50th GST Council Meeting: Key Highlights

The Goods and Services Tax (GST) Council recently convened its 50th meeting, marking a significant milestone in the country’s tax reforms journey. It was held under the chairpersonship of the Union Finance and Corporate Affairs Minister, Smt. Nirmala Sitharaman.

Some of the major recommendations are as follows: –

1. Changes in GST Tax Rates – The GST Council recommended various changes in GST rates on goods to address specific issues and promote certain sectors.

• Reduction in GST rates on uncooked/unfried snack pellets to 5%, and regularisation of GST payments made in the past on these products, on an “as-is” basis. This reduction aims to provide relief to manufacturers and promote the snack industry.
• IGST exemption on medicines and Food for Special Medical Purposes (FSMP) used in the treatment of rare diseases listed under the National Policy for Rare Diseases, 2021, when imported for personal use. This exemption was extended to FSMP imported by Centres of Excellence for Rare Diseases or recommended by any of the listed Centres.
• Imposition of tax at the rate of 28% on activities of online gaming, casinos, and horse racing. In the case of casinos, this tax will be applicable on the face value of chips purchased and in horse racing, it’ll be on the full value of the bets placed with the bookmaker/ totalisator. When it comes to online gaming, the 28% tax will apply to the full value of bets placed.

2. Measures for Facilitation of Trade – The GST Council introduced measures to simplify trade processes and reduce compliance burdens.

• Recommendation regarding the Goods and Services Tax Appellate Tribunal (Appointment and Conditions of Service of President and Members) Rules, 2023. To ensure that the GST Appellate Tribunal is constituted soon, it is proposed that the relevant provisions of the Finance Act, 2023, be notified w.e.f. August 1, 2023. These rules were aimed at streamlining the dispute resolution mechanism.
• Continuation of the relaxations provided in the previous financial year for filing annual returns (FORM GSTR-9 and FORM GSTR-9C). Further, taxpayers with an aggregate annual turnover of up to Rs. 2 Crores were exempted from filing annual returns (in FORM GSTR-9/9A) to ease the compliance burden on smaller taxpayers.
• Clarifications on various GST-related issues through circulars. These include clarifications on GST liability and input tax credit reversal in cases involving warranty replacements, refund-related issues, TCS liability in multi-operator transactions, and invoicing requirements for specific services.

3. Measures for Streamlining Compliance in GST – To enhance compliance and minimize fraudulent practices, the GST Council proposed several measures.

• Bringing in an amendment to the CGST Rules, 2017 to improve the registration process and address fake and fraudulent registrations. The changes proposed include the requirement to furnish details of a valid bank account within 30 days of registration and allowing system-based suspension of registrations for non-compliance.
• Adopting a mechanism for system-based intimation to taxpayers regarding excessive Input Tax Credit (ITC) claims in FORM GSTR-3B compared to FORM GSTR-2B. Taxpayers would be required to explain the reasons for the differences or take remedial action. This aims to reduce ITC mismatches and misuse.
• Adding a new rule in the CGST Rules, 2017 and introducing FORM GST DRC-01D to provide for the procedure of tax and interest recovery in respect of the amount intimated under rule 88C which hasn’t been paid and for which no satisfactory explanation has been furnished by the registered person.