Key Takeaways From The 48th GST Council Meeting

As the 48th GST council meeting went underway today, the agenda was filled with items waiting to be ticked away. 

While rate changes on certain items formed a principal feature of the previous GST council meeting, tax evasion in the tobacco industry, GST on online gaming and decriminalisation of offences were the top discussion points for the GST Council Meet led by Finance Minister Nirmala Sitharaman. 

Here are the top takeaways from the  48th GST Council Meeting on Saturday: 

As a measure for the facilitation of trade, the Council has recommended decriminalising offences under GST specified under clauses (g), (j) and (k) of sub-section (1) of section 132 of CGST Act, 2017.  The said offences include obstruction or preventing any officer in discharging of his duties; deliberate tempering of material evidence and failure to supply the information.

Criminal prosecution under the GST law has been a subject of debate. Penal laws in statutes concerning revenue are seen as a deterrent to the ease of doing business climate. But rampant tax evasion tactics by taxpayers made such a strict measure an inevitable feature of the GST law.  Giving leeway in what experts say is the right direction, the government recommended to raise the minimum threshold of tax amount for launching prosecution under GST from Rs. One Crore to Rs. Two Crores, except for the offence of issuance of invoices fake invoices. 

Welcoming the move,  Archit Gupta, Founder and CEO, Clear says there is some relief via increasing the threshold of tax amount for criminal proceedings to be activated. 

With focus on digitisation, the government now has more resources to catch offending taxpayers and therefore may be in a position to offer relief to other taxpayers by raising this threshold further. Ease of doing business has been high on the government's agenda and therefore taxpayers were expecting further relief on this matter.

Refund to unregistered persons: There is no procedure for claim of refund of tax borne by the unregistered buyers in cases where the contract/ agreement for supply of services, like construction of flat/house and long-term insurance policy, is cancelled and the time period of issuance of credit note by the concerned supplier is over. The Council recommended an amendment in CGST Rules, 2017, along with the issuance of a circular, to prescribe the procedure for filing application of refund by the unregistered buyers in such cases. 

Facilitate e-commerce for micro-enterprises: 

There are more than 8 crore small traders in the Country but  a large number of traders are conducting business activities without GST registration since their annual sale is below the GST threshold limit. Such traders will now be able to trade on e commerce

GST Council in its 47th meeting had granted in-principle approval for allowing unregistered suppliers and composition taxpayers to make the ntra-state supply of goods through E-Commerce Operators (ECOs), subject to certain conditions. The Council approved the amendments in the GST Act and GST Rules, along with the issuance of relevant notifications, to enable the same.  Further, considering the time required for the development of the requisite functionality on the portal as well as for providing sufficient time for preparedness by the ECOs, Council has recommended that the scheme may be implemented w.e.f. 01.10.2023. There are more than 8 crore small traders in the Country but a large number of traders are conducting business activities without GST registration since their annual sale is below the GST threshold limit. Such traders will now be able to trade on e commerce 

Appreciating wholeheartedly the major decision of the GST Council to allow small unregistered vendors to sell their goods through e-commerce portals, the Confederation of All India Traders (CAIT)  thanked Prime Minister Shri Narendra Modi and Finance Minister Nirmala Sitharaman for this progressive decision which was demanded by CAIT since last more than two years. 

CAIT National President Mr B C Bhartia & Secretary General Mr Praveen Khandelwal said that this decision will empower small traders who are below GST threshold limit to expand their business through e-commerce and will strongly Digital India vision of PM Shri Modi. 

India is fast emerging as an e-commerce hub and there is tremendous growth in online business. E-commerce business in India is now approximately 10% of total retail and around 25-50% of some sectors like garments and electronics. In view of this, it was extremely pertinent that small vendors who have small turnovers and do not fall under the purview of the GST, were not able to conduct online business, thus causing huge loss of market and business opportunities.

Measures for streamlining compliances in GST

• Proposal to conduct a pilot in State of Gujarat for Biometric-based Aadhaar authentication and risk-based physical verification of registration applicants. Amendment in rule 8 and rule 9 of CGST Rules, 2017 to be made to facilitate the same. This will help in tackling the menace of fake and fraudulent registrations.
• PAN-linked mobile number and e-mail address (fetched from CBDT database) to be captured and recorded in FORM GST REG-01 and OTP-based verification to be conducted at the time of registration on such PAN-linked mobile number and email address to restrict misuse of PAN of a person by unscrupulous elements without knowledge of the said PAN-holder.
• Section 37, 39, 44 and 52 of CGST Act, 2017 to be amended to restrict filing of returns/ statements to a maximum period of three years from the due date of filing of the relevant return / statement.
• FORM GSTR-1 to be amended to provide for reporting of details of supplies made through ECOs, covered under section 52 and section 9(5) of CGST Act, 2017, by the supplier and reporting by the ECO in respect of supplies made under section 9(5) of CGST Act, 2017.
• Rule 88C and FORM GST DRC-01B to be inserted in CGST Rules, 2017 for intimation to the taxpayer, by the common portal, about the difference between liability reported by the taxpayer in FORM GSTR-1 and in FORM GSTR-3B for a tax period, where such difference exceeds a specified amount and/ or percentage, for enabling the taxpayer to either pay the differential liability or explain the difference. Further, clause (d) to be inserted in sub-rule (6) of rule 59 of CGST Rules, 2017 to restrict furnishing of FORM GSTR-1 for a subsequent tax period if the taxpayer has neither deposited the amount specified in the intimation nor has furnished a reply explaining the reasons for the amount remaining unpaid. This would facilitate taxpayers to pay/ explain the reason for the difference in such liabilities reported by them, without intervention of the tax officers.
• Amendment in definition of “non-taxable online recipient” under section 2(16) of IGST Act, 2017 and definition of “Online Information and Database Access or Retrieval Services (OIDAR)” under section 2(17) of IGST Act, 2017 so as to reduce interpretation issues and litigation on taxation of OIDAR Services.

Unfinished agenda rolls over to next GST Council meeting

Eight of the agenda points were taken up at the 48th GST Council meeting today. The rest would be carried on to the next meeting. The Finance Minister clarified that no new taxes have been brought in. Everything that has been done is to issue clarifications where the ambiguity of interpretations prevailed. 

The issue of mechanisms to curb tax evasion in pan masala and gutkha businesses and GST on online gaming has been deferred to the next meeting due to paucity of time.