RECOMMENDATIONS OF THE 53RD MEETING OF GST COUNCIL

[Dr. Sanjiv Agarwal]

53^rd GST Council Meeting – Major Highlights

The 53^rd GST Council meeting chaired by Finance Minister after almost eight months was held on 22^nd June 2024 at New Delhi. The meeting aims to ease the compliances for taxpayers by making provisions and procedures simpler and less cumbersome.

Major Highlights at a Glance

GST Council took many decisions / made recommendations, major ones of which are as follows:

• Measures to ease compliance for GST assessees
• No anti-profiteering provisions after 31^st March, 2025.
• The time limit to avail input tax credit w.r.t. any invoice or debit note under Section 16(4) of CGST Act, through any GSTR 3B return filed upto 30.11.2021 for FY 2017-18, 2018-19, 2019-20 and 2020-21, shall be deemed to be 30.11.2021
• No levy interest u/s 50 of CGST Act in case of delayed filing of return, on the amount which is available in Electronic Cash Ledger (ECL) on the due date of filing of the said return.
• Provision to recognize general practice of non-levy or short levy of tax by way new power under section 11A to allow regularization of non-levy or short levy of GST where tax was being short paid or not paid due to common trade practice.
• Waiver of interest and penalty for demand notices issued under section 73 (non-fraud cases) for the financial years 2017-18, 2018-19 and 2019-20 subject to the condition that full tax is paid by 31^st March, 2025.
• Clarification on valuation of services of corporate guarantee, i.e., higher of 1% of guarantee amount or actual consideration; Rule 28(2) to be amended for related party transactions.
• To reduce litigation, monetary limits for revenue appeals prescribed at Rs. 20 lakh for GSTAT, Rs. one crore for high court and Rs. two crores for Supreme Court. For assesses, no monetary limits exist.
• Maximum amount of pre-deposit in appeals reduced to Rs. 40 crores.
• Cutoff date to be notified for GSTAT appeals.
• Rolling out biometric based Aadhaar authentication on pan-India basis for registration.
• New Form GSTR-1A introduced to facilitate amendment in Form GSTR-1
• Accommodation for students / working in hostels etc to be exempted if amount is Rs. 20,000 p.m. per person and such service is provided for a minimum period of 90 days continuously.

Some of the major recommendations / highlights are summarized as follows:

1. In relation to Appeals:

1. Reduction in Monetary limits prescribed for filing appeals by Department to reduce litigation :

Before Forum	Amount (INR)
GSTAT	20 Lakhs
High Court	1 Crores
Supreme Court	2 Crores

2. Reduction in the maximum amount of pre-deposit for filing appeals

Appeal to	Existing	Revised
First Appellate Authority	The maximum of Rs. 25 Crores CGST and Rs. 25 Crores SGST (Total Rs. 50 crore)	The maximum of Rs. 20 Crores CGST and Rs. 20 Crores SGST (Total Rs. 40 crore)
Appellate Tribunal	20% of the disputed tax amount with a maximum amount of Rs. 50 crore CGST and Rs. 50 Crores SGST (Total Rs. 100 crore)	10% of the disputed tax amount with a maximum of Rs. 20 Crores CGST and Rs. 20 Crores SGST. (Total Rs. 40 crore)

3. Time for filing appeals in GST Appellate Tribunal: Amendment in Section 112 to allow the three-month period for filing appeals before the Appellate Tribunal to begin from the date to be notified.

4. Adjustment of an amount paid through Form GST DRC-03: Amendment in Rule 142 of CGST Rules and issuance of a Circular to prescribe a mechanism for adjustment of an amount paid, in respect of a demand through Form GST DRC-03, against the amount to be paid as pre-deposit for filing of appeal.

B. In relation to Input Tax Credit (ITC) :

1. Relaxation in condition of section 16(4): Time limit for availing ITC pertaining to FY 2017-18 to FY 2020-21 has been extended to 30^th November 2021 retrospectively w.e.f. 1^st July 2017. Further, retrospective amendment to section 16(4) will allow the benefit of ITC for the period between cancellation and revocation of registration to the taxpayers who has filed all the return for the said period within 30 days from the date of revocation of registration.

2. Applicability of provisions of section 16(4), in respect of invoices issued by the recipient under Reverse Charge Mechanism:  In case of supplies received from an  unregistered supplier, where tax has to be paid by the recipient under RCM and invoice is to be issued by the recipient only, the relevant financial year for calculation of time limit for availment of input tax credit under the provisions of section 16(4) of CGST Act, will be the financial year in which the invoice has been issued by the recipient.

C. In relation to Demand and Adjudication:

1. Interest or penalties or both waived off or the demand notices issued under section 73: A new section 128A to be inserted in CGST Act, 2017 to waive off the interest or penalties or both for the demand notices issued under section 73 (non fraud cases) for the FY 2017-18, 2018-19 and 2019-20, if the taxpayer pays full tax demand upto 31.03.2025 but the waiver does not cover demand of erroneous refunds.
2. Common time limit for issuance of demand notices and orders under section 73 / 74: Insertion of a new section 74A to provide for common time limit for issuance of demand notices and orders for FY2024-25 and onwards.Further, the time limit to avail the benefit of reduced penalty, by paying the tax demanded along with interest, has been recommended to be increased from 30 days to 60 days.

D. In relation to GST Returns:

1. No levy of interest under section 50 for delayed filing of returns: Amendment to Rule 88B of CGST Rules, 2017 to not levy interest in case of delayed payment of taxes as a result of late filing of GSTR 3B when such amount is available in the Electronic Cash Ledger (ECL) on the due date of filing of return.

2. Extended the due date for FORM GSTR-4 for composition taxpayers: Due date for filing of return in FORM GSTR-4 for composition taxpayers has been extended from 30^th April to 30^th June following the end of the Financial Year. To apply for returns for the Financial Year 2024-25.

3. New form GSTR-1A introduced: New form introduced to facilitate the taxpayers (including IFF return filers) to amend the details in Form GSTR-1 for a tax period and/ or to declare additional details, if any, before filing of return in Form GSTR-3B for the said tax period to ensure that correct liability is auto-populated in Form GSTR-3B.

4. Form GSTR-9/ 9A: Taxpayers having aggregate annual turnover upto Rs. 2 crores for the FY 2023-24 to be exempted for filing of Annual Return.

5. Threshold limit for reporting of B2C inter-state supplies reduced: The threshold for reporting of B2C inter-State supplies invoice-wise in Table 5 of Form GSTR-1 to be reduced from Rs 2.5 Lakhs to Rs 1 Lakh.

E. Other General changes:

1. Valuation of Corporate Guarantee provided between related persons: Amendment to be made in rule 28(2) of CGST Rules retrospectively with effect from 26.10.2023 and issuance of a Circular to clarify various issues regarding valuation of services of providing corporate guarantees between related parties. It is inter alia being clarified that valuation under Rule 28(2) of CGST Rules would not be applicable in case of export of such services and also where the recipient is eligible for full Input Tax Credit.

2. Reduction in TCS rate: Tax collected at source (TCS) rate reduced from 1% to 0.5 % to ease the financial burden on suppliers making supplies through Electronic commerce operators (ECO’s).

3. Amendment in section 140(7) of CGST Act retrospectively w.e.f. 01 July 2017 to provide for transitional credit in respect of invoices pertaining to services provided before appointed date, and where invoices were received by Input Service Distributor (ISD) before the appointed date.

4. To create a separate entry in  notification No. 12/2017- CTR 28.06.2017 under heading 9963 to exempt accommodation services having value of supply of accommodation up to Rs. 20,000/- per month per person subject to the condition that the accommodation service is supplied for a minimum continuous period of 90 days.

5. Anti profiteering provision (section 171) not to continue after 31 March, 2025.

6. Roll-out the biometric-based Aadhaar Authentication of registration applicants on pan –India basis in a phased manner. 

The recommendations would be given effect through the relevant circulars / notifications / law amendments which alone shall have the force in law.

(With contributions from CA Neha Somani and CA Saurabh Agarwal).