Key Highlights of the 53rd GST Council Meeting

Introduction

The 53rd GST Council Meeting, chaired by Union Minister for Finance and Corporate Affairs, Smt. Nirmala Sitharaman, presented several crucial recommendations aimed at enhancing the GST framework. Key decisions spanned from waivers of penalties to rate adjustments, and procedural amendments, reflecting the Council’s continuous effort to streamline GST compliance and foster a taxpayer-friendly environment.

Waivers and Time Extensions

One of the notable recommendations is the waiver of interest and penalties for demand notices issued under Section 73 of the CGST Act for FY 2017-18, 2018-19, and 2019-20. This applies to cases not involving fraud or willful misstatement, provided the full tax demanded is paid by March 31, 2025. This move is aimed at providing relief to taxpayers who faced challenges during the initial years of GST implementation.

Additionally, the Council recommended extending the time limit for availing input tax credit (ITC) related to any invoice or debit note under Section 16(4) of the CGST Act. For the fiscal years 2017-18 to 2020-21, the time limit is deemed to be November 30, 2021.

Monetary Limits and Pre-Deposit Reduction

To reduce litigation, the Council set new monetary limits for filing appeals by the Department: Rs. 20 lakh for the GST Appellate Tribunal, Rs. 1 crore for the High Court, and Rs. 2 crore for the Supreme Court. This is expected to decrease the number of cases reaching higher judicial forums, thereby streamlining the legal process.

In a bid to ease the financial burden on taxpayers, the quantum of pre-deposit required for filing appeals under GST has been reduced. The maximum pre-deposit amount for appeals with the appellate authority has been lowered from Rs. 25 crores (both CGST and SGST) to Rs. 20 crores each. For appeals with the Appellate Tribunal, the pre-deposit rate has been reduced from 20% to 10% of the disputed amount, with a maximum cap of Rs. 20 crores each for CGST and SGST.

Rate Adjustments and Exemptions

The Council made several rate adjustments to simplify and reduce GST on specific goods and services:

• Uniform 5% IGST on imports of parts, components, testing equipment, tools, and tool-kits of aircraft.
• Reduced GST rate from 18% to 12% on cartons, boxes, and cases of both corrugated and non-corrugated paper or paperboard.
• Uniform 12% GST on all solar cookers, whether single or dual energy source.
• Clarification that all types of sprinklers, including fire water sprinklers, will attract 12% GST.

Specific Exemptions

The Council proposed exemptions to foster economic activities and ease operations for various sectors:

• Compensation Cess exemption on imports by SEZ units/developers for authorized operations effective from July 1, 2017.
• Exemption for services provided by Indian Railways to the general public, including platform tickets, retiring rooms, cloak room services, and battery-operated car services.
• Exemption for services provided by Special Purpose Vehicles (SPV) to Indian Railways, allowing the use of SPV-built infrastructure and maintenance services.

Procedural Amendments

Several procedural amendments were recommended to enhance clarity and ease of compliance:

• Insertion of Section 128A in the CGST Act to provide conditional waiver of interest or penalty for demands raised under Section 73 for FY 2017-18 to 2019-20.
• Amendment of Section 107 and 112 of the CGST Act to reduce the pre-deposit amount required for filing appeals.
• Retrospective amendment in Section 16(4) to conditionally relax provisions for availing ITC for cases involving cancellation and revocation of registration.
• Change in the due date for filing GSTR-4 for composition taxpayers from April 30 to June 30 following the financial year.

Special Clarifications

The Council also addressed specific issues to provide clarity and reduce litigation:

• Clarified that input tax credit is not restricted for ducts and manholes used in optical fiber cable networks.
• Clarified the place of supply for custodial services provided by Indian banks to Foreign Portfolio Investors.
• Clarified the valuation of corporate guarantees provided between related persons.

Conclusion

The 53rd GST Council Meeting’s recommendations reflect a comprehensive approach to addressing various challenges faced by taxpayers. By waiving penalties, extending deadlines, adjusting rates, and providing specific exemptions and clarifications, the Council aims to make the GST framework more transparent, efficient, and taxpayer-friendly. These changes are expected to ease the compliance burden, reduce litigation, and support the overall objective of a seamless tax regime in India.