52nd GST Council Meeting: Top Highlights and Key Takeaways

The 52nd GST Council meeting recently took place in New Delhi, chaired by Union Minister for Finance & Corporate Affairs Smt. Nirmala Sitharaman. This meeting involved key figures like Union Minister of State for Finance Shri Pankaj Chaudhary, Chief Ministers of Goa and Meghalaya who manage finance, various Finance Ministers from states and union territories, and senior officials from the Ministry of Finance.

During this meeting, several significant recommendations were made regarding changes in GST tax rates, simplifying trade processes, and streamlining GST compliance.

Changes in GST Rates for Goods and Services

The GST Council decided on changes in GST rates for various goods and services. Here are some highlights:

Goods:

1. GST rates for “Food preparation of millet flour in powder form, containing at least 70% millets by weight” were specified:

   – 0% if sold unpackaged and unlabeled.

   – 5% if sold pre-packaged and labeled.

2. Clarity was provided regarding the GST rate for imitation zari thread or yarn made from metallized polyester/plastic film, which falls under HS 5605.

3. Foreign-going vessels were recommended to be exempted from IGST when they convert to coastal run temporarily, with the condition that they must revert to their foreign-going status within six months.

Other Changes for Goods: 

1. Extra Neutral Alcohol (ENA) used for making alcoholic beverages for human consumption was proposed to be excluded from GST.

2. GST on molasses was reduced from 28% to 5%, benefiting sugar mills and reducing cattle feed manufacturing costs.

3. A new tariff HS code was introduced for rectified spirit for industrial use, with an 18% GST rate.

Services:

1. Services provided to government bodies for functions delegated to Panchayats and Municipalities, and services related to water supply, public health, sanitation, conservancy, solid waste management, and slum improvement/upgradation, were recommended for exemption from GST.

2. Clarification was provided that job work services for processing barley into malt are taxed at 5% under “job work in relation to food and food products.”

3. Liability for paying GST on bus transportation services offered through Electronic Commerce Operators (ECOs) was shifted to the ECOs, benefiting small bus operators.

4. District Mineral Foundations Trusts (DMFT) set up by State Governments were confirmed as Governmental Authorities, eligible for GST exemptions.

5. Indian Railways was proposed to be taxed under the Forward Charge Mechanism to allow them to avail Input Tax Credit (ITC), ultimately reducing their costs.

Facilitation of Trade Measures

The GST Council introduced several measures to simplify trade: 

1. An amnesty scheme for filing appeals against demand orders that couldn’t be filed within the allowable time period was recommended, offering relief to taxpayers.

2. Clarifications were made regarding the taxability of personal guarantees offered by directors to banks for company credit and corporate guarantees for related entities.

3. The Council proposed automatic restoration of provisionally attached properties after one year, eliminating the need for separate orders.

4. Clarity was sought on various issues related to the place of supply for services.

5. Guidelines were issued for the admissibility of export remittances received in Special INR Vostro accounts.

6. Special Economic Zones (SEZ) units/developers were allowed to use the IGST refund route for goods and services supplied to them.

Other Law and Procedure Measures

The GST Council recommended aligning the CGST Act, 2017, with the Tribunal Reforms Act, 2021, for the appointment of President and Member of the proposed GST Appellate Tribunals. This includes eligibility criteria, age limits, and tenure. 

Additionally, amendments were recommended for Input Service Distributor (ISD) procedures, making them mandatory for certain scenarios, with corresponding changes in the CGST Act and Rules.

These recommendations aim to simplify GST processes, reduce tax burdens, and facilitate trade while ensuring compliance with GST regulations.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.