Day 1 of 47th GST Council meeting ends with mixed surprises

The first day of the 47th GST Council meeting took place on Tuesday, 28th June 2022, at Chandigarh. It was chaired by Smt. Nirmala Sitharaman, the Union Finance Minister. 

Day 1 of the meeting was attended by Shri Pankaj Chaudhary, the present MoS (F), Shri. Tarun Bajaj, Revenue Secretary Shri. Vivek Johri, Chairman of the CBIC, Shri. Sanjay Agarwal, a member of the CBIC, and other senior officers from the Finance Ministry and the CBIC. Most state Finance Ministers and representatives participated in the meeting, except a few ministers who tested positive for COVID-19.

As per sources, the following were the key highlights of today’s meeting. The Ministry was yet to officially make announcements at the time of publishing this piece of update. 

  • Ease of compliance bottlenecks for e-commerce suppliers was the main highlight. GST Council allows e-commerce suppliers to register under the composition scheme, simplify their GST registration process and reduce their tax outflow.
  • The government-run NIC may act as another platform for registering e-invoices. The Council agrees to have six invoice registration portals come into action in the next six months.
  • GST Council allowed taxpayers to carry out amendments in GSTR-3B (Summary return for regular taxpayers). The taxpayers may be entitled to auto-populate details in their Form GSTR-3B and GST annual returns for improved and convenient compliance.
  • Both the Centre and States may issue show cause notice despite the taxpayer’s jurisdiction as a measure to plug revenue leakage.
  • Upcoming GST annual returns in Form GSTR-9 for FY 2021-22 may be notified with minimal changes with some continued relaxation and modifications. GSTR-9 for FY 2021-22 may continue to be exempted for those with the previous year’s threshold turnover falling below Rs.2 crore.
  • GST Council allowed amounts in electronic credit ledger and electronic cash ledger to be utilised for payment of output GST dues in GST returns. However, the money cannot be used to settle any penalties, late fees, or interest.
  • The GST Council indicated that the new return system of Form GST RET-1, ANX-1, and ANX-2 is to be entirely withdrawn as it is no longer relevant.
  • A comprehensive review of the National Anti-profiteering Authority(NAA) was carried out. 
    • The Solicitor General will defend the NAA wherever its constitutional validity is questionable.
    • The government may soon appeal in the apex court for cases where any state courts have remanded the NAA against its orders. 
    • The Council pointed out that the NAA has established an advocates panel to assure justice to consumers where profiteering occurred.
  • GST Council approved a period waiver from the filing of refund claims by condoning the two-year COVID period starting from 1st March 2020 up to 28th February 2022. The Council decided to permit tax officers to file appeals against erroneous refund claims without considering the two-year period.
  • Relaxation in refund claims was provided for the export of electricity and select concessional goods with an inverted tax structure.
  • GST Council extended the GST due dates for the following compliance by the composition taxpayers
    • GSTR-4 deadline for FY 2021-22 up to 28th July 2022 from 30th June 2022
    • CMP-08 deadline for Apr-Jun 2022 (Q1 of FY 2022-23) up to 30th July 2022 from 18th July 2022
  • The GST Council accepted the recommendations of the Group of Ministers (GoM) formed for system reforms.
    • Availability of the outcome of any verification to the tax officers.
    • GST Network (GSTN) to make information related to all bank accounts linked to a particular PAN available to authorities.
    • GSTN to take necessary steps to make information on the development of a feedback mechanism available for capturing the feedback of leads generated by systems to alert tax authorities.
    • Biometric authentication to be used for high-risk GST registration applicants.
    • Artificial Intelligence (AI) to be used to identify risky behaviour of new registrants or applicants. The field officer may pass this information to the back office for compulsory physical verification of such taxpayers.
    • Geo-coding will be used for online or site verification to obtain the correct address of taxpayers and to allow a smooth physical verification of high-risk taxpayers.
    • Electricity bill metadata (CA No.) could be included as a new field in the GST registration application and be verified to ensure the accuracy of addresses.
    • Bank accounts must be validated in real-time through GST system integration with the National Payments Corporation of India (NPCI).
  • GST Council has accepted the interim report of GoM formed for rate rationalisation in totality, which means 14 goods and 22 services could undergo rate revision. Some of the rate revision cases are as follows-
    • 5% – Unroasted coffee beans, unprocessed green tea leaves, wheat bran, de-oiled rice bran, Hospital rooms, except for ICU, with daily rent of Rs 5,000 without ITC
    • 12% – Hotel accommodation below Rs.1,000 per unit per day 
    • 18% on e-waste (earlier 5%), Cheques (lose or book -earlier exempted)
    • Higher rate – Petroleum/coal bed methane (earlier 5%)
  • GST Exemptions have been withdrawn for essential consumable items.
    • No more exemption on packaged curd, lassi, buttermilk, puffed rice, flattened rice, parched rice, pappad, paneer, honey, food grains, cereals, jaggery, and certain veggies. 
    • No more GST exemption on services such as- 
      • Reinsurance of exempted insurance schemes, 
      • Services of RBI, IRDA to insurers, SEBI, GSTN to government, registration services by FSSAI to food business operators
      • Transportation of passengers in business class from airports in N.E states, Transportation of newspapers and magazines by rail/vessel/road
    • No more GST exemption for renting– 
      • a religious place for the general public use at above Rs.5,000/day 
      • Shops at more than Rs 2,500/month
  • Decisions for correcting the inverted tax structure were as follows-
    • The GST rate for edible oils to not undergo any correction
    • GST rate was increased from 12% to 18% for – Printing, writing, and drawing ink, LED lights, fixtures, and LED lamps.
    • GST rate was increased from 5% to 12% for – Solar water heater and system, Finished and composition leather, works contract to government, and tailoring and other textile job works.
  • GST Council accepted the proposal for imposing e-way bill generation on gold, gold jewellery, and precious stones.
  • The GST Council decided to form a GoM to study setting up GST Tribunals and define a structure.
  • The GST Council also deferred the implementation of the GST margin scheme for tour operators and instead indicated studying the proposal in detail.

The GST Council will again meet on Wednesday morning, 29th June 2022, to continue discussions on other matters. The Union Finance Minister is expected to address the press and media later in the evening.

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

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