The Goods and Services Tax (GST) Council, headed by Union Finance Minister Nirmala Sitharaman, held last week made a slew of significant announcements. The GST Council meeting focused on certain key areas including tax amendments, Aadhaar biometric integration, and exemptions in railway services. The meeting marked the first meeting since the 52nd GST Council meeting took place on October 7, 2023, when the council decided to impose a 28% GST on online gaming, casinos, and horse racing.
Services related to hostel accommodation outside educational institutions, up to Rs 20,000 per person per month are now exempted from GST with a condition that the student stays in the hostel for at least 90 continuous days.
The Council has also decided to exclude from GST the purchase of railway tickets as well as payments for waiting room and cloakroom services. Services like intra-railway services and rides in battery-operated vehicles would also be exempted from GST.
The GST Council proposed the countrywide implementation of biometric-based Aadhaar authentication for GST registration applicants in a phased manner. The move intends to improve registration integrity and reduce fraudulent input tax credit claims through fake invoices.
Listed below are key takeaways from the 53rd GST Council meeting:
- GST exemption on Indian Railways services, such as platform tickets.
- Interest and penalty are to be waived off in the case of demand notices issued for 2017-18, 2018-19, and 2019-20, if the entire tax is paid by March 31, 2025
- The council has recommended a monetary limit of Rs 20 lakh for the GST Appellate Tribunal, Rs 1 crore for the High Court, and Rs 2 crore for the Supreme Court for filing appeals.
- Council approved the rollout of Pan India-based biometric Aadhaar-based GST Verification.
- GST Council exempted services related to hostel accommodation outside educational institutions charging up to Rs 20,000/person per month.
- Input Tax Credit (ITC): The time limit for ITC on invoices/debit notes under Section 16(4) for FY 2017-18 to 2020-21 deemed as 30.11.2021 for returns filed by this date.
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Changes in GST rates of Goods:
- Aircraft Parts and Tools: 5% IGST on imports of parts, components, testing equipment, tools, and tool-kits of aircraft.
- Milk Cans: The GST Council recommended a uniform rate of 12% on all milk cans.
- Carton Boxes: GST on cartons, boxes, and paper cases reduced from 18% to 12%.
- Solar Cookers: 12% GST on all solar cookers whether single or dual energy source
- Poultry Machinery Parts: 12% GST on parts of poultry-keeping machinery.
- Sprinklers: 12% GST on all types of sprinklers, including fire water sprinklers.
Pre-deposit Amount lowered for GST Appeals:
The pre-deposit amount is lowered for filing appeals under the GST Act to Rs. 20 crores CGST and SGST to facilitate cash flow.
Appeal Filing Period:
Amend the CGST Act to start the 3-month period for GST Appellate Tribunal appeals from a notified date.
Interest Burden:
Zero interest on delayed return filing if the amount is available in the Electronic Cash Ledger on the due date.
Changes proposed in IGST Act & CGST Act for Export Duty Cases:
Amendment recommended to stop IGST refund in cases where export duty is payable.
Threshold reduced for B2C Inter-State Supplies:
The threshold has been reduced from Rs. 2.5 lakh to Rs. 1 lakh for reporting B2C inter-State supplies invoice-wise in FORM GSTR-1.
Monthly Filing of GSTR-7:
GSTR-7 to be filed monthly by TDS deductors without a late fee for delayed filing of Nil returns.
Exemption of GST on Extra Neutral Alcohol:
The council proposed to exclude Extra Neutral Alcohol from GST when used for alcoholic liquor.
Monthly Filing of GSTR-7:
GSTR-7 to be filed monthly by TDS deductors without a late fee for delayed filing of Nil returns.
Petrol and Diesel under GST:
The union government reiterated its stance to bring petrol and diesel under the GST regime, pending agreement among states on the applicable tax rate. This move is viewed as a step towards uniform taxation of fuel across the country.
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Conditional loans to states:
The Union Government’s commitment to supporting states through prompt tax devolution, Finance Commission grants, and GST compensation payments was underscored by Finance Minister Sitharaman. The FM emphasized the “Scheme for Special Assistance to States for Capital Investment,” pointing out that although the majority of loans are unrestricted, some are still subject to the states carrying out particular capital projects across various industries and citizen-centric reforms. Sitharaman urged the state governments to meet the requirements in order to leverage these loans.
