GST Council Meeting News Updates Highlights: The Goods and Services Tax (GST) Council is Meeting today (June 22). Union Finance Minister Nirmala Sitharaman is presiding over the meeting. Earlier, the GST Council, just a day after Nirmala Sitharaman formally assumed charge as Union Minister of Finance and Corporate Affairs, announced the date of the 53rd GST Council meet – June 22.
The previous GST Council meeting was held on October 7, 2023. It was presided over by Finance Minister Sitharaman and attended by Finance MoS Pankaj Chaudhary, the Revenue Secretary, Chairman CBIC, Member CM, Member GST, Member TP, and senior officers from the Union Government and States. In its October meeting, the GST Council decided to impose a 28 per cent levy on online gaming, casinos, and horse racing. Later in the March GST meeting, the council postponed the review of the 28 per cent levy imposed on the proceeds from online gaming.
During her address, Finance Minister Sitharaman reiterated the Union Government’s commitment to aiding states through timely tax devolution, Finance Commission grants, and GST compensation settlements. She highlighted the 'Scheme for Special Assistance to States for Capital Investment', noting that while most loans are unrestricted, a portion remains conditional on states implementing citizen-centric reforms and specific capital projects across sectors. Sitharaman encouraged states to leverage these loans by fulfilling the stipulated criteria.
The Finance Minister assured ministers that their recommendations would be carefully considered in the upcoming formulation of the Union Budget for the next fiscal year.
The meeting was attended by Union Minister of State for Finance Pankaj Chaudhary, as well as chief ministers from Goa, Meghalaya, Mizoram, Nagaland, and Sikkim, and deputy chief ministers from Bihar, Madhya Pradesh, Odisha, Rajasthan, and Telangana. Also present were state finance ministers, other ministers, senior officials from states and Union Territories with Legislature, and representatives from the central government.
Regarding the ‘Scheme for Special Assistance to States for Capital Investment’, Sitharaman highlighted that while a significant portion of the loans is untied, a portion is conditional and linked to citizen-centric reforms by states and sector-specific capital projects. She urged states to take advantage of these loans by meeting the necessary criteria.
Many states appreciated the central government’s ‘Scheme for Special Assistance to States for Capital Investment’ and offered suggestions for further enhancements.
Finance Minister Nirmala Sitharaman emphasized the Centre’s commitment to bolstering states' economies through prompt tax devolution and the settlement of GST compensation arrears to drive growth.
During a pre-budget meeting with state finance ministers on Saturday, Sitharaman also encouraged states to utilize the 50-year interest-free loan scheme offered by the Centre for undertaking specific reforms.
In her remarks, the Union Finance Minister emphasized the central government's support to states through timely tax devolution, Finance Commission grants, and the disbursement of GST compensation arrears to stimulate growth, according to an official statement.
The meeting was attended by Union Minister of State for Finance Shri Pankaj Chaudhary, Chief Ministers of Goa, Meghalaya, Mizoram, Nagaland, and Sikkim, Deputy Chief Ministers of Bihar, Madhya Pradesh, Odisha, Rajasthan and Telangana, State Finance Ministers and other Ministers, and Senior Officers from the States and Union Territories (with Legislature) and the Union Government
Courtesy: Ministry of Finance
The union finance minister, Nirmala Sitharaman, underlined the government's support to states through timely tax devolution, finance commission grants, and arrears of GST compensation being provided for providing stimulus to growth. Concerning the 'Scheme for Special Assistance to States for Capital Investment,' Sitharaman stated that although the majority of the loans are unconditional, a portion of them are subject to conditions related to sector-specific capital projects and citizen-centric reforms implemented by the states. She further asked the states to apply for these loans by meeting the necessary requirements.
Courtesy: PIB
"As hinted by the finance minister recently, spirited discussions regarding the inclusion of petrol, diesel, ATF, natural gas, and selected petroleum products within the ambit of GST have been taking place not just within the corridors of power but also within the industry," stated Shivam Mehta, Executive Partner, Lakshmikumaran & Sridharan Attorneys. The extent of the Center's acceptance of the states will determine how far these requests can be fulfilled. The industry as a whole, he continued, is looking to the new coalition government for assistance because of the difficulties encountered since the implementation of the new corporate guarantee valuation rule. “The industry is hoping for an amendment/clarification to fix the value of supply basis, the actual loan amount disbursed and the non-applicability of the rule where full ITC is available to recipients,” he said.
Courtesy: PTI
Smita Singh, Partner, S&A Law Offices, said, “The Council is expected to address and provide clarification on various issues which need clarification/ resolution for quite some time now. One of the most pressing issues which needs immediate clarification is related to online gaming. Previously, online gaming companies were charging GST at 18% on platform fees, but now face a higher tax rate on certain online gaming services. The next issue is a persistent demand for rationalization of rates. There is a huge expectation in the industry of an overhaul of the existing four-tiered GST rate structure of 5 per cent, 12 per cent, 18 per cent and 28 per cent during the current financial year.”
The expectations from the GST council are that the pre-deposit amount will be reduced from 10% and 20% to 7.5% to bring it to par with the earlier service tax or excise regime, said Parag Mehta, Partner with N.A. Shah Associates. The other points he listed are:
- A GST rate of 28% on online games, horse racing, and casinos may be considered and reviewed.
- One-time amnesty is an expectation of the trade to regularize all initial issues of GST Implementation.
- The Interim Budget 2024 made the applicability of Input Service Distributor (ISD) mandatory for entities having multiple GST registrations. However, rules and timelines may be discussed and notified.
- Refunds in cases of industry having an inverted duty structure are a big issue, and there has been substantial working capital blockage for textiles and other sectors. There may be some relief expected.
- Rate rationalization and classification may be difficult in this meeting as there may be a change in members due to changes in recent political dynamics.
This is the first GST Council Meeting after the Modi 3.0 Cabinet is sworn into power. This is the 53rd meeting of the GST Council and they are meeting after 8 months. The last meeting was held in October 2023. Some of the key topics that are expected to be deliberated upon include
1. Retrospect tax reimbursement
2. Rationalisation of rates in key sectors
3. Consideration on possible inclusion fuel prices under GST ambit
All eyes are on the 53rd GST meeting in New Delhi today. The GST Council is meeting nearly 8 months after the last meeting in October 2023. Finance Minister Nirmala Sitharaman has arrived for meeting and Finance Ministers of all states are expected to join in this meeting being held just ahead of the budget.
There have been many discussions amongst various circles about bringing natural gas under GST and the potential implications for the gas producers, marketers, and the entire petrochemical value chain, from polymers to plastics. Bringing ATF under GST would be a positive for airline companies, and air travellers.
ONGC, Oil India and Reliance would be among the beneficiaries of gas being included in the GST ambit along with city gas distribution companies.
Prashant Vasisht, Senior Vice President, Corporate Ratings, ICRA, said, “Bringing gas under GST should let companies like GAIL, Petronet LNG, and CGD entities reduce prices or result in savings for them.” There could be a similar positive impact on gas-based power capacities, he added.
The GST Council is meeting today and there are a host of expectations. Rajat Bose, Partner, Shardul Amarchand Mangaldas & Co, believes, “GST compliance may be examined for ease of doing business. Currently, there is no facility to file revised returns but only amendment in invoice detail is permitted. These provisions could be re-looked for the benefit of the taxpayer. The benefits of the GIFT CITY in Gandhinagar expanded to sunshine sectors like Data Centres, Data Embassies, etc, which have an enormous growth potential in India. In the absence of the proposed DESH Bill, this would be a significant push to the archaic SEZ laws presently in force. The government should also push for development of infrastructure / capex and think of rational practical measures to assure the industry of their best intentions, for the eventual strengthening of the economy.”
The GST Council is expected to deliberate on a host of topics at its meeting today. Here is a look at some of the key expectations and wishlist across industry-
1. GST on fertiliser firms: The Standing Committee on Chemicals and Fertilisers had recommended cutting down GST applicable on raw materials and nutrients to help farmers and address the interest of fertiliser firms. These recommendations were made in February and may come up for deliberation in today's meeting.
2. Restructuring of rates: The inverted duty structure, especially in the pharma and textile sectors has been a matter of concern and there has been call for restructuring of this. Additionally, reductions in GST rates sectors that can help stimulate consumption and provide relief to businesses is also on many wishlit.
3. 28% GST on Online Gaming: The online gaming companies have been reeling under the impact. However a review of the same doesn't seem to be on the cards despite a call for relief from many quarters.
4. Inclusion of fuel prices under GST: Despite a demand for this for long, petrol and diesel prices seem unlikely to be included under the ambit of GST. One of the most important consideration would be inclusion of opinion from all states and every state has to unanimously agree to this.
1) Reduction of pre-deposit amount while filing appeal to Appellate Authority/ Tribunal U/s 107 & 112 of CGST Act 2017.
2) Modification in filing of appeal procedure U/s 129/130 dealing with Detention seizure and release of goods and conveyance in transit and confiscation of goods or conveyance and levy of penalty.
3) Putting a cap on the maximum number of SCN based on artificial intelligence tools.
4) Land value deduction on an actual basis.
5) Modification of formulae for calculating the value of Transfer of Development Right (TDR).
6) ITC eligibility under CGST head where place of supply (POS) is in another state.
7) RCM liability should be allowed to be discharged through credit.
8) Exempt GST on corporate guarantee.
9) Lowering the rate of Interest from 18% to 12%.
10) Transfer of accumulated ITC (CGST+IGST) from one distinct person to another.
11) Scope of item covered in Para-1 of Schedule -1 of CGST act 2017, disposal of business assets where ITC has been availed on such assets.
12) Issuance of credit note to be permitted in case of bad debts.
13) Clarity of ocean freight under GST.
14) Simplified the procedure for reversal of credit notes on inputs and more particularly capital goods in terms of Rule 42/43 of CGST Rules 2017.
15) Rationalization of blocked credit U/s 17(5) to avoid cascading effect and to reduce litigation.
16) E-way bill
a) Exemption to E-way bill for E-invoices (IRN)
b) Extension of time limit for validating the expiry of E-way bill
17) ITC
- Extension of time limit up to 31st march of next financial year U/s 16(4)
- No disallowance of ITC if credit availed in books of accounts within the time limit prescribed U/s 16(4).
- ITC to be allowed on construction of immovable property where property is used for leasing and GST paid on lease rent.
18) GST rate on restaurants at 5% without ITC irrespective of its locations.
19) Merger of 12% & 18% rate into one single rate of 15%.
20) Introduction of faceless adjudication on the line of Income Tax.
For May, the Central Goods and Services Tax (CGST) collection came in at Rs 32,409 crore and the State Goods and Services Tax (SGST) came in at Rs 40,265 crore, latest data released by the Ministry of Finance showed. Integrated Goods and Services Tax (IGST), meanwhile, was recorded at Rs 87,781 crore, including Rs 39,879 crore collected on imported goods.
For FY25 so far, the Finance Ministry collected CGST of Rs 76,255 crore and SGST of Rs 93,804 crore.
One of the key proposals of the 52nd GST Council revolved around encouraging the use of millets and spurring demand for it. As a result, the Council had recommended 0 rate for millet food preparation. This was applicable for millet flour in powder form as well provided 70% of it comprised of millets by weight if sold loose and in case of pre-packaged items the 5% need to be millet.
All eyes would be on the rate restructure proposals and potential rate overhaling at the 53rd GST Council meeting. According to Ranjeet Mahtani, Partner, Dhruva Advisors, expectations on plugging concerns with respect to inverted duty structure, especially in the pharmaceuticals and textiles sector would be primary point of concern. That apart, "further clarifications on the newly introduced GST on corporate guarantee." is another focus area. "A part of the wish list is that the GST Council provides definitive guidance on multiplicity of proceedings by different tax authorities in the GST regime – this has become a bane for industry and is somewhat allayed by the Circular of 30.03.2024," he added.
Also watch out for potential review of online gaming sector which has thus far seen adverse impact of modification of the GST rate.
The 52nd GST Council meeting was held in October, 2023. Presided by Finance Minister Nirmala Sitharaman, the GST Council recommended key changes in rates and along with measures for streamlining compliances and trade facilitations.
In May collections were:
-Central Goods and Services Tax (CGST): Rs 32,409 crore
-State Goods and Services Tax (SGST): Rs 40,265 crore
-Integrated Goods and Services Tax (IGST): Rs 87,781 crore. This included Rs 39,879 crore on imported goods as well.
Apart from this Rs 12,284 crore cess was collected and this included Rs 1,076 crore on imported goods. Overall the gross GST collections for FY25 till May is at Rs 3.83 lakh crore. A boost in domestic transactions and higher imports helped in clocking this 10% plus growth on a YoY basis in May.
According to the latest data released by the Ministry of Finance, Goods & Services Tax (GST) collections during May came in at Rs 1.73 lakh crore, recording a growth of 10 per cent year-on-year. Though GST collection in May was a tad lower than April it recorded a steady growth. GST collection had breached the Rs 2 lakh crore milestone in April. The gross GST collection during April had hit a record of Rs 2.10 lakh crore, up 12.4 per cent on-year.
The GST Council meeting is set to begin soon and most experts we spoke on the expectations from the 53rd GST council meeting highlighted three key aspects-
1. Simplifying GST framework
2. Looking at ways to enhance compliance
3. Pay heed to industry concerns
According to Ankur Gupta, Practice Leader - Indirect Tax, SW India, “One major area of discussion will likely be rate rationalization, potentially involving reductions in GST rates for specific goods and services to stimulate consumption and provide relief to businesses. Additionally, efforts may be made to correct the inverted duty structure, which currently leads to input tax credit accumulation issues in certain sectors.”
He further stated that in terms of compliance simplification, proposals may include streamlining the GST return filing process by allowing amendments in case of incorrect reporting in GSTR in the same month. Further, there could be discussions on simplifying the ITC claim process. In terms of a tribunal set up, Ankur Gupta added that there may be discussions on pre-deposit, finalising SOPs and timelines for filing pending appeals.
Most restaurants fall under the 5% GST rate. In this case one does not have the option to claim ITC or input tax credit (ITC). The 18% GST rate has a provision for ITC claims. The rate is mostly dependant on the location of the restaurant.
Meanwhile restaurants listed under the food apps pay a uniform GST rate of 5% on the bill. Food delivery aggregators though delivery commissions and marketing services which fall under the 18% GST slab.
The current GST on personal vehicles range between 5-12%. On an average, 5% GST rate is applicable on carriages meant for specially abled. This includes both motorized/non-motorized and also on the parts/accessories of these carriages. This rate came into effect after the decision of 31st GST Council Meeting in 2018.
Meanwhile 12% GST rate is applicable on EVs, vehicle powered by hydrogen fuel cell tech and hand propelled vehicles including rickshaws.
28% GST is applicable on Motor vehicles but the cess differs from engine capcity and length of the vehicle.
The 53rd GST Council meet is set to kick off in a few hours from now. In terms of agenda and expectations, it is seen as a key meeting with a host of issues on which decision is expected. The first GST Council Meet after the Modi 3.0 Cabinet was sworn in is set to consider-
1. Taxability of corporate guarantees
2. Taxation on online gaming
3. Possible tax structure for share reimbursement by companies as ESOPs, ESPPs, and RSUs.
GST on online gaming is expected to take centre stage today. But another sector that has been continuously highlighted is GST on automotive. The average Passenger cars generally fall under the 28% GST bracket. But there are separate cess range depending on engine capacity and length of the cars.
In general cess for cars range between 1-22%. According to the 37th GST Council meet, the cess on 1200cc and 1500cc vehicles ranges between 1-3%. However this applies to cars with length up to 4000mm or passenger capacity of 10 or less persons to less than 13 persons.
The GST rate on EVs has been decided at 5% as per the 36th GST Council decision. However, EV components carry a GST rate of 18%. Even Lithium Ion batteries if bought separately have 18% GST rate.
Shivam Mehta, Executive Partner, Lakshmikumaran & Sridharan Attorneys, said, “As hinted by the finance minister recently, spirited discussions regarding the inclusion of petrol, diesel, ATF, natural gas, and selected petroleum products within the ambit of GST have been taking place not just within the corridors of power but also within the industry. How far these requests will be met, however, will depend on the Centre taking on board the states.” Further, he added that the entire industry is counting on the new coalition government for relief owing to the hardships faced post the introduction of the new rule for the valuation of corporate guarantees. “The industry is hoping for an amendment/clarification to fix the value of supply basis, the actual loan amount disbursed and the non-applicability of the rule where full ITC is available to recipients,” he said.