52nd GST Council Meeting - Key Decisions

52nd GST Council Meeting - Key Decisions

This is to apprise you regarding important decisions taken by GST Council in its 52nd meeting.

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Decision 1 – Taxability of corporate guarantee by holding company to its subsidiary company

GST Council has proposed an amendment in GST Valuation Rules to prescribe the taxable value as 1 percent of the amount of guarantee offered by the Holding Company for its Subsidiary Company.

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GABA & CO. | Insights?

·??????????? The amendment will put to rest the question on valuation of services of corporate guarantee. However, for period prior to amendment, corporate guarantee given or renewed can have any value (e.g., ? 100) where ITC is fully available to the recipient entity.

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·??????????? It is pertinent to note that the levy of GST at the first place is still a question of law. Since, the corporate guarantee for subsidiary is a shareholding function, one may argue that it should not be treated as a provision of services.

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Decision 2 – Taxability of personal guarantee by Directors

·??????????? GST Council has recommended that personal guarantee given by Directors to the bank is not chargeable to GST provided that no consideration is directly or indirectly paid to such Director.

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Decision 3 – Amnesty Scheme for filing of appeals against demand orders issued till March 31, 2023

·??????????? GST Council has recommended that for all assessment orders passed on or before March 31, 2023, appeal can be filed upto January 31, 2024.

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GABA & CO. | Remarks

·??????????? This is welcome recommendation by GST Council. Taxpayers whose appeal time limit got lapsed can avail the benefit of the same.

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Decision 4 – ISD Mechanism will be mandatory

·??????????? GST Council has recommended to make ISD mechanism mandatory to distribute the common Input Tax Credit.

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GABA & CO. | Remarks

·??????????? The taxpayers involved in cross-charging for each and every service including common ones, must prepare to obtain ISD registration and streamline their compliances.

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·??????????? A proper segregation/classification of services must be made beforehand so that once the amendment is enforced, there should not be any difficulty in executive the process of distribution of ITC.

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Decision 5 – Allowing refund of IGST paid on supplies to SEZ

·??????????? GST Council has recommended that DTA units can supply to SEZ with payment of IGST and claim the refund of such IGST paid.

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GABA & CO. | Remarks?

·??????????? This was an unintended omission from the Government which is now corrected in this GST Council meeting.

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Decision 6 – Consideration for export of services

·??????????? GST Council has recommended that consideration received through special vostro account should be admissible towards qualification of ‘export of services’.

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Hope you find the update useful.

For any clarification, query, or feedback, please feel free to reach us at [email protected] or +91-7042522108.

Disclaimer:

The views expressed in the update are strictly personal, based on our understanding of the underlying law. We are not responsible for any injury, loss or cost arising to any person who refers this update and acts or refrains from any act accordingly. We would suggest that a detailed legal advice must be sought before relying on this update.

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