GST Update: Summary of decisions taken in 48th GST Council meeting

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GST Update: Summary of decisions taken in 48th GST Council meeting

Tejasvi

@tejasvi

December 22, 2022

Public Policy

315

The 48th meeting of the GST Council was held in Delhi on December 17, 2022. Some of the important updates pursuant to the meeting are as follows:

Key Updates:

The Council had, in its 47^th meeting, granted in-principle approval for allowing unregistered suppliers and composition taxpayers to make intra-state supply of goods through E-Commerce Operators (ECOs), subject to certain conditions. The Council approved the amendments in the GST Act and rules thereunder along with issuance of relevant notifications, to enable the same. In this regard, NASSCOM made a representation to GST Policy Wing as well as GSTN requesting them to defer the date of implementation of the above decision. This is due to the reason that ECOs would be required to onboard millions of small sellers and getting them registered on the GST portal for enrolment number would take a significant amount of time (at least 6 months). Link to our representation is available here. The GST Council has now recommended that the scheme may be implemented w.e.f. October 1, 2023.
Paras 7 (i.e. supply of goods from a place in non-taxable territory to another place in non-taxable territory), Para 8a (i.e. Supply of warehoused goods to any person before clearance for home consumption) and Para 8b (i.e. Supply of goods by consignee to any other person, by endorsement of documents of title) were inserted in Schedule III of Central Goods and Services Tax Act, 2017 (CGST Act) with effect from February 1, 2019 to keep certain transactions/ activities. In order to remove the doubts and ambiguities regarding taxability of such transactions/ activities during the period July 1, 2017 to January 31, 2019, the Council has recommended to make the said paras effective from July 1, 2017. However, no refund of tax paid shall be available in cases where any tax has already been paid in respect of such transactions/ activities during the period 01.07.2017 to 31.01.2019.
Introduction of Rule 37A in CGST Rules, 2017 to prescribe the mechanism for reversal of Input Tax Credit (ITC) by a registered person 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 ITC under S.16(2)(c) of CGST Act.
Amendment in definition of “non-taxable online recipient” under S. 2(16) of Integrated Goods and Services Tax Act, 2017 (IGST Act) and definition of “Online Information and Database Access or Retrieval Services (OIDAR)” under S. 2(17) of IGST Act so as to reduce interpretation issues and litigation on taxation of OIDAR Services.

Measures for facilitation of trade

Decriminalisation under GST

Raise minimum threshold of tax amount for launching prosecution under GST from INR 1 Crore to INR 2 Crores, except for the offence of issuance of invoices without supply of goods/ services/ both.
Reduce compounding amount from the present range of 50% to 150% of tax amount to the range of 25% to 100%;
Decriminalise certain offences specified under clause (g), (j) and (k) of S. 132(1) of CGST Act, viz.-

Obstruction or preventing any officer in discharge of his duties;
Deliberate tempering of material evidence;
Failure to supply the information.

Refund to un-registered person - There is no procedure for claim of refund of tax borne by the unregistered buyers in cases where the contract/ agreement for supply of services, like construction of flat/house and long-term insurance policy, is cancelled and the time period of issuance of credit note by the concerned supplier is over. The Council recommended amendment in CGST Rules along with issuance of a circular, to prescribe the procedure for filing application of refund by the unregistered buyers in such cases.
Amendment to Rule 37(1) of CGST Rules retrospectively with effect from October 1, 2022 to provide for reversal of ITC, in terms of second proviso to S. 16 of CGST Act, only proportionate to the amount not paid to the supplier vis a vis the value of the supply, including tax payable.
Amendment to Rule 108(3) and Rule 109 of CGST Rules 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 burden for the appellants.
Rule 109C and FORM GST APL-01/03 W to be inserted in CGST Rules to provide the facility for withdrawal of an application of appeal up to certain specified stage. This would help in reducing litigations at the level of appellate authorities.
Following circulars are proposed to be issued to clarify:

No Claim Bonus offered by the insurance companies to the insured is an admissible deduction for valuation of insurance services.
Treatment of statutory dues under GST law in respect of the taxpayers for whom the proceedings have been finalised under Insolvency and Bankruptcy Code, 2016. Rule 161 of CGST Rules and FORM GST DRC-25 also to be amended for facilitating the same
Issues pertaining to the place of supply of services of transportation of goods in terms of the proviso to S. 12(8) of IGST Act and availability of ITC to the recipient of such supply. It has also been recommended that proviso to S. 12(8) of IGST Act may be omitted.
Procedure for verification of ITC in cases involving difference in input tax credit availed in FORM GSTR-3B vis a vis that available as per FORM GSTR-2A during FY 2017-18 and 2018-19.
Manner of re-determination of demand in terms of S. 75(2) of CGST Act.
Applicability of e-invoicing with respect to an entity.

Rule 12(3) of CGST Rules to be amended to provide for facility to registered persons who are required to collect tax at source under S.52 or deduct tax at source under S. 51 of CGST Act for cancellation of their registration on their request.

Measures for streamlining compliances in GST

Proposal to conduct a pilot in State of Gujarat for Biometric-based Aadhaar authentication and risk-based physical verification of registration applicants.
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 such PAN-linked mobile number and email address to restrict misuse of PAN of a person by unscrupulous elements without knowledge of the said PAN-holder.
S. 37, 39, 44 and 52 of CGST Act to be amended 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 S.52 and S. 9(5) of CGST Act by the supplier and reporting by the ECO in respect of supplies made under S.9(5) of CGST Act.
Rule 88C and FORM GST DRC-01B to be inserted in CGST Rules for intimation to the taxpayer, by the common 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 Rule 59(6) of CGST Rules 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. This would facilitate taxpayers to pay/ explain the reason for the difference in such liabilities reported by them, without intervention of the tax officers.

Copy of the PIB release is attached for your reference.

We hope you will find the update useful.

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