic Packaging Paper) | 12% | 18% |
| Tar (From coal, or coal gasification plants, or producer gas plants and coke oven plants) | 5%/18% | 18% |
| What's cheaper | ||
| Import of tablets called Diethylcarbamazine (DEC) free of cost for National Filariasis Elimination Programme (IGST) | 5% | Nil |
| Import of particular defence items by private businesses or suppliers for end-consumption of Defence (IGST) | Applicable rates | Nil |
| Ostomy Appliances | 12% | 5% |
| Orthopedic appliances such as intraocular lens, artificial parts of the body, splints and other fracture appliances, other appliances which are worn or carried, or body implants, to compensate for a defect or disability | 12% | 5% |
| Transport of goods and passengers by ropeways (with ITC of services) | 18% | 5% |
| Renting of truck or goods carriage including the fuel cost | 18% | 12% |
| *The rates will come into effect from 18th July 2022 subject to CBIC notification | ||
Pruning of GST exemptions
| Description of goods or services | Old Rate | New Rate |
|---|---|---|
| Earlier fully exempted, now withdrawn | ||
| Maps and hydrographic or similar charts of all kinds, including atlases, wall maps, topographical plans and globes, printed | Nil | 12% |
| Cheques, lose or in book form | Nil | 18% |
| Parts of goods of heading 8801 | Nil | 18% |
| Air transportation of passengers to and from north-eastern states and Bagdogra now restricted to economy class | Nil | Condition added |
| Transportation by rail or a vessel of railway equipment and material, storage or warehousing of commodities attracting tax such as copra, nuts, spices, jaggery, cotton, etc, fumigation in a warehouse of agri produce, services by RBI, IRDA, SEBI, FSSAI, and GSTN, renting of residential dwelling to GST-registered businesses, and services by the cord blood banks for preserving stem cells | Nil | Applicable rate |
| Room rent (excluding ICU) exceeding Rs.5,000 per patient day taxed without ITC | Nil | 5% |
| Common bio-medical waste treatment facilities for treating or disposing biomedical waste shall be taxed with availability of ITC, like CETPs | Nil | 12% |
| Hotel accommodation priced up to Rs.1,000 per day | Nil | 12% |
| Training or coaching in recreational activities on arts or culture, or sports other than by individuals | Nil | Applicable rate |
| Earlier partially exempted, now withdrawn | ||
| Petroleum/ Coal bed methane | 5% | 12% |
| e-Waste | 5% | 18% |
| Scientific and technical instruments to public funded research institutes | 5% | Applicable rate |
| *The rates will come into effect from 18th July 2022 subject to CBIC notification | ||
Other decisions
- More clarification will be been given for allowing money in electronic credit ledger and electronic cash ledger to be used to pay output tax dues in returns; Such amounts cannot be used to pay off penalties, late fee and interest
- The GST Council to form a Group of Ministers (GoM) to consider setting up GST Appellate Tribunals after a detailed study of its structure.
- A comprehensive review of the National Anti-profiteering Authority(NAA).
- Solicitor General to defend cases before NAA where its constitutional validity is questionable.
- The government may soon appeal in SC cases where NAA has been remanded by state HC against the orders.
- NAA has set up an advocates panel to ensure justice to consumers where profiteering has occurred.
- GST Council approves waiver from the filing of refund claims by condoning the two-year COVID period from 1st March 2020 to 28th February 2022. Council decides to permit tax authorities to file appeals against erroneous refunds by not considering the two-year period
- Ease in refund claims for export of electricity and select concessional goods with an inverted tax structure.
- GST Network may set up AI/ML-based systems to cross-check the antecedents of the GST registration applicants and improved risk-based monitoring of their behaviour post-registration so that non-compliant taxpayers can be identified at the nascent stage and actions be taken so as to minimise revenue losses.
- A decision was taken to defer the implementation of the GST margin scheme for tour operators after studying it in detail.
Expectations from 47th GST Council meeting
Modifications in GSTR-3B for better ITC reporting
The GST Council may propose changes to Form GSTR-3B and its reporting. The move aims to fasten the Input Tax Credit (ITC) settlement wherever genuine while curbing any fake ITC claims.
As per the sources, the revised GSTR-3B format would allow reporting of the gross ITC available for claims to the taxpayer, the ITC claimed during the tax period and the net ITC in the electronic credit ledger of the taxpayer.
Correction of the inverted tax structure of certain items
The Group of Ministers (GoM) for GST rate rationalisation are expected to submit an interim report at the GST Council meeting. The report may propose corrective actions to address the inverted tax structure for some products such as writing, printing or drawing ink, LED lights, lamps and fixtures bearing tax rates from 12% to 18%. Whereas some rates may be increased from 12% to 18% for correction of inversion. The edible oil could not be allowed any accumulated ITC refund despite the inverted tax structure.
Crypto taxation under GST
The GST Council plans to effectively clarify the taxation of cryptos under GST to track various digital asset transactions. Even though a GST rate may not be fixed in this meeting, exchanges and traders may get clarity on whether or not such crypto transactions could be placed in the highest slab of 28%. But the Fitment Committee desires to dig deeper into this matter and is therefore enquiring with the state governments of Karnataka and Haryana for an exhaustive paper for the GST charges on crypto activities.
GST rate changes and the trimming of the GST exemption list
According to the initial report of the GoM, which the chief minister of Karnataka leads, the GST Council’s choices should be carefully considered and sensitive to the general people’s needs, particularly when reducing the list of GST exemptions.
Until now, the Fitment Committee has rejected rate revision for the 113 commodities but accepted rate modifications for 14 goods and 22 services.
Bread, kitchenware, tractors, hearing aids, educational institutions, and incense sticks may receive a complete exemption. The exemption on products including honey, food grains, flattened rice, parched rice, puffed rice, cereals, jaggery, packaged curd, lassi, buttermilk, paneer, pappad, and some vegetables may be gradually removed by the Council.
Services provided by the IRDA to insurers, FSSAI to food business operators about registration, SEBI, and the RBI are among the things that may no longer be excluded from GST. The Fitment Committee has proposed that certain defence equipment imported by private parties for national defence purposes be free from basic customs duty and IGST.
Other Expectations
- Clarity regarding the ITC refund to duty-free stores.
- Waiver from the March 1, 2020 to February 28, 2022 deadlines for refund applications under GST.
- Further extension of the GSTR-4 filing deadline for FY 2021–22 to July 28, 2022, from June 30, 2022.
- Extension of the CMP-08 filing deadline from July 18 to July 30 for June 30, 2022.
- States may demand a minimum 2 to a 3-year extension of the compensation timeframe.
- The GST Council may present a thorough report on the National Anti-Profiteering Authority (NAA) and the current open cases for further consideration.
- The Center and states may be given the authority to issue show-cause notices, and the GST Council may also consider the compliance difficulties that e-commerce sellers face.
- Approval of an additional e-invoice portal or Invoice Registration Portal (IRP).
- Proposal to introduce a new margin scheme for tour and hospitality industry.
The GST Council previously met for the 46th GST Council meeting on 31st December 2021.