The GST Council along with the Union Finance Minister Via virtual mode during their 48^th meeting recommended various changes in the gst tax rates and ways to facilitates trade and streamlining the procedures in Gst Compliances.

NOTE: These changes will come into effect from the date of such notification or the date mentioned in such notification after separate enabling activities to be conducted by CBIC, Ministry of Finance.

1)Changes in Rate of Taxes: –

• Compensation cess @ 22% for SUVs with specific conditions.
• If a registered person rents a residential dwelling in his/her personal capacity for their own residence in their own account is not on the account of the business is not liable to pay GST on such rented residency.
• Fryums manufacturing with the process of extrusion is covered specifically under CTH 19059030 and would attract GST at the rate of 18%.
• The Amount paid by Central Government to bank as an incentive for the promotion of Rupay debit cards and low value BHIM-UPI transactions are treated as a subsidy and thus is not taxable.
• Rab (rab-salawat) will attract gst rate of 18% which is classifiable under CTH 1702.
• Goods attracting lower rate of tax (5%) under schedule I of notification No. 1/2017-CTR imported for petroleum operations will attract lower rate of 5% and the rate of 12% shall be applicable only if the general rate is more than 12%.

2) Proposals contributing for facilitation and ease of trade

1. Decriminalization under GST
   1. The minimum threshold for prosecution under gst has been raised to Rs 2 Crores from the limit of Rs 1 Crore. However, this shall not apply for the offence of issuance of invoices without supply of goods or services or Both.
   2. Recommendation for reduction in the compounding amount to 25% to 100% of tax from previous range of 50% to 150% of tax.
   3. Certain offenses specified under clause (g), (j) & (k) of sub-section (1) of section 132 of CGST Act, 2017 should be decriminalized Viz: –

• Restricting or preventing any officer in discharge of his duties
• Intended tempering of material evidence

• Failure to supply the information.

2. Refund to unregistered Person

Earlier there was no way for an unregistered person to claim refund of tax borne where contract or agreement of supply of services, like long term insurance policy or construction of flat/house, is cancelled and the time period for issuance of credit note by the supplier has passed. The Gst Council recommends an amendment in CGST Rules, 2017, along with a circular, to prescribe the procedure for filing an application of refund by unregistered buyers.

3. Ease for Micro enterprises in E-commerce.

The GST Council has approved Amendments in the GST Act and rules, along with issuance of relevant notifications.

From 1^st October 2023 unregistered suppliers and composition taxpayers can make intra-state supply goods through E-Commerce operators.

4. Changes in period of payment for reversal of ITC:

The Council has made recommendations to amend sub-rule (1) of rule 37 of CGST Rules, 2017 retrospectively with effect from 1st October 2022 to provide for reversal of input tax credit, in terms of second proviso to section 16 of CGST Act, only proportionate to the amount not paid to the supplier i.e., the value of the supply, including tax payable. 

5. New CGST Rule 37A for ITC reversal

The GST Council has made recommendation to insert Rule 37A in CGST Rules, 2017 to prescribe the mechanism for reversal of input tax credit in the event of non-payment of tax by the supplier by a specified date and mechanism for re-availment of such credit, if the supplier pays tax subsequently. This would ease the process for complying with the condition for availment of input tax credit under section 16(2)(c) of CGST Act, 2017

6. Facilitation of timely processing of appeals:

Sub-rule (3) of rule 108 and rule 109 of the CGST Rules, 2017 to be amended to provide clarity on the requirement of submission of certified copy of the order appealed

against and the issuance of final acknowledgment by the appellate authority.

This would facilitate timely processing of appeals and ease the compliance requirements for the appellants.

Rule 109C and FORM GST APL-01/03 W to be inserted in the CGST Rules, 2017 to provide the facility for withdrawal of an application of appeal up to certain specified stage to reduce litigations at the level of appellate authorities

7.Insurance (No Claim Bonus):

Circular to be issued to clarify that No Claim Bonus offered by the insurance companies to the insured is an admissible deduction for valuation of insurance services.

3)Streamlining GST Compliances.

• Biometric-based Aadhaar authentication and risk-based physical verification of registration applicants to help in tackling the cases of fake and fraudulent registrations.
• PAN-linked mobile number and e-mail address (fetched from CBDT database) to be captured and recorded in FORM GST REG-01 and OTP-based verification to be conducted at the time of registration on the same to restrict misuse of PAN.
• Amendment to restrict filing of returns/ statements to a maximum period of three years from the due date of filing of the relevant return / statement.
• FORM GSTR-1 to be amended to provide for reporting of details of supplies made through ECOs, covered under section 52 and section 9(5) of CGST Act, 2017, by the supplier and reporting by ECO.
• Intimation to the taxpayer, by the portal about the difference between liability reported by the taxpayer in FORM GSTR-1 and in FORM GSTR-3B for a tax period, where such difference exceeds a specified amount and/ or percentage, for enabling the taxpayer to either pay the differential liability or explain the difference.
• Further, clause (d) to be inserted in sub-rule (6) of rule 59 of CGST Rules, 2017 to restrict furnishing of FORM GSTR-1 for a subsequent tax period if the taxpayer has neither deposited the amount specified in the intimation nor has furnished a reply explaining the reasons for the amount remaining unpaid enabling non-intervention of tax officers
• Amendment in definition of “non-taxable online recipient” and “Online Information and Database Access or Retrieval Services (OIDAR)” to reduce interpretation issues and litigation on taxation of OIDAR Service

Authors:

Neel Shah

|Associate Consultant |+918369754362|neel.shah@masd.co.in|LinkedIn Profile

Kalp Lodha

|Associate Consultant|+918369419320|kalp.lodha@masd.co.in|LindedIn Profile