48th GST Council Meeting – Update

Posted On - 20 December, 2022 • By - Deni Shah

The 48th GST Council meeting was held on 17 December 2022, which was Chaired by the Honorable Finance Minister – Smt. Nirmala Sitharaman and attended by the Finance Ministers of various Indian States and Union Territories.  The role of the GST Council is to propose changes to GST rates and compliances, issuing clarifications on contentious issues, identifying amendments to the substantive law, which if approved will be implemented through issuance of relevant notifications, circular, instructions, etc.

 A summary of key proposals deliberated during the meeting are as follows:

  • A higher rate of GST Compensation Cess of 22% will include motor vehicles fulfilling all the following four (4) conditions:
  1.  The vehicle is popularly known as SUV
  2.  Has engine capacity exceeding 1500cc
  3.  Has length exceeding 4000 mm; and
  4.  Has a ground clearance of 170 mm or above

 This proposal once implemented will result in a total GST of 50% for such vehicles – 28% GST + 22% Compensation Cess.

  • Clarification to be issued for non-applicability of GST if a residential dwelling is rented to a GST registered person in their personal capacity for their own use/ account as a residence and not for business. This clarification provides relief to GST registered proprietors or partners who rent property for residential purposes.
  •    It has been proposed to decriminalize or increase the threshold for certain offences under the GST law:

  1. The threshold for launching prosecution to be increased from GST amount of Rs 10 mn to Rs 20 mn, except for fake invoices. Offences pertaining to issuance of invoices without supply of goods or services would continue to be prosecuted if GST involved is more than Rs 10 mn.

  2. Compounding amount to be reduced from the current tax range of 50%-150% to 25%-100%.

  3. Certain offences under Section 132(1) of the Central Goods and Services Tax Act, 2017, such as obstruction or restricting any officer from discharging their duties, intentional tempering of material evidence and failure to provide the information to be decriminalized.

  • Refund provisions/ mechanism to be introduced for unregistered persons under the GST legislation. Currently, there is no defined process for filing a refund claim of GST paid by unregistered persons and which becomes refundable on cancellation of certain contracts/ agreement such as for sale of flats/ house construction, long-term insurance policy, etc.

  • Amendments for timely and easier GST appeal processing:

  1. Clarity to be provided for submission of certified copies of the order against which an appeal is filed; this would facilitate timely processing of appeals.

  2. Facility to be extended for withdrawing an appeal up to a certain defined stage to avoid litigations at the appellate level.

  •  Clarification to be issued for treatment of statutory dues under GST law in respect of taxpayers for whom proceedings have been finalized under the Insolvency and Bankruptcy Code, 2016.

  • Clarifications to be issued to remove ambiguity and legal disputes on various issues, such as:

  1. Procedure for verification of input tax credit in cases involving difference in input tax credit availed in FORM GSTR-3B vis-à-vis that available as per FORM GSTR 2A during FY 2017-18 and FY 2018-19.

  2. Manner of re-determination of demand if the GST authorities are unable to prove wilful misstatement or suppression or fraud with the intent to evade taxes.

  3.  Applicability of e-invoicing.

  • Amendment proposed in the definition of “non-taxable online recipient” under Section 2(16) and “Online Information and Database Access or Retrieval Services under Section 2(17) of the IGST Act to reduce issues in interpretation and litigation.

 Apart from the aforementioned key proposals, various other issues were discussed during the GST Council meeting.  A press release of the same can be accessed here.

 Key decisions deferred by the GST Council

 1. Taxability (tax rate and valuation) of online gaming, horse races and casinos

2.  Setting up of GST Appellate Tribunals