The 49th GST Council Meeting was held on 18th February 2023, under the chairpersonship of Union Minister for Finance & Corporate Affairs, Smt. Nirmala Sitharaman in New Delhi. The meeting was attended by Union Minister of State for Finance, Shri Pankaj Chaudhary, Finance Ministers of States & UTs (with legislature) and senior officers of the Ministry of Finance & States/UTs.
The Council made several recommendations relating to GST compensation, GST Appellate Tribunal, approval of the Report of Group of Ministers (GoM) on Capacity-Based Taxation and Special Composition Scheme in certain sectors on GST, recommendations relating to GST rates on Goods and Services and other measures for facilitation of trade.
The Government of India has decided to clear the entire pending balance GST compensation of Rs. 16,982 crore for June 2022. Since there is no amount in the GST compensation Fund, the Centre decided to release this amount from its own resources and the same will be recouped from the future compensation cess collection. With this release, the Centre would clear the entire provisionally admissible compensation due for five years as envisaged in the GST (Compensation to States) Act 2017. In addition, the Centre would also clear the admissible final GST compensation to those States who have provided the revenue figures as certified by the Accountant General of the States amounting to Rs. 16,524 crore.
10 Takeaways from the Ministry of Finance's Recommendations of the 49th GST Council Meeting are:
- The Government of India will clear the entire pending balance GST compensation of Rs. 16,982 crore for June’2022 from its own resources.
- Changes in GST rates of "Rab" and Pencil Sharpener, with "Rab" now having a 5% GST if sold pre-packaged and labelled, and 0% GST if sold otherwise. The GST rate on pencil sharpeners has been reduced from 18% to 12%.
- The GST Council adopted the report of Group of Ministers (GoM) on GST Appellate Tribunal with certain modifications.
- The GoM report on Capacity Based Taxation and Special Composition Scheme in certain Sectors on GST was approved to improve revenue collection from commodities like pan masala, gutkha, and chewing tobacco.
- Compliance and tracking measures will be taken to plug leakages/evasions, exports of such commodities will be allowed only against LUT with consequential refund of accumulated ITC, and compensation cess levied on such commodities will be changed from ad valorem to specific tax-based levy.
- The payment of GST on "rab" will be regularized on an "as is basis" due to genuine doubts over its classification and applicable GST rate.
- Notification No. 104/94-Customs will be amended so that if a device like tag-tracking device or data logger is already affixed on a container, no separate IGST shall be levied on such an affixed device.
- The exemption available to educational institutions and Central and State educational boards for conduct of entrance examinations will be extended to any authority, board, or body set up by the Central Government or State Government, including National Testing Agency for admission to educational institutions.
- The dispensation available to Central Government for making payment of GST on procurement from unregistered persons to be extended to States/UTs also.
- The GST Council authorized the Chairperson to finalize the final draft amendments to the GST laws circulated to Members for their comments.
GST Appellate Tribunal
The Council adopted the report of the Group of Ministers on 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.
Approval of the Report of GoM on Capacity Based Taxation and Special Composition Scheme in certain Sectors on GST
The Council approved the recommendations of the GoM, including the capacity-based levy not to be prescribed. Compliance and tracking measures will be taken to plug leakages/evasions. Exports of commodities such as pan masala, gutkha, chewing tobacco will be allowed only against LUT with consequential refund of accumulated ITC. Compensation cess levied on such commodities will be changed from ad valorem to specific tax-based levy to boost the first stage collection of the revenue.
Recommendations Relating to GST Rates on Goods and Services
The Council made some changes in GST rates of goods and services. The GST rate on ‘Rab’ has been reduced from 18% to 5% if sold pre-packaged and labelled, and nil if sold otherwise. The GST rate on Pencil Sharpener has been reduced from 18% to 12%.
Other changes relating to Goods and Services
The Council 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. It was also decided to suitably amend notification No. 104/94-Customs dated 16.03.1994 so that if a device like tag-tracking device or data logger is already affixed on a container, no separate IGST shall be levied on such affixed device, and the ‘nil’ IGST treatment available for the containers under notification No. 104/94-Customs shall also be available to such affixed device subject to the existing conditions.
Also Read GST Changes in Budget-2023
Compensation Cess will be levied on the coal rejects supplied by a coal washery to the Ministry of Defence for their captive consumption. This amendment is expected to provide relief to the coal washery industry by removing the ambiguity regarding the levy of compensation cess on coal rejects supplied by a coal washery. The amendment will also ensure that the Ministry of Defence can continue to receive coal rejects from coal washeries without any additional burden of compensation cess. The decision will also help in promoting the ease of doing business in the country.