The 50th GST Council Meeting was held on 11-07-2023 in which Council recommended multiple changes in GST law. Kindly refer recommendations that may have an impact on the company:
- Reduction of GST rate on uncooked/unfried snack pellets: The council has decided to reduce the GST rate on uncooked/unfried snack pellets, by whatever name called, to 5% and to regularise payment of GST on uncooked /unfried snack pellets during the past period on “as is basis”.
- Filing of a declaration by GTA: Earlier GTAs were required to file a declaration by the 15th of March of each year for paying GST under forward charge but now it has been recommended that if they have exercised this option for a particular financial year, they shall be deemed to have exercised it for the next and future financial years unless they file a declaration that they want to revert to reverse charge mechanism (RCM). Also, it has been decided that the last date of exercising the option by GTAs to pay GST under forward charge shall be 31 March of the preceding Financial Year instead of 15 March. 1 January of the preceding Financial Year shall be the start date for the exercise of the option.
- Clarification of RCM on services by a director of a company/ body corporate to the said company/ body corporate: RCM is applicable in the hands of the company/ body corporate when services are supplied by directors. Now, Council has decided to clarify that services supplied by a director of a company to the company in his private or personal capacity such as supplying services by way of renting of immovable property to the company or body corporate are not taxable under RCM.
- Clarification on ISD Mechanism and Cross charge: The Council has recommended clarifying through a circular That the Input Services Distributor (ISD) mechanism is not mandatory for the distribution of input tax credit of common input services procured from third parties to the distinct persons as per the present provisions of GST law, and also to clarify issues regarding taxability of internally generated services provided by one distinct person to another distinct person. The Council has also recommended that amendment may be made in GST law to make the ISD mechanism mandatory prospectively for the distribution of input tax credit of such common input services procured from third parties.
- Clarification for calculation of interest amount liable to be paid under section 50(3) of CGST Act, 2017 in respect of wrongly availed and utilized IGST credit: It has been decided to clarify that in cases of wrong availment of IGST credit, the balance of input tax credit (ITC) in electronic credit ledger, under the heads of IGST, CGST, and SGST taken together, has to be taken in consideration while calculating such interest liability as per rule 88B of CGST Rules,2017.
- Biometric-based Adhaar Authentication: Pilot to be conducted in U.T. of Puducherry for risk-based biometric-based Aadhaar authentication of registration applicants. The State of Andhra Pradesh also expressed its intent to join this pilot after the system’s readiness is tested in the state of Gujarat and the U.T. of Puducherry.
- Recommendation for amending CGST Rules for granting new GST registration: To strengthen the registration process and to effectively deal with the menace of fake and fraudulent registrations in GST, the council has recommended certain amendments which are:
- Restriction on the filing of GSTR-1 if valid bank account details are not provided: The council has recommended that if a registered person has not furnished valid bank account details, then they will not be allowed to GSTR-1/ IFF. Earlier, the taxpayer was able to file GST returns without updating bank account details as well.
- Physical verification of premises even when Aadhaar Authentication has been done: It is decided that physical verification of business premises is to be conducted in high-risk cases even where Aadhaar has been authenticated at the time of granting new GST registration. Earlier physical verification was not required where Aadhaar Authentication has been completed.
- Insertion of new Rule 142B & Form DRC-01D for recovery of tax and interest: The Council has now recommended insertion of Rule 142B in the CGST Rules, 2017 and insertion of a FORM GST DRC-01D to provide for manner of recovery of the tax and interest in respect of mismatch between output liability declared in GSTR-1 and GSTR-3B as per rule 88C where it has not been paid and for which no satisfactory explanation has been furnished by the registered person.
- New mechanism for excess availment of ITC and insertion of new rule 88D & form DRC-01C: The Council has recommended a mechanism for system-based intimation to the taxpayers in respect of the excess availment of ITC in GSTR-3B vis a vis that made available in GSTR-2B above a certain threshold, along with the procedure of auto-compliance on the part of the taxpayers, to explain the reasons for the said difference or take remedial action in respect of such difference. For this purpose, rule 88D and FORM DRC-01C are to be inserted in CGST Rules, 2017, along with an amendment in Rule 59(6) of CGST Rules, 2017.
- FORM GSTR-3A to be amended to provide for issuance of notice for non-furnishing of Annual Return in FORM GSTR-9/9A: The council has recommended amending FORM GSTR-3A for issuance of notice against non-filing of GSTR-9/9A by the due date.
- Constitution of Goods and Services Tax Appellate Tribunal (GSTAT): The council suggests for Constitution of GSTAT and its Rules for enabling the smooth functioning of the GST Appellate Tribunal. The same will be notified with effected from 1st August 2023.
- Taxability of food and beverages in Cinema halls: The council has proposed clarifying that the food and beverages in cinema halls will be taxable as restaurant services thereby levying GST of 5%. However, when the supply of food and beverages is clubbed with cinema hall exhibition service, the entire supply will be a composite supply wherein the principal supply will be the service of the cinema hall exhibition. However, if the sale of tickets and the supply of food and beverages are bundled together as a composite supply, the entire supply attracts the GST at the rate applicable to the exhibition of cinema which is considered as Principal supply.
- Special provision to enable manual filing of Appeal for Tran 1 and Tran 2 Issues: Taxpayers aggrieved by the order passed by the authority in case availing of ITC through transitional form i.e. Trans 1/ 2 can file an appeal against such order manually. Regarding the same, the relevant amendment has been proposed under section 148 of the CGST Act, 2017.
- Extension of the Time limit of GST Amnesty Scheme 2023 has been extended up to 31st August 2023: The Council has extended the benefits of GST Amnesty Scheme 2023 till 30 August 2023 regarding the non-filers of Form GSTR 4 (Composition dealer), GSTR 9 (Annual Return), and GSTR 10 (Final Return). Further, the Revocation of cancellation of GST registration and deemed withdrawal of assessment order issued under section 62 of the CGST Act which has been lapsed by dated 30.06.2023 has also been extended till 31 August 2023.
- The benefit of Circular no 183/15/2022- GST dated 27 December 2022 has extended for the period of 2019-20 and 2020-21: CBIC vide circular no 183/15/2022 dated 27 December 2022 provides clarification that the difference in Input Tax Credit (ITC) availed in FORM GSTR-3B as compared to that detailed in FORM GSTR-2A for FY 2017-18 and 2018-19 on account of scenario as mentioned below, the taxpayer is required to submit vendor certificate is mismatch amount is less than 5 lakhs, or certificate from the chartered account or cost account if the mismatched amount is more than 5 lakh. Considering the issue faced in the industry, the GST council recommended providing similar benefits for the F.Y. 2019-20 and for the period April -20 to Dec-20 also.
The supplier has failed to file FORM GSTR-1 for a tax period but has filed the return in FORM GSTR-3B for the said tax period
The supplier has filed FORM GSTR-1 as well as return in FORM GSTR-3B for a tax period but has failed to report a particular supply in FORM GSTR-1
Supply made to registered person(B2B) has wrongly reported as unregistered person (B2C)
The GSTIN of the recipient has been wrongly reported in GSTR-1
- Annual Returns for FY 2022-23: The Council has recommended that the relaxations provided in FY 2021-22 in respect of various tables of FORM GSTR-9 and FORM GSTR-9C be continued for FY 2022-23. Further, for easing the compliance burden on smaller taxpayers, exemption from filing of annual returns (in FORM GSTR-9/9A) for taxpayers having aggregate annual turnover up to two crore rupees, is to be continued for FY 2022-23 also.
- E-invoice: Clarifying that the registered person, whose turnover exceeds the prescribed threshold for generation of e-invoicing, is required to issue E-invoices under rule 48(4) of CGST Rules. for the supplies made to Government Departments or establishments / Government agencies / local authorities / PSUs, etc., registered solely for the purpose of TDS.
- Clarification on Place of supply for goods supplied to unregistered persons: The Council has proposed to insert a clause (ca) in sub-section (1) of section 10 of the IGST Act, 2017 to clarify the place of supply in respect of the supply of goods to unregistered persons.
- GST on holding of shares by the parent company in the subsidiary company: The Council has proposed to clarify that no GST will be levied on holding securities in the subsidiary company as there is no supply of service from the parent company.
- Implications when FOC goods & services are provided during the warranty period: The Council has proposed to clarify that no GST will be leviable on the replacement of parts & services used for honoring warranty obligations. Further, there will be no requirement to reverse ITC on goods replaced.
- Implementation of E-way bill requirement for movement of Gold/ Precious stones: The Council has recommended inserting rule 138F in GST Rules for the implementation of the mandatory requirement of generation of e-way bills for intra-State (within their States) movement of gold and precious stones under Chapter 71.
- Taxability of Casino, Horse Racing, and Online Gaming under GST Law: It has been recommended by the council that all three namely Casino, Horse Racing, and Online Gaming be taxed at the uniform rate of 28%. Tax will be applicable on the face value of the chips purchased in the case of casinos and on the full value of the bets placed in the case of Horse Racing and Online Gaming.
- Supply of raw cotton, including kala cotton, by agriculturists to cooperatives is taxable under RCM: It has been decided to clarify that supply of raw cotton, including kala cotton, by agriculturists to cooperatives is taxable under reverse charge mechanism and to regularise issues relating for the past period on “as is basis”.
If you want to know more and understand decisions, relaxations, and recommendations in detail, contact ASC Group. We will connect you with GST Experts to assist you in all your matters relating to Goods and Services Tax.
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