RECENT DEVELOPMENTS IN GST

[Dr. Sanjiv Agarwal]

MoF has appointed four new Secretaries in a major reshuffle with Mr. Arvind Shrivastava as new Revenue Secretary, Mr. V. Vualnam as new Expenditure Secretary, Ms. Anuradha Thakur as new Economic Affairs Secretary and Mr. K. Chalai as new Public Enterprises Secretary.

CBIC has issued new instructions or guidelines for processing of applications for registration under GST law. This would facilitate ease of doing business, are more transparent and aimed to reduce compliance burden. These instructions shall be in suppression of earlier guidelines dated 14.06.2023.

MoF has clarified that it does not intend to levy GST on UPI transactions of Rs. 2000 or above, as is being reported in media. It has termed such claim as false, misleading and without any basis. It states that since currently there is no MDR (Merchant Discount Rate) on UPI transaction, there is consequently no GST levied. Also, it has clarified or taxability of transactions between RWA’s and flat owners.

Kerala High Court has recently (11.04.2025) upheld in INDIAN MEDICAL ASSOCIATION, KERALA VERSUS UNION OF INDIA, STATE OF KERALA, GST COUNCIL, ADDITIONAL DIRECTOR GENERAL, DIRECTORATE GENERAL OF GST INTELLIGENCE, KOCHI, DEPUTY DIRECTOR, DIRECTORATE GENERAL OF GST INTELLIGENCE, KOZHIKODE (VICE VERSA). [2025 (4) TMI 872 - KERALA HIGH COURT] case in relation to non-levy of GST in case of clubs or association on the concept of mutuality. It has struck down Section 7(1) (aa) and Section 2(17)(e) of CGST/KGST Acts, 2017 as unconstitutional. These provisions amended in 2021 w.r.e.f. 01.07.2017 deemed associations and members as separate entities and transactions between them as supply for the purpose of GST. The court held that transaction between an association and its members cannot constitute a supply as they are essentially the same entity on the doctrine of mutuality. Supply requires two distinct persons – a provider and a recipient and that constitutional interpretation by Supreme Court in State of West Bengal and Calcutta Club in 2019 is binding.

Revised Guidelines for GST Registration

• CBIC has issued new / revised instructions for processing of applications for GST registration which may enable reduced compliance burden on taxpayers and will also facilitate transparency, besides smoothening the registration process.
• It lists the documents to be sought from applicant while processing of application for all types of premises – owned, rented, other premises which are neither owned or rented, shared premises, premises without lease agreement etc.
• Officers will adhere to the prescribed list of documents provided in registration application form. Requisite documents in specific cases to be uploaded with registration application form have also been delineated in the instructions.
• Officers will not issue notices based on presumptive grounds, minor discrepancies, or for additional documents that are not essential for processing applications.
• It also clarifies on issues in relation to constitution of business and documentary evidences therefor.
• No additional or unwarranted documents shall be sought by the department based on presumptive queries.
• It also lays down the manner of processing of registration application including seeking of clarification by the processing officer.
• The Zonal Principal Chief Commissioner/Chief Commissioners have been advised to devise mechanism to closely monitor and issue suitable trade notices, wherever required. Strict action should be taken against the officers deviating from these instructions.

[Source: CBIC Instruction No. 03/2025-GST dated 17.04.2025]

No plan to levy GST on UPI transactions

• Ministry of Finance (MoF) has denied the reported news on proposed levy of GST on UPI payments
• MoF has stated that ‘claims that the Government is considering levying Goods and Services Tax (GST) on UPI transactions over Rs. 2,000 are completely false, misleading, and without any basis. Currently, there is no such proposal before the Government’.
• GST is levied on charges, such as the Merchant Discount Rate (MDR), relating to payments made using certain instruments. Effective January 2020, the Central Board of Direct Taxes (CBDT) has removed the MDR on Person-to-Merchant (P2M) UPI transactions through the Gazette Notification dated 30th December 2019. Since currently no MDR is charged on UPI transactions, there is consequently no GST applicable to these transactions.
• The Government continues to promote digital payments via UPI. To support and sustain the growth of UPI, an Incentive Scheme has been operational from FY 2021-22. This scheme specifically targets low-value UPI (P2M) transactions, benefiting small merchants by alleviating transaction costs and promoting wider participation and innovation in digital payments.

(Source: PIB Release ID 2122747 dated 18.04.2025)

Clarification on GST on RWAs and Apartment owners

Ministry of Finance (MoF) has clarified on levy of GST on Resident Welfare Associations (RWA’s) as follows by way of a tweet:

• GST registration not required

If aggregate turnover below Rs. 20 lakh in financial year, GST registration and payment are not required – even if monthly maintenance exceeds Rs. 7500 per member.

• GST applicability

GST @ 18% becomes applicable only when both conditions are met:

• Monthly maintenance exceeds Rs. 7500 per member
• Aggregate turnover of RWA is Rs. 20 lakh or more in financial year

• Multiple flats

The Rs.7500 threshold is applied separately for each apartment owned by a member.

• Full taxation beyond Limit

If charges exceed Rs. 7500 (e.g. Rs. 9000), then GST is levied on the entire amount, not just on the excess.

• ITC benefit under GST

Unlike pre-GST era. RWAs can now avail input tax credit (ITC) on capital goods, goods and input services.

(Source: MoF tweet dated 20.04.2025)

GSTN Advisory on reporting values (Table 3.2, GSTR-3B)

• GSTN has issued an advisory on Table 3.2 of Form GSTR-3B captures the inter-state supplies made to unregistered persons, composition taxpayers, and UIN holders out of the supplies declared in Table 3.1 & 3.1.1 of GSTR-3B along with few FAQs.
• The values in Table 3.2 of GSTR-3B auto-populates from corresponding inter-state supplies declared in GSTR-1, GSTR-1A, and IFF in requisite tables.
• From April-2025 tax period, inter-state supplies auto-populated in Table 3.2 of GSTR-3B will be made non-editable. The GSTR-3B shall be filed with the auto-populated values as generated by the system only.
• Wherever any modification/amendment is required in auto-populated values of Table 3.2 of GSTR-3B, same can be done only by amending the corresponding values in respective tables of GSTR-1A or through Form GSTR-1/IFF filed for subsequent tax periods.
• To ensure that GSTR-3B is filed accurately with the correct values of inter-state supplies, it has been advised to report the correct values in GSTR-1, GSTR-1A, or IFF. This will ensure the auto-populated values in Table 3.2 of GSTR-3B are accurate and compliant with GST regulations.

Readers may also refer to FAQ’s given in the said advisory.

(Source: GST Advisory dated 11.04.2025)