The 50th meeting of the GST Council, chaired by Union Finance & Corporate Affairs Minister Smt. Nirmala Sitharaman, took place on Tuesday, 11 July 2023. The meeting focused on changes in GST tax rates, measures for trade facilitation, and streamlining compliance in GST. Here are the key recommendations made during the meeting:

Changes in GST Tax Rates:

I. Recommendations relating to GST rates on Goods

  1. Reduction in GST rates of uncooked/unfried snack pellets: The rate on uncooked/unfried snack pellets will be reduced to 5%. Payment of GST on uncooked/unfried snack pellets during the past period will be regularized on an “as is basis.”
  2. Exemption of IGST on medicine and food for rare diseases: IGST exemption will be provided for Dinutuximab (Quarziba) medicine imported for personal use. Similarly, IGST exemption will be extended to medicines and Food for Special Medical Purposes (FSMP) used in the treatment of rare diseases enlisted under the National Policy for Rare Diseases, 2021.
  3. Taxation of raw cotton supplied by agriculturists to cooperatives: Supply of raw cotton, including kala cotton, by agriculturists to cooperatives will be taxable under reverse charge mechanism. Issues related to the past period will be regularized on an “as is basis.”
  4. Reduction in GST rate on imitation zari thread or yarn: The GST rate on imitation zari thread or yarn will be reduced from 12% to 5%. Payment of GST related to this matter during the past period will be regularized on an “as is basis.”
  5. Inclusion of utility vehicles in compensation cess notification: All utility vehicles meeting specific parameters will be included in the compensation cess notification. “Ground clearance” will be clarified as ground clearance in an unladen condition.
  6. Reduction in GST rate on LD slag: The GST rate on LD slag will be reduced from 18% to 5% to promote its better utilization and environmental protection.
  7. Regularization of issues related to trauma, spine, and arthroplasty implants: Matters relating to trauma, spine, and arthroplasty implants prior to 18.07.2022 will be regularized on an “as is basis.”
  8. Reduction in GST rate on fish soluble paste: The GST rate on fish soluble paste will be reduced from 18% to 5%. Payment of GST on fish soluble paste during the past period will be regularized on an “as is basis.”
  9. Regularization of issues related to desiccated coconut: Issues related to desiccated coconut for the period 1.7.2017 to 27.7.2017 will be regularized on an “as is basis.”
  10. Levy of Compensation Cess on pan masala, tobacco products, etc.: For pan masala, tobacco products, etc., where it is not legally required to declare the retail sale price, the earlier ad valorem rate applicable on 31 March 2023 may be notified for the levy of Compensation Cess.
  11. Inclusion of RBL Bank and ICBC bank in IGST exemption: RBL Bank and ICBC bank will be included in the list of specified banks eligible for IGST exemption on imports of gold, silver, or platinum.
  12. Amendments to notifications in line with Foreign Trade Policy 2023: Consequential changes in notifications will be made to align with the new Foreign Trade Policy 2023.

II. Recommendations relating to GST rates on Services

  1. Extension of GST exemption for satellite launch services: GST exemption on satellite launch services supplied by private sector organizations, similar to ISRO, will be extended to encourage startups.
  2. Streamlining tax liability for GTAs: GTAs will not be required to file a declaration for paying GST under forward charge every year. They will be deemed to have exercised this option for the next financial year unless they choose to revert to the RCM. The last date for exercising this option will be 31 March of the preceding financial year.
  3. Taxability of services supplied by directors: Services supplied by a director of a company to the company in their private or personal capacity, such as renting immovable property, will not be taxable under reverse charge mechanism. Only services supplied by a director in their capacity as a director will be taxable under RCM.
  4. Taxability of food and beverages in cinema halls: Supply of food and beverages in cinema halls will be taxable as a restaurant service if supplied independently of the cinema exhibition service.

III. Second Report of Group of Ministers (GoM) on Casinos, Race Courses, and Online Gaming

  1. Uniform taxation on casinos, horse racing, and online gaming: The GST Council recommended a uniform tax rate of 28% on casinos, horse racing, and online gaming. Tax will be applicable based on the face value of chips purchased in casinos, the full value of bets placed in horse racing, and online gaming.

Measures for Facilitation of Trade:

  1. GST Appellate Tribunal Rules: Rules governing the appointment and conditions of service of the proposed GST Appellate Tribunal were recommended to be notified. The Chief Secretary of Maharashtra will be nominated as one of the members of the Search cum Selection Committee.
  2. Annual Returns for FY 2022-23: Relaxations provided in FY 2021-22 for various tables of FORM GSTR-9 and FORM GSTR-9C will be continued for FY 2022-23. Taxpayers with an aggregate annual turnover up to two crore rupees will be exempted from filing the annual return.
  3. Clarifications and Circulars:
    • Input Services Distributor (ISD) mechanism: A circular will clarify that ISD mechanism is not mandatory for distributing input tax credit of common input services procured from third parties to distinct persons.
    • Warranty replacement of parts and repair services: A circular will provide clarity on GST liability and input tax credit reversal in cases involving warranty replacement of parts and repair services without consideration.
    • Refund-related issues: Circulars will be issued to clarify various refund-related issues, including refund of accumulated input tax credit and admissibility of refund in cases where export of goods or realization of payment for export of services occurs after the time limit provided under rule 96A.
    • TCS liability for multiple E-commerce Operators (ECOs): A circular will clarify the TCS liability under Section 52 of the CGST Act, 2017 when multiple E-commerce Operators are involved in a single transaction of supply.
    • Simplified invoicing requirements: Rule 46 of CGST Rules, 2017 will be amended to require only the name of the state of the recipient (not the full address) on the tax invoice in cases of supply of taxable services through an ECO or by a supplier of OIDAR services to an unregistered recipient.

Measures for Streamlining Compliance in GST:

  1. E-way bill requirement for movement of Gold/Precious stones: Rule 138F will be inserted in CGST Rules, 2017 to mandate the requirement of e-way bills for intra-state movement of gold and precious stones under Chapter 71.
  2. Capacity-based taxation and Special Composition Scheme: Special procedures, penalties, and amendments will be introduced to address the specific needs of manufacturers of tobacco, pan masala, and similar items.
  3. Strengthening the registration process: Amendments will be made to the CGST Rules, 2017 to strengthen the registration process and combat fake and fraudulent registrations in GST. This includes the requirement to furnish bank account details and system-based suspension of registration for non-compliance.
  4. Mechanisms to address ITC differences and compliance: System-based intimation and procedures will be introduced to address excess ITC availment, promote compliance, and reduce mismatches in ITC. Additional provisions will be made for recovery of tax and interest and issuance of notices for non-filing of annual returns.
  5. Other recommendations: Recommendations include amendments related to OIDAR service providers, duty-free shops, compounding amounts for offenses, sharing of information between GST administrations, and clarification of the place of supply for goods supplied to unregistered persons.

The 50th GST Council Meeting concluded with significant recommendations to bring about changes in tax rates, facilitate trade, and streamline compliance in the GST system. These measures aim to promote economic growth, simplify processes, and enhance transparency in the GST regime.