Anti-profiteering mechanism only till FY25-end
The Goods and Services Tax (GST) Council on Saturday announced several steps to ease the compliance burden of taxpayers and reduce litigation, tweaked the rates for a few items and set a sunset date of April 1, 2025, for the controversial anti- profiteering mechanism.
Finance minister Nirmala Sitharaman said after the 53rd meeting of the Centre-state Council, also the first in the tenure of the new government at the Centre, that the Council would take up important agenda of rate rationalisation at the next meeting, likely in August. The re-constituted Group of Ministers on this, headed by Bihar deputy chief minister Samrat Choudhary, would make a detailed presentation on the work done so far and the unfinished agenda in the next meeting of the Council, the minister said.
However, the issue of 28% levy on “full face value of bets” in online gaming did not feature in Saturday’s discussions.
The minister, however, clarified, that “the issues that were not taken up this meeting, will be taken up in the August meet”.
Sitharaman also reiterated the Centre’s intent on bring petrol and diesel under the ambit of GST during the presser, but mentioned that it’s for states to now come and board and make their recommendation for the rates. “The proviso (for inclusion of petrol and diesel) is already there (in the law). The rates will have to be decided.. it is up to the states,” she said.
The Council decided to roll out the biometric-based Aadhaar authentication of registration applicants in a phased manner, in an attempt to strengthen the registration process, and combat fraudulent input tax credit (ITC) claims via fake invoices.
Revenue secretary Sanjay Malhotra said the anti-profiteering mandate would be shifted from the Competition Commission of India to the GST Appellate Tribunal being formed.
The Council decided to reduce the amount of pre-deposit for filing of appeals under GST to ease cash flow and working capital blockage for the taxpayers. The maximum amount for filing appeal with the appellate authority has been reduced from Rs 25 crore to Rs 20 crore for both Central GST and State GST. Further, the amount of pre-deposit for filing appeal with the Appellate Tribunal has been reduced from 20% with a maximum amount of Rs 50 crore to 10% and Rs 20 crore, for the central and state taxes.
“This initiative aims to focus judicial resources on cases with substantial tax implications, thereby promoting efficiency and ensuring faster resolution of disputes,” said Ankur Gupta, Practice Leader – Indirect Tax at SW India.
For easing financial burden on the suppliers, who supply material through Electronic Commerce Operators (ECOs), the Council recommended to reduce the TCS rate on taxable supplies from the present 1% to 0.5%.
Also, the Council announced an exemption on interest and penalties for demand notices issued under Section 73, provided the taxpayer settles the demand before March 31, 2025.
This is likely to lessen the financial burden of taxpayers who are willing to rectify their tax dues. Given the value of interest has been increased more than the tax amount for matters pertaining to FY 2017-18 to FY 2019-20, the taxpayers can now take advantage of this exemption to clear their outstanding dues without the additional burden of interest and penalties in cases “where the grounds of appeal are not strong or the benefit provided under this exemption is substantial,” said an official press note.
Parag Mehta, Partner, NA Shah Associates, said on the GST Council meeting: “This is bound to enable assesses to regularise the disputes relating to initial three years of introduction of GST by discharging the applicable GST.”
The Council has also announced an extension for the due date of availing ITC for the financial years 2017-18 to 2020-21.
The Council prescribed monetary limits for filing of appeals in GST by the department before GST Appellate Tribunal, High Court, and Supreme Court, to reduce government litigation. The following monetary limits were recommended by the Council are GSTAT Rs 20 lakh; High Court Rs 1 crore; and Supreme Court Rs. 2 crore. The finance minister mentioned that the principal bench may become operational by August, as the process of appointing technical and judicial members is ongoing.
On the valuation of corporate guarantee, the Council recommended an amendment on Rule 28(2) of CGST rules, and said that valuation under the said rules would not be applicable in case of export of such services, and where the recipient is eligible for full input tax credit. This means, in the cases where the recipient is entitled to claim full input tax credit, there shall not be any GST on corporate guarantees received. “As a result, major proportion of assesses who are entitled to full credits will not have to beat burden of GST on guarantees received by them,” said Manish Mishra, Partner, JSA Advocates and Solicitors.
The Council recommended 12% GST on all milk cans, all solar cookers, and all types of sprinklers. It said that a uniform rate of 5% IGST will apply to imports of “parts, components, testing equipment, tools and tool-kits of aircrafts, irrespective of their HS classification”. It also recommended to amend existing entry covering poultry keeping machinery attracting 12% GST to specifically incorporate parts of poultry keeping machinery.
Clearing ambiguities on GST on hostel accommodation, which is located outside an educational institute, it has been clarified that exemption will be given to all hostels for providing services to students/working professionals if the value of service is less than Rs 20,000 per month per person, given the condition is that the service should be provided for minimum 90 days. “Though the same is beneficial, it may also increase the cost as due to exemption, the hostels will lose the Input Tax Credit (ITC) benefits,” said Mehta.
Andhra Pradesh finance minister P Keshav said the council has referred a recommendation on exempting the fertiliser sector (current rate 5% and 18% for inputs like sulphuric acid and ammonia) to the Group of Ministers on rate rationalisation.
MS Mani, Partner, Deloitte India, said: “While the rate rationalisation exercise is expected to take time, it would be good to have a broad level time frame to achieve the goal of fewer rates as this is one of the key areas of simplifying GST and improving the ease of doing business.” Pratik Jain, partner, PwC India, said: “Waiver of interest and penalty for past GST demands is a great step which would hopefully bring down the litigation to some extent. Sunset clause for anti-profiteering provisions will bring in much needed certainty for industry.”
Source:financialexpress.com