RECENT DEVELOPMENTS IN GST

[Dr. Sanjiv Agarwal]

According to RBI, Indian economy has started recovering in the current quarter from slow down seen in Q2 of FY 2024-2025, which appears to be driven by festive events and surge in demand or consumption. GDP growth in Q3 is expected to be 6.8% (Q2 was 5.4%). It is gaining momentum backed by record food grain production, rural demand and personal consumption. Sustained infrastructure spending may further stimulate economic activity and investments.

India’s growth had slowed down to 5.4% in Q2 of current fiscal due to low capital formation, weak consumption, adverse weather etc. It is desirable that the forthcoming budget contains measures for MSME sector and industrial growth, besides stimulus to consumption.

RBI has recently released its Financial Stability Report, according to which, Indian economy and financial system remain stable, underpinned by sound macroeconomic fundamentals, strong balance sheets of banking & non-banks and low volatility in financial markets despite of some global macroeconomic concerns. Economy is expected to improve after show down in the pace of H1 economic activities as the structural growth drivers remain intact.

In budget preparedness exercise, PM and FM have met economists to seek their views as a pre-budget consultation on the theme of maintaining India’s growth momentum at a time of global uncertainty. It was emphasized that developed India can be achieved through a fundamental change in mindset, which is focused on making India developed by 2047.

Dr. Arunish Chawla has been appointed as Secretary, Department of Revenue, Ministry of Finance. He is a 1992-batch Indian Administrative Service (IAS) officer of the Bihar cadre and has served as the Secretary in the Department of Pharmaceuticals in the Ministry of Chemicals and Fertilisers since November 1, 2023.

It is reported that GST compensation cess may fall short of Rs. 1.37 lakh crore by March, 31, 2025. Centre may clear the interest of Rs. 50,000 crore due on back-to back loans taken during Covid period which were taken to meet the shortfall during such period.

The 55th meeting of GST Council was held on 21^st  December, 2024 at Jaisalmer (Rajasthan) wherein various recommendations have been made which inter alia, include changes proposed in CGST / IGST law, rules, clarifications and few rate reductions / rates increase, exemptions, compensation cess, ITC / ISD related amendments and so on. These changes approved shall have far reaching impact on all the stakeholders, particularly taxpayers and revenue. The overall impact is going to be pro-revenue. Also, proposed changes or recommendations are micro in nature leaving aside major policy amendments and rate rationalization for future.

GSTN has issued various advisories on e-way bill system and section 128A relating to amnesty scheme. GSTN had issued Advisory for Waiver Scheme under section 128A. Under the waiver scheme, for a demand notice or statement or order which has been issued under Section 73 for the tax periods between July 2017 & March 2020, the taxpayers are required to file an application either in Form GST SPL-01 or Form GST SPL-02 in GST portal accordingly. Presently, Form GST SPL-02 is made available in the GST portal. Form GST SPL-01 will be available soon in the GST portal.

The GST collection for the month of December, 2024 have been released according to which total gross GST revenue in December, 2024 stood at 1,76,857 crore, a rise of 7.3% on YoY basis (December 2023- Rs. 1,64,882 crore). The commutative collection till December, 2024 is Rs. 16,33,567/- crore which is again a rise of 9.1% on YoY basis. Net GST revenue for December, 2024 stood at Rs. 1,54,366 crore (3.3% growth).

While 2024 has seen many changes in GST law, rules and tax jurisprudence including setting up and steps towards constitution of GSTAT benches, the new year 2025 is going to be a year of appellate reforms as we foresee commencement of functioning of GSTAT which will be a land mark step of GST era in 8^th year of GST. The fact remains that even today, GST is a work-in-progress.

GST as a tax has now entered into 8^th year as it was started from 1^st July, 2017. It is hoped that the law which is still evolving will gradually settle down with interpretations getting decided on Appellate forums.

GST Rates: Recommendations of GST Council

GST Council in its 55^th meeting on 21 December, 2024 recommended the following changes in GST rates of specified goods:

• GST @ 5% on fortified rice kernel classifiable under code 1904
• No GST on gene- therapy
• IGST exemption to systems, sub-systems, equipments, parts, software etc meant for assembly / manufacture of LRSAM system
• IGST exemption to imports of all equipments and consumable samples by inspection of International Atomics Energy Agency
• Reduced 5% GST on food inputs and food preparations under HSN 19 or 20 which are supplied for food preparations meant for free distribution to economically weaker sections under Government programme.
• Reduced 0.1% compensation cess on supplier to merchant exporters.
• Increased GST @ 18% on sale of all old and used vehicles
• GST @ 12% on Advanced Aerated Concrete (ACC)  blocks (with more than 50% fly ash) under HSN 6815.
• No GST on pepper (both fresh green or dried pepper) and raisins supplied by agriculturists.
• Tax on popcorn divided into three rates of 5%, 12% and 18% based on packaging and contents.

(Source: MoF PIB Release ID 2086873 dated 21.12.2024)

GSTN advisory for Leased Wagons in E-way Bill System

• GSTN issued an advisory for Entry of Receipt Numbers Pertaining to Leased Wagons in the E-Way Bill System, i.e., specific instructions or guidelines for accurate entry of receipt numbers.
• This advisory focuses on the requirements specific to Leased Wagons.
• This covers:
  • Prefixing Receipt Numbers in the EWB System - Taxpayers transporting goods via Leased Wagons must prefix Receipt Numbers with the identifier "L" when entering them into the EWB system.
  • Updating Part-B of the EWB for Rail Transport - While generating an EWB for goods transported by rail, taxpayers should select the transport mode as "Rail" in Part-B of the EWB using the "Multi-Transport Mode" option on the EWB portal and then enter the Receipt Number with the prefix "L" to indicate that the transport is via Leased Wagons.
  • Format for Number Entry in the EWB System - Taxpayers must use the following format when entering Receipt Numbers related to Leased Wagons: L
  • Validation Process in the EWB System - Once the Receipt Number is entered, the system will validate the entry against the designated database for Leased Wagons. In case of discrepancies such as mismatched or missing numbers, taxpayers will receive an alert and must correct the entry promptly.

• For any clarification regarding the entry of Receipt Numbers for Leased Wagons, taxpayers may raise a ticket with the EWB support team through the support portal. Provide the details of the entry, including the prefix used, for quick resolution.

(Source: GSTN Advisory dated 23.12.2024)

GST Advisory on Waiver Scheme under Section 128A

• GSTN has issued a new Advisory on Waiver Scheme u/s 128A of the CGST Act, 2017.
• Under the Waiver Scheme, for a demand notice or statement or order which has been issued under Section 73 for the tax periods between July 2017 & March 2020, the taxpayers are required to file an application either in FORM GST SPL-01 or SPL-02 in GST portal accordingly.
• While Form GST SPL-01 is expected to be made available in due course, Form GST SPL-02 is presently available on the GSTN portal.
• GSTN has provided a detailed procedure for filing Form GST SPL-02 electronically.
• It contains details about how to fill application, navigation, payment, up loading of supporting documents and submissions of application.
• Taxpayers can seek guidance from:

https://tutorial.gst.gov.in/downloads/news/help_document_on_filing_of_spl_02.pdf

(Source: GSTN Advisory dated 29.12.2024)

GSTN Advisory on Extension of E-way Bills

GSTN has taken following emergency measures in relation to issues being faced in generation of e-way bills expired on 31.12.2024:

• Extension of Expired E-Way Bills:

• As per the existing procedure, e-way bills that expired at midnight on 31st December, 2024, could be extended either within 8 hours prior to the expiry or 8 hours after the expiry.
• Due to the technical glitch, this process was disrupted. To mitigate the impact, the window period for extending the e-way bills expiring on 31st December, 2024, has been extended up to 1st January, 2025, midnight. Taxpayers and transporters are advised to utilize the "Extend EWB" facility on the portal to extend these e-way bills, if required.

•  Generation of E-Way Bills for Goods Moved During the Glitch:

 Payers and transporters who moved goods on 31st December 2024 without generating e-way bills due to the technical issues are required to generate the necessary e-way bills on 1st January 2025 using the existing facility on the portal.

(Source: GSTN Advisory dated 01.01.2025)

GST collection in December, 2024

• Total gross GST Collection in December, 2024 is Rs. 1,76,857 crore which is 7.3%  higher them in December, 2023.
• Total GST refunds amounted to Rs. 22,490 crore which is 45.3% higher on YoY basis.
• Total net GST revenue in December, 2024 is 1,54,366 crore which is 3.3% higher on YoY basis.
• Growth in GST collection on YoY basis in December, 2024 has shown good growth in states like Punjab, Haryana and Sikkim while states like Chandigarh, Arunachal Pradesh, Meghalaya etc have recorded negative growth.

(Source: GST revenue collection December, 2024)