45TH GST Council Meeting Discussion & Recommendations

A press release was issued concerning the 45th GST Council held on 17th September 2021 in Lucknow, chaired by the Honorable Union Finance & Corporate Affairs Minister Smt. Nirmala Sitharaman. The recommendations made in the council covered some reliefs in view of the COVID Pandemic situation, compensation cess utilization, changes in GST laws and procedures, interest on ineligible ITC and many more.
 
These recommendations would be given effect through issuing circulars and notifications as and when deemed fit.
 
Here, in this text, we have tried to briefly cover all the highlights of the said press release and other significant recommendations made by the council.
 
1: Relief measures, given the COVID Pandemic situation-
 
* Concessional rates were being charged on some Covid treatment drugs up to 30th September 2021. The period now has been extended till 31st December 2021.
 
* Rates on some other Covid treatment drugs would also be reduced to 5%.
 
2: A recommendation was also made to change the rates of some goods.
 
*  A list of goods was released mentioning the change in tax rates on goods like cancer medicines, Cartons, boxes, bags, packing containers of paper, Specified Renewable Energy Devices and parts, and some other items.
 
*  Mentha oil being supplied by an unregistered person would be covered under reverse charge mechanism, and in case of its export, refund of ITC should only be allowed against LUT. 
 
*  The composition scheme would also cover brick kilns (threshold limit-Rs 20 Lakhs). Bricks without ITC would attract the rate of 6%, and with ITC would attract a 12% rate of tax.
 
3: A problem of accumulated ITC was faced by the dealers of footwear and textiles due to the wrong inverted duty structure on them. This incorrect inverted duty structure is now being rectified by changing the applicable rates of GST. This change would be brought w.e.f. 1st January 2022.
 
4: The council also had a discussion over the matter of petroleum products to be included or not under the purview of the GST Act. It was decided that it is not appropriate to take this step at this point.
 
5: Exemptions and change in rates of tax in case of a supply of services were also taken into account, and among them, some of the worth noting exemptions and changes were-
 
*  The exemption on the transport of goods by vessel or air from India to a place outside India has now been extended up to 30th September 2022
 
*  Electronic Commerce Operators (ECOs) are being made liable to pay tax on the following services-
 
1: Transport of passengers by a motor vehicle
 
2: Restaurant services (with some exceptions)
 
6:  Clarifications in relation to rates on goods and services. Some important points to be considered are-
 
* Coaching services to students provided by coaching institutes and NGOs under '‘Scholarships for students with Disabilities” are exempt from GST. 
 
* Supply of already manufactured ice-creams by ice-cream parlours would attract the rate of 18%.
 
*  ''Carbonated Fruit Beverages of Fruit Drink" and "Carbonated Beverages with Fruit Juice" would attract 28% of GST and 12% of Cess.
 
*  A uniform rate of 18% would be charged on all paper and paper board containers.
 
*  Overloading charges at toll plazas are exempt.
 
*  Entry tickets in amusement parks would now attract 18% GST, and if casino facilities are being provided, then the rate will be 28%.
 
*  Alcoholic liquor is not to be considered as food, and the job workers providing the services related to alcoholic liquor is liable to pay the tax at the rate of 18% instead of 5%.
 
A presentation was made on the issue of usage and exhausting of the compensation cess collection from June 2022 to April 2026. It was decided that the amount should be used in respect of the repayment of borrowings and debt servicing made to bridge the arising gap in 2020-21 and 2021-22. Council also thought it through to set up a group of ministers to look into the matter of inverted duty, rationalizing rates and exemptions under the GST Act.

ADVICE ON GST LAW AND PROCEDURE

* Relaxation in filing FORM GST ITC-04 (Details of goods/capital goods sent to job worker and received back)-
 
1: The report is to be furnished once in six months, in case the annual aggregate turnover in preceding financial exceeds Rs 5 crores.
 
2: The report is to be furnished annually, in case the annual aggregate turnover in preceding financial is up to Rs 5 Crores.
 
* Retrospective change in the law that the interest to be paid by a taxpayer will be on Ineligible ITC availed and utilized instead of ineligible ITC availed. The rate of interest will be 18% with effect from 01.07.2017A change may also be introduced in the provisions of transfer of unutilized ITC balance in cash ledger between distinct persons without going through the whole process of refund.
 
It was also discussed and decided to issue clarifications for removing ambiguousness through circulars for the taxpayers to benefit from. The issues and disputes are related to-
 
* Scope of intermediary services
 
* Interpretation of “merely establishment of distinct person” in case of export of services.
 
* Some other clarifications related to debit note issuance date need of carrying a physical copy of tax invoices under Rule 48(4).
 
* Provisions regarding procedure and time limit for filing refund of tax paid wrongfully.

FACILITATING AND STREAMLINING OF GST COMPLIANCES

1: Aadhar authentication has now been made mandatory for taxpayers wanting to take the refund and applying for revocation or cancellation of registration.
 
2: A refund of GST will be made in the same bank account to which the PAN is linked.
 
3: The late fee for Form GSTR-1 will now be auto-populated in the next return in Form GSTR-3B.
 
4: A registered person shall not be allowed to furnish FORM GSTR-1 if he has not furnished the return in FORM GSTR-3B for the preceding month. (w.e.f. 01.01.2022)
 
These recommendations were made after thorough deliberations and discussions. Many issues were brought up in view of the current COVID situation, problems related to GST structure, ambiguity and hardships that a taxpayer goes through. Many steps are to be taken which will prove to be beneficial and welcoming for the taxpayers.
 
The above-mentioned points were made only in the form of recommendations and are yet to be enforced through issuing notifications and circulars. 
 
Authored by CA Manish Gupta & assisted by Khushi Khandelwal
For any queries or suggestions, reach at info@manishanilgupta.com

Disclaimer

-The information given above by the author is to provide a general guidance to the readers. This information should not be sought as a substitute for legal opinion.