 "GST Council waives interest, penalty on tax demands between FY18 and FY20")
The Goods and Services Tax (GST) Council in its Saturday meeting has approved several compliance measures, aiming at reducing tax litigation and enhancing ease of business across the sectors.
The all-powerful Council waived interest and penalty for demand notices issued for the financial years 2017-18, 2018-19, and 2019-20. This is for cases where the taxpayer pays the full amount of tax raised in the notice by March 31, 2025. The waiver is conditional and does not cover wilful defaulters.
“The Council at its 53rd meeting has taken key decisions on trade facilitation, easing compliance, and easing the burden of taxpayers,” said Union Finance Minister Nirmala Sitharaman, who chaired her first Council meeting under the NDA-led government. “This will benefit MSMEs, traders, and taxpayers,” she said while briefing the media post-Council meeting in Delhi.
She said some of the agenda items couldn’t be taken up due to a paucity of time and could be addressed in the next Council meeting post-budget or before the end of August, FM Sitharaman said.
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Among key decisions, the Council approved the PAN-India implementation of biometric-based registration in a phased manner. The move would help weed out fake registrations and fake credits.
It has also given the nod to one of the key amendments in the Central GST Act under Section 11A, which has the potential to overrule retrospective tax demands arising in various sectors.
The amendment will give power to both the centre and states to waive off the GST not paid due to ambiguity of law or on account of “general practices” consistently being followed by the businesses.
The move will have a direct impact on online gaming, foreign airlines, and shipping companies.
To reduce litigation, the Council has approved a monetary limit of Rs 20 lakh for the GST Appellate Tribunal, Rs. 1 crore for the High Court, and Rs 2 crore for the Supreme Court for the filing of appeals by the GST department. Further, it reduced the quantum of pre-deposit required to be paid for filing of appeals under GST.
For small taxpayers, the Council has recommended extending the time limit to furnish the detail and the returns in the form GSTR 4 from April 30 to June 30, Sitharaman said, adding that this will apply for returns for the financial year 2024-25 onwards.
The Council also provided clarity on several goods and services which have been grappling with tax uncertainty.
For instance, it suggested 12 per cent GST on milk cans (steel, iron, aluminium) irrespective of use; cartons, boxes, and cases of both corrugated and non-corrugated paper or paper-board; solar cookers whether single or dual energy source; and sprinklers, including fire water sprinklers.
On services, it exempted certain services provided by Indian Railways and intra-railway supplies. GST relief was also given to students on accommodation services, for up to Rs 20,000 per month per person, if the person stays a maximum of 90 days.
Apart from this, the Council has introduced a sunset clause from April 1, 2025, for filing complaints of anti-profiteering matters. The union minister said that all such matters under anti-profiteering legislation will be handled by the GST Appellate Tribunal. Earlier, the anti-profiteering authority was subsumed with CCI. However, CCI expressed its inability to deal with GST cases.
The Council clarified that a corporate guarantee of 1 per cent on 18 per cent is exempt for businesses where full input tax credit is available. The move follows the appeals companies have filed before high courts.
The Council reconstituted the group of ministers (GoM) on rate rationalisation and asked them to give a status report on the rate rejig in the next Council meeting. This follows the political change in the state government.
On including petrol and diesel under the GST ambit, Sitharaman said that the intent of the central government when the GST was implemented, was eventually that petrol and diesel could be brought into GST. “…Then we don't have to go and amend the law. The provision has already been made that it can be brought into GST. The states have to agree, come into the GST Council, and decide what rates they agree on."
Talking about the ease of business, the union minister highlighted that only 1.96 per cent of all active tax assessees have been sent tax notices from the Central GST department till December 31, 2023. This translates to approximately 114,000 out of the total 5,862,000 assessees, indicating a selective and restrained approach in the issuance of tax notices.
“The first meeting after the formation of the new government sets the tone for ensuring measures to ease industry concerns. Sunset clause to anti-profiteering provisions, amnesty for initial years, allowing amendment of outward supplies, and corporate guarantee clarification were the major highlights. Come August, it’ll be interesting to see if a similar sentiment continues, specifically on rate rationalisations and clarifications,” said Abhishek Jain, Indirect Tax Head & Partner, KPMG.