50th GST Council Meeting: Key Updates, Expectations, and Latest News, Recent Recommendations by the GST Council for Changes in Tax Rates and Trade Facilitation

Introduction:
In its 50th meeting, the Goods and Services Tax (GST) Council made significant recommendations pertaining to changes in GST tax rates, measures for trade facilitation, and streamlining compliance in GST. These recommendations aim to enhance the efficiency and effectiveness of the GST system. This blog post provides an overview of the key recommendations made by the council.

Changes in GST Tax Rates:

The GST Council proposed several changes in the tax rates for goods and services. Some notable recommendations include:

1. Reduction in GST rates for uncooked/unfried snack pellets: The council decided to reduce the GST rate on uncooked/unfried snack pellets to 5% and regularize the payment of GST on past transactions.

2. Exemption of IGST on medicines and Food for Special Medical Purposes (FSMP) used in the treatment of rare diseases: The council exempted IGST on medicines and FSMP used in the treatment of rare diseases imported for personal use, subject to certain conditions.

3. Reduction in GST rate on LD slag: The council lowered the GST rate on LD slag from 18% to 5% to promote its better utilization and protect the environment.

4. Clarification on GST for raw cotton supply by agriculturists to cooperatives: The council clarified that the supply of raw cotton, including kala cotton, by agriculturists to cooperatives is taxable under the reverse charge mechanism.

Measures for Facilitation of Trade:

The GST Council recommended various measures to facilitate trade and improve the ease of doing business. These include:

1. GST Appellate Tribunal Rules: The council proposed the rules governing the appointment and conditions of service for the GST Appellate Tribunal. These rules aim to enable the smooth functioning of the tribunal and ensure effective dispute resolution.

2. Relaxation in annual return filing for smaller taxpayers: The council recommended continuing the relaxation provided in the previous financial year for various tables of FORM GSTR-9 and FORM GSTR-9C. Additionally, taxpayers with an annual turnover of up to two crore rupees were exempted from filing annual returns.

3. Clarification on input services distribution and supply of services by directors: The council provided clarifications on the input services distribution mechanism and the taxability of services supplied by directors in their personal capacity. It emphasized that services provided as or in the capacity of a director are taxable under the reverse charge mechanism.

Measures for Streamlining Compliance in GST:

To streamline compliance and address compliance-related challenges, the GST Council made the following recommendations:

1. Mechanism to address differences in input tax credit (ITC): The council proposed a mechanism to notify taxpayers when there is a significant difference in ITC between FORM GSTR-2B and FORM GSTR-3B. Taxpayers will be required to explain the reasons for the difference or take remedial action.

2. Strengthening registration process and curbing fraudulent registrations: The council recommended amendments to CGST Rules to strengthen the registration process and prevent fake and fraudulent registrations. These amendments include furnishing bank account details within a specific timeframe and enabling system-based suspension and revocation of registrations.

3. Recovery of tax and interest: The council recommended a procedure for the recovery of tax and interest in cases where output tax liability exceeds the liability disclosed in the return by a specified threshold.

Conclusion:

The recommendations made by the GST Council in its 50th meeting aim to bring about changes in tax rates, facilitate trade, and streamline compliance in the GST system. These measures will contribute to enhancing the efficiency and effectiveness of the GST regime and promote a favorable business environment. It is essential for businesses and taxpayers to stay updated with these changes to ensure compliance and take advantage of the benefits offered by the revised GST framework.