GST Update: Summary of decisions taken in 54th GST Council meeting

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GST Update: Summary of decisions taken in 54th GST Council meeting

Tejasvi

@tejasvi

September 10, 2024

Public Policy

121

The Goods and Services Tax (GST) Council convened the 54^th council meeting on September 9, 2024. The Council's recommendations include amendments to GST law entailing rate rationalisation as well as measures for facilitation of trade and measures for streamlining compliances in GST.

The announcement to roll out B2C e-invoicing on voluntary basis, issuance of a clarification on place of supply for data hosting services provided by service providers located in India to cloud computing service providers located outside India and advertising services provided by Indian advertising companies to foreign entities are welcome move. Nasscom had been advocating on these issues for more than a year, highlighting the challenges faced by companies. We are encouraged to see our efforts culminate into positive clarifications for the industry. We will wait for the fine prints of the Circular.

Other updates:

The Council recommended to issue a circular to provide clarification regarding availability of Input Tax Credit on demo vehicles by the dealers of the vehicle manufacturers.
Invoice Management System and new ledgers: This will allow the taxpayers to accept, reject, or to keep the invoices pending for the purpose of availment of Input Tax Credit. This will be an optional facility for taxpayers to reduce errors in claiming input tax credit and improve reconciliation. This is expected to reduce notices issued on account of ITC mismatch in the returns.
Procedure and conditions for waiver of interest or penalty or both, in respect of tax demands under S. 73 of CGST Act, 2017 for FYs 2017-18, 2018-19 and 2019-20 as per S. 128A of CGST Act, 2017: The GST Council recommended insertion of rule 164 in CGST Rules providing for the procedure and conditions for availment of benefit of waiver of interest or penalty or both, relating to tax demands under section 73 of CGST Act, pertaining to FYs 2017-18, 2018-19 and 2019-20, as per section 128A of CGST Act. The Council also recommended to notify March 31, 2025 as the date on or before which the payment of tax may be made by the registered persons, to avail the said benefit as per section 128A of the CGST Act. The Council also recommended the issuance of a circular to clarify various issues related to availment of waiver of interest or penalty or both as per section 128A of CGST Act.
Providing a mechanism for implementation of newly inserted sub-section (5) and sub-section (6) in section 16 of CGST Act, 2017:

The Council recommended to notify a special procedure to enable ITC through rectification of orders which confirmed wrong availment of ITC in contravention of S. 16(4), but where such ITC is now available as per S. 16(5) and 16(6), and where no appeal has been filed.

Amendments in rule 89 and rule 96 of CGST Rules and to provide clarification in respect of IGST refunds on exports where benefit of concessional/ exemption notifications specified under rule 96(10) of CGST Rules has been availed on the inputs:

The GST Council recommended to clarify that where the inputs were initially imported without payment of integrated tax and compensation cess by availing benefits under Notification No. 78/2017-Customs dated 13.10.2017 or Notification No. 79/2017-Customs dated 13.10.2017, but IGST and compensation cess on such imported inputs are subsequently paid, along with applicable interest, and the Bill of Entry in respect of the import of the said inputs is got reassessed through the jurisdictional Customs authorities to this effect, then the IGST paid on exports, refunded to the said exporter shall not be considered to be in contravention of provisions of sub-rule (10) of rule 96 of CGST Rules.

Further, considering the difficulty being faced by the exporters due to restriction in respect of refund on exports, imposed vide rule 96(10), rule 89(4A) & rule 89(4B) of CGST Rules, 2017, in cases where benefit of the specified concessional/ exemption notifications is availed on the inputs, the Council recommended to prospectively omit rule 96(10), rule 89(4A) & rule 89(4B) from CGST Rules, 2017. This will simplify and expedite the procedure for refunds in respect of such exports.

We hope you will find the update useful. Please refer to the attached press release for update on other decisions taken by the government in 54^th GST Council meeting.

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Tejasvi