We wish to update you about various recommendations proposed by the GST Council in its 53rd meeting held on 22 June 2024. Summary of the same is provided below for ease of your reference:
Key announcements:
A) Proposals relating
to litigation and assessments under GST
► Conditional waiver of interest or penalty or both, relating to
demands raised under Section 73 of the CGST Act:
- Waiver of interest and penalty in
respect of demand notices (except demand for erroneous refunds) issued under
Section 73 of the CGST Act for FY 2017-18 to 2019-20, in case where tax
liability is discharged in full upto 31 March 2025 – to be
implemented through insertion of a new provision in the CGST Act
► Reduction in the amount of pre-deposit for filing of appeals under GST - amendments to be made in Section 107 and Section 112 of CGST Act:
|
Forum |
Existing
pre-deposit requirement |
Proposed
pre-deposit requirement |
|
First
Appellate authority |
Maximum
amount: INR 25 crores (CGST and GST each) |
Maximum
amount: INR 20 crores (CGST and GST each) |
|
Appellate
Tribunal |
20%
subject to maximum of INR 50 crores (CGST and GST each) |
10%
subject to maximum of INR 20 crores (CGST and GST each) |
► Time for filing appeals before GST Appellate Tribunal:
Prescribed period of three months to commence from a date to be notified (in respect of appeal/ revision orders passed up to such notified date) – to allow sufficient time to taxpayers to file appeal in the pending cases
► Reduction of Government litigations by fixing monetary limits for filing appeals under GST:
Monetary limit for filing appeal by the department before the GST Appellate Tribunal, High Court, and Supreme Court, has been proposed to be reduced to the following:
GSTAT: INR 20 lakhs
High Court: INR 1 crore
Supreme Court: INR 2 crores
► Time limit for issuance of demand notices and orders,
and benefit of reduced penalty
- From FY 2024-25 onwards, common time limit to be
prescribed for issuance of demand notices and orders, irrespective of
whether case involves fraud, suppression, wilful misstatement etc.
- Time limit to avail benefit of reduced penalty, by
paying the tax demanded along with interest, to be increased from 30 days
to 60 days.
B) Proposals relating
to time-limit for availment of Input Tax Credit (ITC) and valuation of
services:
► Relaxation in time limit for availment of input tax
credit in respect of invoice or debit note – to be made effective through amendments to be
carried out in section 16(4) of the CGST Act:
a.
In
respect of initial years of implementation of GST (i.e., FY 2017-18 to
2020-21):
-
Time limit for ITC availed in respect of any invoice
or debit note pertaining to FY 2017-18 to FY 2020-21 through Form GSTR 3B filed
upto 30 November 2021, may be deemed to be 30 November 2021.
b.
With
respect to cases where returns have been filed after revocation of registration:
-
To relax the time limit for availment of ITC in cases
where returns for the period (between date of cancellation and date of
revocation of cancellation), are filed within 30 days of the order of
revocation.
► Clarification on time of availment of ITC in respect of
self-invoices (for supplies received from unregistered suppliers):
- Time limit for availment of ITC in respect of tax
paid under RCM (on supplies received from unregistered suppliers) shall be
reckoned based on the time of issuance of self-invoice by the recipient.
► Clarification regarding valuation of supply of import
of services by a related person:
- Open
market value (in cases where recipient is eligible for full
ITC), as per Rule 28 of the CGST Rules, shall be deemed to be as follows:
a)
Value declared in the invoice (where such value is determined/ agreed between
the parties); or
b)
NIL (where no such value is determined/ agreed)
► Clarification on valuation of corporate guarantee
provided between related persons after insertion of Rule 28(2) of CGST Rules,
2017:
- Rule
28(2) i.e., deeming value of corporate guarantee as 1% of guarantee
amount, not to apply (retrospectively from 26 October 2023) in following
cases:
- Cases
where recipient is eligible to full input tax credit; and
- Export
of such services.
C) Proposals relating
to trade facilitation measures:
► Relaxation in levy of interest on late return filings
where sufficient credit exists in the Electronic Cash Ledger on the due date of
return (amendment to be notified in Rule 88B of CGST Rules, 2017):
- No interest to be paid on amount available in the
Electronic Cash Ledger on the due date in case of belated filing of Form
GSTR 3B.
► Refund of additional Integrated Tax (IGST) paid on
account of upward revision in price of the goods subsequent to export:
- Mechanism to be prescribed for claiming refund of
additional IGST paid on account of upward revision made in prices,
subsequent to exports being effected.
► Reduction in rate of TCS to be collected by the ECOs
for supplies made through them:
- TCS rate to be reduced from 1% (0.5% CGST and
SGST each) to 0.5% (0.25% CGST and SGST each)
► Proposal to grant powers to the Government to not to recover duties, not
levied or short-levied – to allow
regularization of non-levy or short levy of GST, where tax was being short paid
or not paid due to common trade practices (Propose to insert Section 11A in
CGST Act)
D) Proposals to
clarify following aspects through issuance of relevant circulars:
- Clarification
on mechanism for providing evidence by the suppliers for compliance of the
conditions of Section 15(3)(b)(ii) of CGST Act - i.e. in respect of
post-sale discounts, to the effect that input tax credit has been reversed
by the recipient on the said amount.
- Taxability
of re-imbursement of securities/shares as ESOP/ESPP/RSU provided by a
company to its employees.
- GST
Implications on warranty/ extended warranty provided by manufacturers to
the end customers.
- Clarification
relating to place of supply of goods supplied to unregistered persons,
where delivery address is different from the billing address.
E) Other
miscellaneous proposals
- Rolling out of bio-metric based
Aadhaar authentication on pan-India basis in a phased manner (in respect of
GST registrations to be obtained)
- Transitional credit allowed in
respect of services provided before 1 July 2017, where invoices were
received by ISD before 1 July 2017.
- Introduction of a new statement in
Form GSTR-1A to allow addition/ amendment of details reported in FORM GSTR-1,
before filing of return in FORM GSTR-3B for the said tax period.
- The threshold for reporting of B2C
inter-State supplies invoice-wise in Table 5 of FORM GSTR-1 to be reduced from
Rs 2.5 Lakh to Rs 1 Lakh
- Exemption from filing annual return
for FY 2023-24 for taxpayers having aggregate annual turnover upto INR 2
crores.
- Retrospective amendment (wef 1 October 2023)
providing that penal provision for defaults by e-commerce operators, shall
apply only to those ECOs who are required to collect tax under section 52 of
CGST Act
- Mechanism to be prescribed for adjustment amount
paid through FORM GST DRC-03 against the amount to be paid as pre-deposit
for filing appeal
- Sunset clause providing receipt of
new application for anti-profiteering by 1 April 2025. Further,
existing anti-profiteering cases to be handled by Principal bench of GST
Appellate Tribunal (instead of CCI)
Kindly note that the above
proposals/ recommendations shall be given effect by way of issuance of relevant
notifications, circulars and/or amendments in the GST law, which will be issued
in due course of time.
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