The Goods and Services Tax (GST) Council has decided to exempt taxes on certain services provided by Indian Railways to the general public. Chaired by Finance Minister Nirmala Sitharaman, the council in its 53rd meeting held on 22nd June 2024, cleared multiple compliance measures to reduce tax litigation and enhance the ease of business across various sectors. “I want to reassure the assessees that we intend to make the GST assessee's life easier. We are working towards less and less compliance,” the finance minister stated in a media briefing post-Council meeting.
FM Sitharaman said some of the agenda items were not deliberated upon due to a paucity of time. “These could be addressed in the next Council meeting post-budget or before the end of August,” she stated.
Here are the key recommendations by the GST Council:
No GST on Indian Railways platform tickets: The Council has exempted GST on the sale of platform tickets, facility of retiring rooms/waiting rooms, and cloakroom services.
GST Compliance for Small Taxpayers: The Council has recommended extending the time limit to provide the details and the returns in the form GSTR 4 from April 30 to June 30. This will apply for returns for the financial year 2024-25 onwards.
GST on Hostel Accommodation: The Council has exempted services related to hostel accommodation outside educational institutions, up to Rs 20,000 per person per month. The exemption is applicable only if the student stays in the hostel for at least 90 days (continuously). The motive is to prevent hostels from misusing the exemption.
Biometric Authentication Push: The GST Council has given its approval to the rollout of Pan India biometric Aadhaar-based GST Verification process to prevent fraudulent claims, etc. The move is intended to strengthen the GST registration process and will help in combating fraudulent input tax credit (ITC) claims made through fake invoices. The Adhaar-based authentication will begin in a phased manner.
Changes in GST rates of Goods: The Council has clarified rates of several goods and services to solve the issue of tax uncertainty. A 12 per cent GST will be levied on milk cans (steel, iron, aluminium); cartons, boxes, and cases of both corrugated and non-corrugated paper or paperboard; solar cookers whether single or dual energy source; and sprinklers, including fire water sprinklers.
GST changes relating to Services: The Council has provided a major relief to the co-insurance and re-insurance sectors. Says Jaya Amarnani, Partner, Indirect Tax, BDO India, “The GST Council has recommended that Co-insurance premium apportioned by the lead insurer to co-insurer and transaction of ceding commission/ re-insurance commission between insurance commission may be declared as no supply, accepting the stand of the industry.” Multiple insurance and re-insurance companies had received notices, demanding GST on these issues from 1 July 2017 and the amendment would resolve the dispute for the industry.
Form - GSTR-1A: The council has recommended the insertion of functionality in the GSTR-1A form to add particulars of the current tax period in case it was missed in reporting.
Says Smita Singh, Partner at S&A Law Offices, “Rectification of outward supply return in Form GSTR 1A will be helpful in resolving discrepancy observed by taxpayers at a later date and consequently will help in eligibility of ITC to recipients in the same period.”
GST on Corporate Guarantees: The Council has clarified that GST of 18 per cent on the deemed value i.e. 1 per cent of corporate guarantee is not applicable in cases where full input tax credit is eligible to the recipient. “This move makes the intention of the government apparent on the issue of taxable value for a levy of GST on the corporate guarantee given by a parent entity to another group entity,” Singh states.
Interest on Penalties on Tax Demand Notice: The Council has recommended waiver of interest and penalty on demand notices issued under Section 73 for financial years 17-18, 18-19, and 19-20. This will be applicable in cases where tax is paid entirely by March 2025. Importantly, the waiver here applies to cases that do not involve fraud, suppression, or misstatements.
As for the rate rationalisation, the Council has reconstituted the group of ministers (GoM) and asked for a status report on the rate rejig in the next Council meeting.
The government has reiterated its aim to bring petrol and diesel under the GST regime as a step towards uniform taxation of fuel across the country. “The provision has already been made that it can be brought into GST,” FM Sitharaman stated, informing that the states are yet to agree and come into the GST Council to decide on rates."
