GST Update: Key Recommendations of 47th Meeting of the GST Council

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GST Update: Key Recommendations of 47th Meeting of the GST Council

Tejasvi

@tejasvi

June 29, 2022

Public Policy

296

The 47th meeting of the GST Council concluded today in Chandigarh under the chairmanship of Finance Minister Smt. Nirmala Sitharaman. The focus of the 47^th Council meeting was on report of four Group of Ministers (GoM) on Rate rationalisation; Casino, Race Course and Online Gaming; IT reforms and Movement of precious metals). Some of the important issues discussed in the meeting are as follows:

In-principal approval for relaxation in the provisions for suppliers making supplies through E-Commerce Operators (ECOs) –

NASSCOM, over the last 2 years, has been advocating with the GST officials to bring in parity in terms of registration and payment of GST under the GST law for small sellers selling online vis-à-vis offline sellers. As per the GST law, a seller is eligible to avail exemption from registration and payment of GST until their annual sale/turnover crosses the threshold of INR 40 lakh. However, for a seller selling goods online, similar exemptions do not apply, and such sellers are liable for GST registration from the very first transaction.

We have had numerous meeting with the GST officials at the centre as well as state levels to highlight the magnitude of the issue and how this is impacting the ecommerce industry overall. We also submitted a detailed report to set the overall context of e-commerce in India and highlighting some of the key inhibitions amongst small retailers in transitioning from a purely offline to “Offline + Online” models.

The Council has decided to waive off the requirement of mandatory registration under GST law for person supplying goods through online marketplaces, subject to certain conditions. Further, the GST Council has also agreed to allow sellers opting for Composition Scheme under GST to make intra-State supply through e-commerce operators, subject to certain conditions. These are important issue for MSMEs selling online. These sellers will now get a level playing field (vis-à-vis offline sellers).

The scheme would be tentatively implemented with effect from January 01, 2023, subject to preparedness on the portal as well as by ECOs.

Amendment in formula for calculation of refund of unutilized Input Tax Credit on account of inverted rated structure

The Council has agreed to amend the formula for calculation of refund under rule 89(5) to allow refund of ITC on input services. This will provide relief to taxpayers who are availing ITC on input services. This is in line with NASSCOM recommendations made to GST Council.

Extension of exemption of Integrated Goods and Services Tax (IGST) on import of capital goods by Export Oriented Units

The Council has decided that the present exemption from IGST on import of goods under Export Oriented Units scheme will be continued. This is an important announcement or MSMEs engaged in export of services. This is in line with NASSCOM recommendations made to GST Council.

Recommendations of GoM on IT Reforms

The GoM on IT Reforms has recommended GSTN To put in in place an AI/ML based mechanism to verify the antecedents of the registration applicants and an improved risk-based monitoring of their behavior post registration so that non-compliant tax payers could be identified in their infancy and appropriate action be taken so as to minimize risk to exchequer.

Other important updates:

UPI & IMPS to be provided as an additional mode for payment of Goods and Services Tax to taxpayers under Rule 87(3) of CGST Rules.

Amendment in CGST Rules for handling of pending IGST refund claims where the exporter is identified as risky exporter requiring verification by GST officers. Amendment in rule 96 of the CGST Rules has been recommended to provide for transmission of such IGST refund claims on the portal in a system generated FORM GST RFD-01 to the jurisdictional GST authorities for processing.

Re-credit of amount in electronic credit ledger to be provided in those cases where erroneous refund amount sanctioned to a taxpayer on account of accumulated ITC or on account of IGST paid on zero rated supply of goods or services, in contravention of rule 96(10) of the CGST Rules, is deposited by him along with interest and penalty, wherever applicable. A new FORM GST PMT-03A is introduced for the same.

Amendment w.r.t interest will be payable on the wrongly availed ITC only when the same is utilized and transfer of cash balance across states of a distinct person would be notified soon.

Issuance of circulars on various issues relating to interpretation of section 17(5) of the CGST Act; clarification on the issue of perquisites provided by employer to the employees as per contractual agreement; clarification on the issues pertaining to refund claimed by the recipients of supplies regarded as deemed export, amongst others.

Explanation 1 after rule 43 of CGST Rules to be amended to provide that there is no requirement of reversal of input tax credit for exempted supply of Duty Credit Scrips by the exporters.

Provision for automatic revocation of suspension of registration would be implemented.

Proposal for comprehensive changes in FORM GSTR-3B to be placed in public domain for seeking inputs/suggestions of the stakeholders.

The Council has decided to constitute a Group of Ministers to address various concerns raised by the States in relation to constitution of GST Appellate Tribunal and make recommendations for appropriate amendments in CGST Act.
The Council directed that the GoM on Casino, Race Course and Online Gaming re-examine the issues in its terms of reference based on further inputs from States and submit its report within a short duration. In the media press release, it was mentioned that July 15, 2022 is the deadline for GoM to submit the report.

Trust the update is useful. Copy of the press release is attached for your reference.

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Tejasvi