49th GST Council meeting on Saturday: GoM reports on the appellate tribunal and online gaming no more on the agenda.

The upcoming GST Council meeting is set to occur on Saturday, 18th February 2023, amidst speculations of it being pushed to the next month. The latest developments indicate that the agenda may not cover online gaming and the appellate tribunal, earlier reported by media as part of the agenda. 

The Union FM, Smt Nirmala Sitharaman, will preside over the meeting scheduled to take place in New Delhi. Meanwhile, in a media interview by the Central Board of Indirect Taxes and Customs (CBIC) Chairman, Shri Vivek Johri stated that the agenda would not include the reports of the Group of Ministers (GoM) on GST appellate tribunal and online gaming earlier planned.

All eyes are on the 49th GST Council meeting since it is the first to be convened after the Budget 2023 presentation on 1st February 2023. Critical rate cut decisions on a few items that have been popular on the list of industry demands are expected from the upcoming Council meeting.

The hike in the GST rate on pencil sharpeners done earlier to address the inverted tax structure may be re-looked at this meeting as school children mostly use it. It may be reduced to 12% from 18%. Further, rate cuts may be recommended on millet-based health products with more than 70% millet content. The fitment committee has proposed a nil rate where millet-based health products are sold in loose form, whereas a 5% when sold in pre-packaged and labelled form.

As per the latest development, the GST Council may also deliberate on creating parity in taxing Indian and foreign shipping lines to Indian exporters. It could amend the Integrated Goods and Services Tax (IGST) Act to revise the place of supply involving the transportation of goods to the ‘location of the recipient’ instead of the current ‘destination of goods’.  

Presently, Indian exporters pay GST on export freight as charged by the Indian shipping lines. In contrast, they don’t pay tax on the charges by the foreign shipping lines. The amendment ensures identical taxability for both foreign and Indian shipping lines for paying or not paying IGST on the transportation of goods by shipping vessels into or out of India.

The earlier reports of the GST rate cut on cement as per the industry demand may no longer be on the agenda. Still, the fitment committee may bring up the matter before the Council. 

On the other hand, discussions are expected on taxing chewing tobacco and pan masala. The refund of accumulated Input Tax Credit (ITC) for these exports shall be approved against the letter of undertaking. Further, approval may be obtained from the GST Council to shift to capacity-based taxation of these items. More measures can be taken for imposing mandatory registration of machines, special monthly GST returns to include details of the machine, clearance, inputs, special compliance requirements such as compulsory e-invoicing, e-way bill, FAST tag/GPS installation, unique identification marking, installation of CCTV cameras and a hefty penalty.

The GST Council made significant decisions in its previous meeting in December 2022, such as decriminalising offences and raising prosecution limits to Rs.2 crore, which led to the amendment proposed to the CGST Act in the Budget 2023. Hence, the upcoming Council meeting may be crucial for many industries and businesses to expect some rate revisions.

For any clarifications/feedback on the topic, please contact the writer at annapoorna.m@clear.in