52nd GST Council Meeting Recommendations: Key Highlights and Implications for Businesses

Introduction:

The GST Council, the apex decision-making body on the Goods and Services Tax (GST), held its 52nd meeting on October 7, 2023, in New Delhi. The meeting was chaired by the Union Finance & Corporate Affairs Minister, Smt. Nirmala Sitharaman.

The Council made several recommendations relating to changes in GST tax rates, measures for facilitation of trade, and measures for streamlining compliances in GST.

Key Changes in GST Rates

The Council recommended the following changes in GST rates:

Goods:

• GST rates on “Food preparation of millet flour in powder form, containing at least 70% millets by weight”, falling under HS 1901, with effect from date of notification, have been prescribed as:
  • 0% if sold in other than pre-packaged and labelled form
  • 5% if sold in pre-packaged and labelled form
• GST rates on molasses reduced from 28% to 5%
• A separate tariff HS code has been created at 8 digit level in the Customs Tariff Act to cover rectified spirit for industrial use. The GST rate notification will be amended to create an entry for ENA for industrial use attracting 18% GST.

Services

• GST rates on job work services for processing of barley into malt reduced from 18% to 5%
• Supply of all goods and services by Indian Railways shall be taxed under Forward Charge Mechanism to enable them to avail ITC.

Other Key Recommendations

The Council also made several other recommendations, including:

• An amnesty scheme for filing of appeals by taxpayers who could not file an appeal within the time limit specified in the CGST Act, 2017.
• Clarifications regarding taxability of personal guarantee offered by directors to the bank against the credit limits/loans being sanctioned to the company and regarding taxability of corporate guarantee provided for related persons including corporate guarantee provided by holding company to its subsidiary company.
• Provision for automatic restoration of provisionally attached property after completion of one year.
• Clarification on various issues related to Place of Supply.
• Issuance of clarification relating to export of services.
• Allowing supplies to SEZ units/ developer for authorised operations for IGST refund route.
• Alignment of provisions of the CGST Act, 2017 with the provisions of the Tribunal Reforms Act, 2021 in respect of Appointment of President and Member of the proposed GST Appellate Tribunals.
• Law amendment with respect to ISD (Input Service Distributor) as recommended by the GST Council in its 50th meeting.

Implications for Businesses The recommendations made by the GST Council in its 52nd meeting have several implications for businesses.:

Reduced GST rates on millets and molasses: The reduced GST rates on millets and molasses are likely to benefit farmers and consumers alike. It is also expected to boost the production and consumption of these products.

Forward Charge Mechanism for Indian Railways: The forward charge mechanism for Indian Railways will enable them to avail ITC on their inputs and services, which will reduce their costs. This is likely to benefit consumers in the form of lower fares and freight charges.

Amnesty scheme for filing of appeals: The amnesty scheme for filing of appeals will provide relief to taxpayers who could not file an appeal within the time limit specified in the CGST Act, 2017. This is likely to reduce litigation and improve taxpayer compliance.

Other clarifications and measures: The other clarifications and measures recommended by the Council are likely to simplify the GST compliance process and make it easier for businesses to operate.

Overall, the recommendations made by the GST Council in its 52nd meeting are welcome and positive. They are likely to benefit businesses and consumers alike.

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