Key highlight in 55th GST Council Meeting

Key highlight in 55th GST Council Meeting (January 15, 2025)

The 55th GST Council Meeting demonstrated a proactive approach to addressing key sectoral challenges, refining tax rates, and simplifying procedural complexities. These updates aim to improve clarity and compliance for taxpayers while simplifying specific processes under GST, particularly regarding annual return filings, ISD mechanisms, and ITC claims for ex-works contracts. We should ensure adherence to these changes in the 55th GST Council Meeting

Pre-Deposits for Filing Appeals Involving Penalty

• The pre-deposit for filing appeals u/s 107(6) & 112(8) of the CGST Act in cases where only a penalty is involved (without a tax demand) has been proposed to be reduced to 10% of the penalty amount.
• Extension for GoM Reports: The Group of Ministers addressing compensation cess, rate rationalization, and health insurance issues was granted an extension for report submission.

Introduction of Temporary Identification Number

• Temporary Identification Number for Non-Registered Persons:
  • Individuals not required to register under the Central Goods and Services Tax Act but liable to make payments can be issued a Temporary Identification Number under Rule 87(4) of the CGST Rules.
  • Temporary GSTINs: Non-registered individuals allowed temporary GSTINs for specific tax payments.
  • Implementation Note: This requires an amendment to the registration provisions and relevant forms.

Amendment in Input Service Distributor Provisions

• • Input Service Distributor Mechanism Update: Proposed inclusion of inter-State transactions subject to reverse charge under the Input Service Distributor framework. Effective Date: April 1, 2025.

ITC Reversal by Electronic Commerce Operators (ECOs) :

• Exemption for ECOs: Electronic Commerce Operators are exempted from proportionate reversal of Input Tax Credit u/s 17(1) & 17(2) for supplies where they are liable to pay tax u/s 9(5).
• ITC on Ex-Works Contracts: Clarification on Receipt of Goods: In an ex-works contract, goods handed over at the supplier’s premises are deemed to be “received” by the recipient u/s 16(2)(b) of the Central Goods and Services Tax Act. Recipients can claim ITC on such goods, subject to compliance with conditions under Sections 16 and 17.

Exemptions Introduced:

• Payment Aggregators: GST exemption for aggregators handling payments below ₹2,000.
• Penal Charges: No GST on penal charges levied by banks/NBFCs for loan defaults.
• Agriculturist Supplies: GST exemption on dried black pepper and raisins supplied by agriculturists.
• Gene Therapy: GST exempt for gene therapies treating life-threatening diseases.
• IAEA Imports: Equipment imports for IAEA inspections exempt from IGST.
• Motor Accident Fund Contributions: Exemption for contributions by insurers to the Motor Accident Fund.

Rate adjustments and clarifications:

• Fortified Rice Kernels: GST rate reduced from 18% to 5%.
• ACC Blocks with Fly Ash: Increased GST from 5% to 12%.
• Popcorn: Differentiated GST rates (5% for salted, 12% for pre-packaged, and 18% for caramelized varieties).

Electric Vehicle (EV) Taxation:

• Used EV sales between individuals: GST reduced to 5%.
• Business sale of refurbished EVs: GST of 18% on profit margin.

Simplifications for Hotel and Restaurant Services:

• GST rates linked to actual supply value from FY 2025-26.
• Hotels can opt for 18% GST with ITC or 5% without ITC.

Clarifications on Goods Classification:

• Used Vehicles: Revised GST rates and margin-based valuation rules clarified.
• Pepper and Raisins: Agriculturist-supplied products exempt from GST.
• Pre-Packaged Goods: Defined as items up to 25 kg/litre needing mandatory declarations.
• Introduction of Track and Trace Mechanism: New provision (Section 148A, CGST Act) to ensure traceability using unique identification markings.

Law and Procedure Simplifications:

• Definition of “plant and machinery” clarified (effective from July 1, 2017).
• GST applicability in SEZ/FTWZ aligned with customs bonded warehouse rules.
• Voucher Rules: Simplified treatment of vouchers, ensuring taxation clarity for agents and related services.

Compliance Waivers and Amendments: Late Fee Applicability for Form GSTR-9C

• Clarity on Late Fee: Late fees u/s 47(2) of the Central Goods and Services Tax Act apply to delays in filing Form GSTR-9C (Reconciliation Statement) as part of the annual return u/s 44 of Central Goods and Services Tax act .
• Waiver for FYs 2017-18 to 2022-23: Waiver of late fees exceeding the amount payable up to the filing date of Form GSTR-9, provided Form GSTR-9C is filed by March 31, 2025.
• Pre-Deposit Reduction: reduced from 25% to 10% for penalty appeals.

Correct Details for B2C Supplies

• Online Services: Suppliers of online money gaming and OIDAR services to unregistered recipients must record the recipient’s State name on tax invoices. The recorded state name will be treated as the recipient’s “address on record” u/s 12(2)(b) of the Integrated Goods and Services Tax Act, read with the proviso to Rule 46(f) of the CGST Rules. Suppliers like Online Information Database Access and Retrieval Services must accurately record the recipient’s state details on invoices.

The 55th GST Council Meeting, held on December 21, 2024, brought a host of decisions and clarifications to improve compliance, simplify tax procedures, and support various sectors under the Goods and Services Tax (GST) regime For details of key highlights, refer to the link

waiver of the late fee for filing GSTR-9C for the FY 2017-18 to 2022-23

The waiver of the late fee for filing GSTR-9C (Reconciliation Statement) for the financial years 2017-18 to 2022-23 is provided under specific notifications issued by the GST authorities. These waivers generally aim to encourage compliance and relieve taxpayers of penalties associated with delayed filings due to various challenges.

 

55th GST Council meeting issuance of 8 Notifications by CBIC

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