Key Decisions and Outcomes from the 53rd GST Council Meeting

The 53rd Goods and Services Tax (GST) Council convened in New Delhi on June 22, 2024, marking its first session since the 2024 Lok Sabha elections, approximately eight months after the previous meeting. Chaired by the newly appointed Union Finance Minister, Nirmala Sitharaman, the council addressed a wide array of topics. Prior to the meeting, the Union FM engaged in pre-budget consultations with various states and Union Territories. She also noted that as of December 31, 2023, only a small fraction of GST taxpayers—less than 1.96% (114,999 individuals)—had received GST notices.

Highlights from the 53rd GST Council Meeting

Ease of compliance burden of taxpayers

• The GST Council approved a new form, GSTR-1A, enabling taxpayers to modify or add details to GSTR-1 or the Invoice Furnishing Facility (IFF) for the first two months of a quarter, which were missed before filing GSTR-3B within the same tax period.
• The requirement for reporting Business-to-Consumer (B2C) interstate supplies, specifically invoice-wise details in Table 5 of GSTR-1, will see its threshold reduced from Rs. 2.5 lakh to Rs. 1 lakh.
• The deadline for filing GSTR-4 by composition taxable persons has been extended from April 30 to June 30, effective from Financial Year 2024-25 onwards.
• The Tax Collected at Source (TCS) rate, previously 1% (0.5% each for CGST and SGST, or 1% for IGST) on net taxable supplies collected by Electronic Commerce Operators (ECOs) under Section 52(1) of the CGST Act, is recommended to be reduced to 0.5% (0.25% for CGST and SGST/UTGST, or 0.5% for IGST).
• GSTR-7 filing is now mandatory even if no Tax Deducted at Source (TDS) has occurred, with invoice-wise reporting required and no late fees for nil filings.
• Taxpayers with an aggregate annual turnover of up to Rs. 2 crore will be exempt from filing the annual return in GSTR-9/9A for the Financial Year 2023-24.
• The time limit for availing Input Tax Credit (ITC) for invoices or debit notes in any GSTR-3B filed up to November 30, 2021 (for fiscal years 2017-18 to 2020-21) will be retrospectively considered November 30, 2021, effective from July 1, 2017. Additionally, Section 16(4) will be relaxed if returns for the period from cancellation to revocation of registration are filed within thirty days of the revocation order.
• The GST Council suggested that interest should not be charged on amounts held in the electronic cash ledger on the due date of filing GSTR-3B and subsequently debited during delayed filing.
• A new Section 128A introduces a waiver of interest and penalties for demand notices issued under Section 73 of CGST (for fiscal years 2017-18 to 2019-20) in cases not involving fraud, suppression, or misstatement, provided the full amount is paid by March 31, 2025.
• A unified time limit will be established for issuing demand notices and orders under Sections 73 and 74, removing the distinction between fraud and non-fraud cases. The period for taxpayers to claim reduced penalties by paying tax and interest will be extended from 30 to 60 days.
• Monetary thresholds for departmental appeals are set at Rs. 20 lakh for the GST Appellate Tribunal, Rs. 1 crore for High Courts, and Rs. 2 crore for the Supreme Court.
• The maximum pre-deposit for appeals before appellate authorities will be reduced from Rs. 25 crore (CGST) and Rs. 25 crore (SGST) to Rs. 20 crore each. Similarly, for appeals before the GST Appellate Tribunal, the pre-deposit amount is decreased from 20% (with a maximum of Rs. 50 crore each for CGST and SGST) to 10% (with a maximum of Rs. 20 crore each).
• A sunset clause will be added for pending anti-profiteering cases, with decisions on hearing panels shifting from the Competition Commission of India (CCI) to the principal bench of the GSTAT. The Council also recommended April 1, 2025, as the sunset date for accepting new anti-profiteering applications.
• Section 112 will be modified to allow a three-month period for filing appeals before the GSTAT, commencing from a government-notified date, likely around August 5, 2024.
• A new Section 11A permits the regularization of non-levy or short-levy of GST in instances where tax was underpaid or unpaid due to common trade practices.
• A mechanism will be introduced to facilitate IGST refunds for additional tax paid due to upward price revisions of goods post-export.
• Sections 16 and 54 will be modified to prevent IGST refunds where export duty is payable, applicable to both exports and supplies to SEZ units/developers, whether tax is paid or not.
• Biometric-based Aadhaar authentication for GST registration, performed at GST Suvidha Kendras, will be rolled out nationwide in a phased manner.
• A circular is anticipated to outline a procedure for adjusting demand amounts paid via DRC-03 against the pre-deposit required for filing a GST appeal.
• Section 122(1B) will be amended retrospectively from October 1, 2023, to clarify that its penal provisions apply solely to e-commerce operators mandated to collect TCS under Section 52, not to other e-commerce operators.

Rate rationalisation for Goods and Services

The GST Council introduced various revisions and exemptions to Goods and Services Tax rates for the items detailed below:

Press Release of 53rd GST Council Meeting

The official press release, issued by the Finance Ministry on June 22, 2024, following the conclusion of the press conference, is available for download.

Download Press Release

Expectations from the 53rd GST Council Meeting

Launching GSTR-1A for amendments to GSTR-1

The GST Council was expected to introduce GSTR-1A, a new form designed to allow taxpayers to amend details previously submitted in GSTR-1, thereby enhancing reporting accuracy.

Rate Rationalisation and Rejig

A major expectation for this meeting centered on GST rate rationalization and restructuring. While tax relief for hybrid cars was unlikely, the Council aimed to review the 28% GST levied on online games, horse racing, and casinos, with potential for retrospective tax relief. Furthermore, a reduction in the TCS rate for e-commerce supplies by online platforms, from 1% to 0.5%, was anticipated. The Group of Ministers had not yet finalized recommendations on rate rationalization, and the Centre sought to consolidate the current 5%, 12%, 18%, and 28% GST rates into a simpler three-slab structure. Discussions were also expected regarding the inclusion of Natural Gas and Aviation Turbine Fuel (ATF) under GST, a move that could alleviate price pressures for petrochemical and airline industries.

Compliance issues on the radar

Beyond rate adjustments, several critical compliance issues were slated for discussion, particularly correcting the Inverted Duty Structure (IDS) in sectors like textiles and fertilizers. The textile sector has long faced IDS challenges, often lacking political consensus for resolution. Fertilizer companies also hoped for relief, as a past circular paved the way for subsidy processing, which had been stalled due to the inverted tax structure.

New ISD Rules and its implementation

Following the Interim Budget 2024's mandate for companies claiming credits under the Input Service Distributors (ISD) mechanism to register as ISDs, the Council was expected to recommend detailed rules and timelines for implementing these new provisions, transitioning from an optional to a mandatory mechanism.

Closure of pending Anti-profiteering cases

The GST Council was anticipated to propose a sunset clause for unresolved anti-profiteering cases, potentially setting April 1, 2025, as a closure date. The introduction of a database to track case statuses was also considered, aiming to streamline GST adjudication. All anti-profiteering cases were likely to be referred to the GSTAT Principal Bench for quicker resolution. Additionally, the Council might establish monetary limits for cases heard by the Tribunal, High Courts, and Supreme Court, potentially around Rs. 20 lakh, Rs. 1 crore, and Rs. 2 crore, respectively.

More items on agenda at this Council meeting

The Council's agenda included clarifying various taxability matters, such as corporate guarantees between related parties across eight scenarios. It also aimed to clarify the GST treatment of share reimbursements by companies for employee stock options (ESOPs), employee stock purchase plans (ESPPs), and restricted stock units (RSUs). Another key discussion point was the GST applicability for builders involved in highway construction and maintenance under various models. Builders might be liable for 18% GST earlier of invoice issuance or payment receipt upon completion of road construction, rather than being linked to the payment due date. Furthermore, interest on installments payable by NHAI to builders could fall under tax purview.

The 52nd GST Council meeting, attended by finance ministers from all states and Union Territories, was held on October 7, 2023.