The 52nd GST Council meeting was held on 7th October 2023 in New Delhi, presided over by Smt. Nirmala Sitharaman, the Union FM, and attended by several prominent figures from the government. Here are the key takeaways:
1. Changes in GST rates of goods
- Millet Flour: Millet flour in powder form, with a composition of 70% millets by weight, will attract 0% GST if sold in loose form and 5% GST if sold pre-packaged and labeled form.
- Molasses: GST on molasses has been reduced from 28% to 5%. This step will increase liquidity with mills and enable faster clearance of cane dues to sugarcane farmers. It will also reduce the cost of manufacturing cattle feed as molasses is an ingredient in its manufacture.
- ENA for Industrial Use: ENA for industrial use will attract 18% GST with a separate tariff HS code.
- Imitation Zari Thread: Imitation zari thread or yarn made out of metallised polyester film or plastic film, falling under HS 5605, will have a 5% GST without refund due to inversion.
2. GST Amnesty Scheme for Appeal Filing
The GST Council has recommended providing an amnesty scheme which allows tax payers an extension in the appeal filing time to 31st Jan, 2024 for filing appeals related to demand orders passed under section 73 or 74 of CGST Act, 2017. Under this scheme, individuals will need to make a pre-deposit of 12.5% of the tax amount, of which 2.5% must be paid in cash. This provides a significant relief to those who missed the initial appeal filing deadline.
3. Automatic Restoration of Attached Property
The GST Council also recommended an amendment to CGST Section 159. This amendment ensures the automatic restoration of provisionally attached property after one year.
4. Taxation of Personal Guarantees
The Council clarified that no GST would apply to personal guarantees offered by directors to banks against credit limits or loans sanctioned to their companies.
5. Taxable Value for Corporate Guarantees
For corporate guarantees provided between related parties, such as a holding company to its subsidiary, the taxable value has been defined. It will be 1% of the guarantee amount or the actual consideration, whichever is higher.
6. Extra Neutral Alcohol (ENA) Taxation
The right to tax Extra Neutral Alcohol (ENA) used in liquor for human consumption has been ceded over to the states.
7. Composition of GST Appellate Tribunal
- An advocate for ten years with substantial experience in litigation under indirect tax laws in the Appellate Tribunal, Central Excise and Service Tax Tribunal, State VAT Tribunals, by whatever name called, High Court or Supreme Court to be eligible for the appointment as judicial member.
- The minimum age for eligibility for appointment as President and Member to be 50 years.
- President and Members shall have tenure up to a maximum age of 70 years and 67 years respectively.
8. Clarifications on Key Issues
Several clarifications were provided during the meeting:
- District Mineral Foundation Trust (DMFT) in mineral mining now enjoys the same GST exemptions as other Governmental Authorities.
- Job work services related to processing barley into malt attract 5% GST instead of 18%, as they fall under "job work in relation to food and food products."
- 18 states have passed amendments to charge 28% GST on gaming companies from October 1, 2023. Revenue Secretary Sanjay Malhotra said that even the 13 States that have not passed it have said that they will pass it with effect from that date.
9. GST Rate Changes on Services
Following services now have revised GST rates:
- GST exemptions have been granted on water supply, public health, sanitation conservancy, solid waste management and slum improvement and upgradation supplied to Governmental Authorities.
- A conditional IGST exemption is given to foreign flag and foreign-going vessels when they convert to coastal run, subject to re-conversion within six months.
- Bus operators organised as companies may be excluded from the purview of section 9(5) of CGST Act, 2017. This would enable them to pay GST on their supplies using their ITC.
- Supply of all goods and services by Indian Railways shall be taxed under Forward Charge Mechanism to enable them to avail ITC. This will reduce the cost for Indian Railways.
The GST Council has recommended to retain the existing exemption provided for pure and composite services to Central/State/UT governments and local authorities for Panchayat/Municipality functions.
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