RECENT DEVELOPMENTS IN GST

[Dr. Sanjiv Agarwal]

The results of recently concluded lok sabha elections are out with NDA (not BJP) getting simple majority over its rival alliance against an expectation of over 400 seats. The new BJP led NDA Government at the centre is in place with Narendra Modi as a third time Prime Minister in a row from 9^th June, 2024. While the core team and the key portfolios remain and are retained by BJP, the new cabinet now represents NDA allies, chiefly JDU and JDP. The new Council of Ministers inter alia, include Rajnath Singh (Defence), Amit Shah (Home & Cooperation), Nitin Gadkari (Highways), Nirmala Sitharaman (Finance & Corporate Affairs), S. Jaishankar (External Affairs), Arjun Ram Meghwal (Law & Justice) and Piyush Goyal (Commerce & Industry).

The stock market which oscillated to top on exit polls and then crashed on counting day is back to recovery and has regained with new glory. With the key portfolios being retained by the erstwhile Ministers in the previous Government, there will be a sense of commitment and continuity in policies and reforms. So far as MoF is concerned, focus shall be on job creation, infrastructure, accelerating private investment, economic and tax reforms, besides long term economic policies and fiscal discipline. On the top of it, focus ought to be on overall economic GDP growth, pace thereof and ensuring that India continue as one of the major fastest developing economies. Thus, growth sustainability should be the top most priority and with this in mind, other focus areas will get addressed. On the down side, policy uncertainty due to other major central banks, geopolitical tensions, sluggish farms sector and rural demand, climate changes and inflation are significant risks to growth.

The most important event to address these objectives and challenges would be the Union Budget 2024-25 to be presented by the Finance Minister sometime next month. This will also highlight focus areas of new Government in current year and next five years. GST reforms, other tax reforms and GST rate rationalization will also need to be addressed for which GST Council will have to be reconstituted and meeting soon convened.

The gross Goods and Services Tax (GST) revenue for the month of May, 2024 stood at Rs. 1.73 lakh crore. This represents a 10% year-on-year growth, driven by a strong increase in domestic transactions (up 15.3%) and slowing of imports (down 4.3%). After accounting for refunds, the net GST revenue for May 2024 stands at Rs. 1.44 lakh crore, reflecting a growth of 6.9% compared to the same period last year.

Personal hearing option in GST-DRC-01 Response

• GSTN has enabled ‘Personal Hearing’ choice in GST DRC-01 responses.
• The GSTN has introduced a new functionality in the GST portal by which taxpayers will be able to opt for a personal hearing in GST DRC-01 Responses by selecting either ‘Yes’ or ‘No’.
• Hitherto, this option was not available, and as such, ‘No’ was the default choice for personal hearings.
• This new option is an outcome of Madras High Court order In GABRIEL INDIA LIMITED REPRESENTED BY ITS AUTHORISED SIGNATORY MR. RISHI LUHARUKA VERSUS STATE TAX OFFICER OFFICE OF THE JOINT COMMISSIONER (ST) (INTELLIGENCE) GROUP IV, STATE TAX OFFICER OFFICE OF THE JOINT COMMISSIONER (ST) GROUP-II, STATE TAX OFFICER OFFICE OF THE JOINT COMMISSIONER (ST) ADJUDICATION-I, ASSISTANT COMMISSIONER (ST) HOSUR – II CIRCLE - 2023 (12) TMI 232 - MADRAS HIGH COURT

(Source: GSTN Advisory dated 04.06.2024)

Information from manufacturers of Pan Masala / Tobacco / related products -Special procedure to be followed

• Government had issued a Notification No. 04/2024 – Central Tax dated 05-01-2024 to seek information from taxpayers dealing in the goods mentioned therein.
• The new Notification No. 4/2024-CT dated 05.01.2024 is applicable w.e.f. 01.04.2024 for the new special procedure.
• Two forms were notified vide notification, namely, GST SRM-I and GST SRM-II  i.e., the former pertains to registration and disposal of machines while the later pertains to information on inputs and outputs during a month.
• GSTN portal has earlier on 15.05.2024 made available facility to register the machines on the GST Portal to file the information in Form GST SRM-I.
• GSTN portal has now made available Form GST SRM-II and accordingly, taxpayers dealing in the manufacture of Pan Masala and Tobacco products can now report the details of inputs and outputs procured and consumed for the relevant month.
• All taxpayers dealing in these specific items may use the facility to file the information about machines and details of inputs and outputs procured and consumed.

(Source: GSTN Advisory dated 07.06.2024)

GST collection in May, 2024

• Gross GST revenue collection in May, 2024 stood at Rs. 1.73 lakh crore which records a 10% growth on Y-o-Y basis.
• Rs. 3.83 lakh crore is gross cumulative GST revenue collection in FY2024-25 (till May, 2024) which records a 11.3% Y-o-Y basis growth.
• Breakdown of May 2024 collections:

• Central Goods and Services Tax (CGST): Rs. 32,409 crore;
• State Goods and Services Tax (SGST): Rs. 40,265 crore;
• Integrated Goods and Services Tax (IGST): Rs. 87,781 crore, including Rs. 39,879 crore collected on imported goods;
• Cess: Rs. 12,284 crore, including Rs. 1,076 crore collected on imported goods.

• The leading states in terms of growth on YoY basis in GST collection are Delhi, Punjab, Uttarakhand and Haryana. The laggards are Himachal Pradesh, Mizoram, Assam, West Bengal, Madhya Pradesh and Tamil Nadu.
• The states which  have recorded a negative growth on YoY basis include Chandigarh, Arunachal Pradesh, Nagaland, Meghalaya, Lakshadweep and Ladakh

(Source: PIB Release ID 2022459 dated 01.06.2024)