Key Points from Recommendations of 49th GST Council Meeting


The 49th GST Council meeting took place in New Delhi today. The meeting was led by Union Minister for Finance & Corporate Affairs, Smt. Nirmala Sitharaman, and attended by Union Minister of State for Finance Shri Pankaj Chaudhary, Finance Ministers from different States & Union Territories (with legislature), and senior officers from the Ministry of Finance & States/ UTs.

The GST Council has suggested various things related to GST compensation, GST Appellate Tribunal, approval of the Report of Group of Ministers (GoM) on Capacity Based Taxation and Special Composition Scheme in certain Sectors on GST, recommendations related to GST rates on Goods and Services and other measures to make trade easier.

GST Compensation Cess:

The Indian government has decided to pay the pending balance of GST compensation of Rs. 16,982 crore for June 2022. However, there is currently no money in the GST compensation fund, so the government will pay this amount from its own resources and will recover it from future compensation cess collections. This payment will cover all the compensation due for five years as per the GST (Compensation to States) Act 2017. Additionally, the government will also pay the final GST compensation to states that have provided certified revenue figures amounting to Rs. 16,524 crore.

Approval of the Report of GoM on Capacity Based Taxation and Special Composition Scheme in certain Sectors on GST:

The Council has approved the recommendations of the GoM to address the issue of revenue loss and improve the collection of taxes on items like pan masala, gutkha, and chewing tobacco. The approved measures include improving compliance and tracking to prevent revenue losses, allowing exports only with LUT and consequential refund of accumulated ITC, and changing the compensation cess levied on such commodities from ad valorem to specific tax-based levy to boost revenue collection in the initial stages. Additionally, the capacity-based levy will not be prescribed.

Recommendations relating to GST rates on Goods and Services:

👉Pencil sharpeners rates have been cut to 12 per cent from 18 percent earlier

👉GST on a type of liquid jaggery, Raab, has been cut to nil from 18% if it is loose. If it is pre-packaged and labelled, the tax rate will be 5%.

Other Recommendations:
👉It has been decided to extend the exemption available to educational institutions and Central and State educational boards for conduct of entrance examination to any authority, board or a body set up by the Central Government or State Government including National Testing Agency for conduct of entrance examination for admission to educational institutions. 

👉It has been decided to extend the dispensation available to Central Government, State Governments, Parliament and State Legislatures with regard to payment of GST under reverse charge mechanism (RCM) to the Courts and Tribunals also in respect of taxable services supplied by them such as renting of premises to telecommunication companies for installation of towers, renting of chamber to lawyers etc.

👉The GST Council has suggested changes to the rules for applying for the Revocation of a cancelled registration. The time limit for applying for Revocation would be extended from 30 days to 90 days. If someone does not apply within 90 days, they may ask for an extension of up to 180 days from a Commissioner or an officer authorized by them. Additionally, the Council has suggested that people who have had their registration cancelled due to not filing returns can apply for reinstatement under certain conditions, even if they missed the original deadline. This will be allowed for a specific period of time through an Amnesty scheme.
👉The GST Council recommended changes to a section 62 of the CGST Act, 2017 that deals with best judgment assessment orders. Currently, if someone files their return within 30 days of receiving such an order, the order is withdrawn. The Council recommends increasing this time to 60 days, and then allowing for an additional 60-day extension under certain conditions. Additionally, the Council has suggested an amnesty scheme for people who were unable to file their returns within the previous time limit but have since done so with interest and late fees paid. This scheme would apply regardless of whether an appeal has been filed or not.

👉The government currently charges a late fee of Rs. 200 per day for filing the annual return (FORM GSTR-9) after the due date. The late fee is subject to a maximum of 0.5% of the turnover in the State or UT. The GST Council has recommended rationalizing this late fee for registered persons having an aggregate turnover of up to Rs. 20 crore in a financial year starting FY 2022-23. Registered persons having an aggregate turnover of up to Rs. 5 crore will now have to pay a late fee of Rs. 50 per day, subject to a maximum of 0.04% of their turnover, while those having an aggregate turnover of more than Rs. 5 crore and up to Rs. 20 crore will have to pay a late fee of Rs. 100 per day, subject to the same maximum limit.

👉To help many taxpayers who have not filed their returns in FORM GSTR-4, FORM GSTR-9, and FORM GSTR-10, the Council recommended amnesty schemes. These schemes will provide conditional waiver or reduction of late fees.

👉The Council suggested a change in the provision of place of supply for transportation services to simplify it. The recommended change is to remove section 13(9) of IGST Act, 2017. This means that in cases where either the location of the service provider or the recipient is outside India, the place of supply for transportation services will be the location of the recipient of the services.

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Disclosures and Disclaimer

This article is being furnished for informational purposes only. We make every effort to use reliable & comprehensive information, but we do not represent that the contents of the article are accurate or complete.

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