Exemption for Railway services, SEZs, and an Aadhaar rollout: Takeaways from 53rd GST Council meet
The 53rd GST Council meeting, chaired by Finance Minister Nirmala Sitharaman, came up with a slew of recommendations aimed at streamlining GST compliance and reducing taxpayer burden. This was the first meeting of the GST council after the formation of the new government.
Here are the key takeaways
Waiving Interest and Penalties:
The Council recommended waiving interest and penalties for demand notices under Section 73 of the CGST Act for fiscal years 2017-18, 2018-19, and 2019-20, provided the full tax demanded is paid by March 31, 2025. This relief applies to cases not involving fraud, suppression, or willful misstatement.
Extended Time for Input Tax Credit:
Taxpayers can now avail input tax credit for invoices or debit notes for FY 2017-18 to 2020-21 up to November 30, 2021. This extension aims to mitigate the challenges faced by taxpayers during the initial years of GST implementation.
Monetary Limits for Appeals:
To reduce litigation, the Council set monetary limits for filing appeals:
- Rs. 20 lakh for GST Appellate Tribunal
- Rs. 1 crore for High Court
- Rs. 2 crore for Supreme Court
- These limits are expected to streamline the appeals process and lessen the burden on the judicial system.
- Reduced Pre-Deposit for Appeals:
The pre-deposit amount required for filing appeals under GST has been reduced, easing the cash flow and working capital concerns for taxpayers. This change will make it more feasible for taxpayers to contest decisions without significant financial strain.
Interest on Delayed Filing:
To alleviate the interest burden on taxpayers, the Council recommended not levying interest under Section 50 of the CGST Act on delayed filings if the amount is available in the Electronic Cash Ledger on the due date. This move aims to reduce the financial stress associated with late filings.
Sunset Clause for Anti-Profiteering:
The Council introduced a sunset clause for receiving new anti-profiteering applications, effective from April 1, 2025. This decision marks a shift towards concluding the anti-profiteering framework under GST.
Exemption for SEZ Imports:
Since July 1, 2017, Compensation Cess on imports by SEZ Units/developers for authorized operations has been exempted. This exemption is intended to foster growth and development within SEZs.
Changes in GST Rates on Goods:
The Council recommended several changes in GST rates to stimulate various sectors:
- A uniform 5% IGST on parts, components, and tools for aircraft to boost MRO activities.
- 12% GST on all milk cans, regardless of material.
- Reduction of GST on cartons, boxes, and cases from 18% to 12%.
- 12% GST on all solar cookers and sprinklers.
- Exemptions for defence-related imports and research equipment.
Changes in GST Rates on Services:
Significant exemptions were proposed for services provided by Indian Railways to the general public and intra-railway transactions. These include exemptions for platform tickets, retiring rooms, cloakroom services, and more, aimed at reducing the cost burden on passengers.
Facilitation of Trade:
Several measures were recommended to facilitate trade:
- Insertion of Section 128A in the CGST Act to waive interest and penalties for certain periods.
- Amendment to the GST law to exclude rectified spirit/Extra Neutral Alcohol used for manufacturing alcoholic beverages from GST.
- Reduction of the TCS rate for Electronic Commerce Operators from 1% to 0.5%.
Compliance Streamlining:
The Council recommended the roll-out of biometric-based Aadhaar authentication for registration applicants nationwide. This initiative aims to strengthen the registration process and combat fraudulent input tax credit claims.
Numerous other measures were discussed to streamline processes and reduce litigation, including amendments to various sections of the CGST and IGST Acts. These include clarifications on input tax credit, valuation of services, and reporting requirements, which are expected to provide greater clarity and reduce disputes.
