Highlights from the 49th GST Council Meeting: Key Decisions and Recommendations

The 49th GST Council Meeting was held on February 17, 2023, to discuss and make recommendations on several issues related to the Goods and Services Tax. The Council proposed several recommendations, including compensation for GST, GST Appellate Tribunal, capacity-based taxation, and special composition schemes for certain sectors.

One of the significant decisions taken by the Government of India was to clear the entire pending balance of GST compensation for June 2022, which amounts to Rs. 16,982 crore. This release is expected to clear the entire provisionally admissible compensation due for five years, as envisaged in the GST (Compensation to States) Act'2017.

The Council adopted the report of the Group of Ministers on the GST Appellate Tribunal with certain modifications. The final draft amendments to the GST laws shall be circulated to Members for their comments. The Chairperson has been authorised to finalise the same.

The Council approved the recommendations of the GoM on Capacity Based Taxation and Special Composition Scheme in certain Sectors on GST. The Council recommended compliance and tracking measures to be taken to plug leakages/evasions in commodities like pan masala, gutkha, and chewing tobacco.

Furthermore, the Council made some changes in GST rates of Goods and Services. 'Rab' has been reduced from 18% to 5% if sold prepackaged and labelled, and to nil if sold otherwise. Pencil sharpeners have been reduced from 18% to 12%.

In addition, the Council has also decided to regularize payment of GST on 'rab' during the past period on "as is basis" on account of genuine doubts over its classification and applicable GST rate.

The Council extended the exemption available to educational institutions and Central and State educational boards for the conduct of entrance examinations to any authority, board, or a body set up by the Central Government or State Government including National Testing Agency for conduct of entrance examination for admission to educational institutions.

The decisions taken by the Council are expected to have a positive impact on the GST regime and will help in the growth of the economy. The Council has recommended various measures to plug leakages and improve revenue collection.

The GST Council has recommended an extension of the time limit for revocation of cancellation of registration from 30 days to 90 days, with an option for a further extension of up to 180 days. An amnesty has also been proposed for cases where registration has been cancelled due to non-filing of returns.

To enable the withdrawal of best judgment assessment orders, the time period for filing relevant returns has been increased from 30 days to 60 days, with an option for a further extension of up to 60 days, subject to certain conditions. An amnesty scheme has also been proposed for conditional deemed withdrawal of assessment orders in past cases.

The Council has recommended rationalizing the late fee for delayed filing of annual returns in FORM GSTR-9 for registered persons with an aggregate turnover of up to Rs. 20 crores, with the late fee being reduced to Rs 50 per day for those with a turnover of up to Rs. 5 crores and Rs 100 per day for those with a turnover of more than Rs. 5 crores and up to Rs. 20 crores.

Amnesty schemes have also been proposed for pending returns in FORM GSTR-4, FORM GSTR-9, and FORM GSTR-10, with conditional waiver or reduction of late fee.

Finally, the Council recommended rationalizing the provision of place of supply for services of transportation of goods by deletion of section 13(9) of IGST Act, 2017 so as to provide that the place of supply of services of transportation of goods, in cases where the location of the supplier of services or location of the recipient?of services?is outside India, shall be the location of the recipient of services.