| Dear All,
The Goods and Services Tax (‘GST’) Council in its 50th Meeting held on 11th July 2023 has made certain recommendations with respect to changes relating to GST rates, measures for facilitation of trade and streamlining compliances under GST. We have hereinbelow summarized the key recommendations of the meeting:
1. Clarification to be issued that under the current GST provisions input service distributor (‘ISD’) mechanism is not mandatory for allocation of input tax credit (‘ITC’) to distinct persons. The same should also clarify the issues regarding taxability of internally generated services between distinct persons. Amendments may be made in the GST law to make ISD mechanism mandatory prospectively for distribution of ITC
2. Goods transport agency (‘GTA’) not required to file annual declaration for paying GST under forward charge every year, unless they want to revert to Reverse Charge Mechanism (RCM). Option to be exercised from 1st January to 31st March of preceding financial year
3. Services provided by a company director in their personal capacity, such as renting immovable property, are not taxable under RCM. Only services provided by a director in their capacity as a director of the company are taxable under RCM
4. Circular to be issued for clarifying that mere holding of securities of a subsidiary company by a holding company cannot be treated as supply of services and thereby not subject to GST
5. GST Tribunal may be notified by the Centre w.e.f. 1 August 2023
6. Relaxation in respect of tables of Form GSTR-9 and GSTR-9C provided in financial year (‘FY’) 2021-22 to be continued for FY 2022-23. Exemption from filing GSTR-9 to continue for taxpayers for FY 22-23 having aggregate annual turnover upto 2 crores
7. Clarification to be provided in case of refund of ITC for a tax period to be restricted to ITC reflected in GSTR-2B of said tax period or any previous tax period. Further, clarifications to be issued for other refund related issues
8. Clarification to be issued to provide clarity on issues pertaining to GST liability and reversal of ITC in case where goods are supplies free of cost under warranty. Accordingly, manufacturer would neither be required to charge GST nor required to reverse the ITC in such cases
9. Balance of ITC in electronic credit ledger under the heads of IGST,CGST and SGST has to be taken together while calculating such interest liability in respect of wrongly availed and utilised IGST credit
10. Issuance of a circular to provide similar procedure as issued post recommendation of the 48th GST council for verification of ITC in cases involving difference in ITC claimed in Form GSTR-3B vis-a-vis Form GSTR-2A for the period 01-04-2019 to 31-12-2021
11. Certain recommendation has been given to strengthen the registration process and to effectively deal with the menace of fake and fraudulent registrations in GST like submission of bank account details having name and PAN of the applicant within 30 days of grant of registration, do away the requirement of physical verification of premises in presence of applicant, etc.
12. It is recommended to provide mechanism for recovery of tax and interest in the following cases:
- Where liability of tax as reported in Form GSTR-1 exceeds the liability reported in Form GSTR-3B above a certain threshold
- Where amount of ITC claimed in Form GSTR-3B exceeds the amount available in Form GSTR-2A above a certain threshold
13. Further, GST rates applicable on certain food items and other goods has been reduced. Also, exemption has been provided for certain goods and services from GST
The circulars in respect to the recommendations of the GST council meeting would be issued soon. |
