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Key Highlights Of The Recommendations Made By The GST Council In Its 47th Meeting

Parina Katyal
30 Jun 2022 1:00 PM GMT
Issue Of Notice Of Hearing Is A Statutory Requirement Under Section 75(4) Of CGST Act Before Imposition Of Tax Or Penalty: Andhra Pradesh High Court

The GST Council, in its 47th Meeting held on the 28th and 29th of June, 2022, has made certain recommendations relating to changes in the GST rate. Certain changes were also recommended relating to the GST law and procedure.

GST on supply of printing, writing or drawing ink, knives, and power- driven pumps, including deep tube-well turbine pumps and bicycle pumps, is recommended to be increased from 12% to 18%.

The supply of cleaning machines as well as machines used in the milling industry, Air Based Atta Chakki and Wet Grinder, is proposed to see a 13% hike in GST from 5% to 18%. Also, as per the recommendations, GST on supply of milking machines and dairy machinery is sought to be increased to 18 % from 12 %. GST on Solar Water Heater and System is sought to be increased from 5% to 12%. Additionally, GST on LED lamps and lights and fixtures is proposed to be increased to 18% from 12%.

The GST Council has also recommended non-allowance of refund of accumulated Input Tax Credit (ITC) on Edible Oils and Coal.

While GST on services including Works Contract for roads, bridges, railways, metro, as well as effluent treatment plants and crematoriums, is proposed to increase to 18% from 12%, GST on Job work in relation to manufacture of leather goods and footwears is recommended to be increased to 12 % from 5 %. Also, with respect to services supplied to a chit fund by a foreman, GST is sought to be increased to 18% from 12%.

GST rates on Ostomy Appliances and Orthopaedic appliances is proposed to see a cut of 7%, with the GST rates falling to 5% from 12%, while IGST on import of Diethylcarbamazine (DEC) Tablets supplied free of cost for National Filariasis Elimination Programme is sought be reduced from 5% to Nil.

Supply of cut and polished diamonds is proposed to attract GST of 1.5%, as compared to the existing rate of 0.25%.

Also, as per the recommendations, IGST on specified defence items imported by private entities or vendors, in cases where the end-user is the Defence force, is proposed to be Nil.

GST on transport of goods and passengers by ropeways is proposed to decrease to 5% from 18%, while GST on renting of truck or goods carriages, where the cost of fuel is included, is recommended to be decreased to 12% from 18%.

The GST Council has recommended to exclude pre-packaged and pre-labelled retail pack, including pre-packed and pre-labelled curd, lassi and butter milk, from the exemption granted to specified non-branded food items.

Exemption from GST granted to cheques and maps is sought to be revoked, with cheques and maps proposed to attract 18% and 12 % GST, respectively.

Exemption in form of concessional rate of GST is recommended to be rationalized for certain goods. Petroleum or coal bed methane, scientific and technical instruments supplied to public funded research institutes, and e-waste are proposed to see a hike of GST rates.

Exemption on certain services is also sought to be rationalized. For instance, exemption on transport of passengers by air to and from North East states and Bagdogra is proposed to be restricted to economy class.

GST exemption on storage or warehousing of commodities that attract tax, including nuts, spices, jaggery and cotton, is also recommended to be withdrawn.

GST exemption on services provided by RBI, IRDA, SEBI and FSSAI, Goods and Services Tax Network (GSTN) services, and renting of residential dwelling to business entities is also sought to be withdrawn.

Hotel accommodations, with a rate of up to Rs. 1000 per day, would attract GST of 12%, as per the recommendations.

The Council has recommended that all taxable services of the Department of Posts would be subject to forward charge. As per the recommendations, the Goods Transport Agency (GTA) would be given an option to pay GST at 5% or 12% under forward charge, which is to be exercised by it at the beginning of the financial year.

Also, services provided by Indian Tour operators to a foreign resident for a tour that is partially in India and partially outside India, is proposed to attract GST proportionate to the tour conducted in India, subject to certain conditions.

The GST Council also directed the Group of Ministers on Casino, Race Course and Online Gaming to re-examine the issues relating to tax on horse races, online gaming and casinos, based on further inputs from the States. The said Group of Ministers were directed to submit their report within a short duration.

The GST Council also made certain clarifications on the GST rates. It is clarified that electric vehicles would be eligible for the concessional GST rate of 5%, whether or not they are fitted with a battery pack. The Council added that GST rate on all forms of mango under CTH0804, including mango pulp, other than sliced or dried mangoes, would attract 12% GST. Also, raw or fresh mangoes will continue to be exempted from GST. As per the clarifications, sewage treated water is exempted from GST, and all fly ash bricks would attract the same concessional rate irrespective of the fly ash content.

Application fee charged for entrance or for issuance of eligibility certificate for admission by universities, or for issuance of migration certificate by universities, is exempt from GST, the Council has clarified.

Also, sale of space for advertisement in souvenirs, which are published in the form of books, is eligible for a concessional GST rate of 5%. The Council has clarified that services in the form of Assisted Reproductive Technology (ART) or in vitro fertilization (IVF) fall under the definition of health care services for the purpose of exemption under GST.

The GST Council also suggested certain trade facilitation measures, including allowing composition tax payers to make intra-state supply through e-commerce operators, subject to certain conditions.

Also, the GST Council has recommended waiver of the requirement of mandatory registration under Section 24 (ix) of CGST Act for persons supplying goods through e-commerce operators, subject to certain conditions.

The Council has also suggested amendment of the formula prescribed under Rule 89 (5) of CGST Rules, 2017 for calculation of refund of unutilized Input Tax Credit (ITC). The Council observed that this amendment would help the taxpayers who are also availing ITC on input services.

Also, amendment in CGST Rules has been proposed for suspending and withholding the refund claims in respect of export goods in cases where the provisions of the Customs Act, 1962 are violated, or where the exporter is identified as a risky exporter.

In cases where erroneous refund amount sanctioned to a taxpayer is deposited by him along with interest and penalty, re-credit of the amount in electronic credit ledger is proposed, for which a new FORM GST PMT-03A is recommended to be introduced.

The waiver of late fee under Section 47 of the CGST Act for delay in filing FORM GSTR-4 for Financial Year 2021-22, is proposed to be extended by approximately four more weeks, i.e., till 28.07.2022.

Also, the due date of filing FORM GST CMP-08 for the 1st quarter of Financial Year 2022-2023 is recommended to be extended from 18.07.2022 to 31.07.2022.

The Council recommended granting exemption to the taxpayers having Annual Aggregate Turnover of up to Rs. 2 Crores from filing annual return in FORM GSTR-9/9A for the Financial Year 2021-2022.

The Council has also recommended not to further pursue the E-wallet scheme.

To facilitate the exporters of electricity in claiming refund of utilized ITC on zero rated supplies, the Council proposed that an amendment be made in the CGST Rules to provide for refund of unutilized ITC on account of Export of Electricity.

Also, supplies from Duty Free Shops (DFS) at international terminals to outgoing international passengers is recommended to be treated as exports by the Duty Free Shops and accordingly, consequential refund benefit is to be made available to them on such supplies.

The Council suggested that proposals for comprehensive changes in FORM GSTR-3B be placed in the public domain for seeking inputs and suggestions of the stakeholders.

Further, the time period from 01.03.2020 to 28.02.2022 is proposed to be excluded from calculation of the limitation period for filing refund claim under Section 54 and 55 of CGST Act.

The Council has also decided to constitute a Group of Ministers to address the concerns raised by the States relating to the constitution of the GST Appellate Tribunal as well as for recommending amendments to the CGST Act.

The Group of Ministers on IT Reforms have suggested that Artificial Intelligence and Machine Learning (AI/ML) based mechanism should be put in place by the Goods and Services Tax Network (GSTN) to verify the antecedents of the applicants registered under the GST law.

The Council has also approved the release of Rs. 13, 500 Crores to the States, i.e., 50% of the apportioned IGST.

The GST Council has specified that the GST rate changes recommended by it would be made effective from 18th July, 2022.

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