GST Council held its 52nd meeting at New Delhi. The following recommendation relating to changes in GST tax rates, measures for facilitation of trade and measures for streamlining compliances in GST.
Key recommendation of the GST council are:
A. Changes in GST rates of goods and services:
1. GST rates on “Food preparation of millet flour in powder form, containing at least 70% millets by weight”, has been recommended as:
i. Nil rate if sold in other than pre-packaged and labelled form
ii. 5% if sold in pre-packaged and labelled form
2. Job work services for processing of barley into malt shall attracts GST @ 5% as applicable to “job work in relation to food and food products” and not 18%.
3. Extra Neutral Alcohol (ENA) used for manufacture of alcoholic liquor for human consumption recommended to be kept outside ambit of GST laws.
4. To reduce GST on molasses from 28% to 5%.
5. GST rate to be amended for ENA for industrial use attracting 18% GST.
6. To clarify that imitation zari thread or yarn made out of metallised polyester film /plastic film, are covered by the entry for imitation zari thread or yarn attracting 5% GST rate.
7. Foreign going vessels are liable to pay 5% IGST on the value of the vessel if it converts to coastal run. It has been recommended conditional IGST exemption to foreign flag foreign going vessel when it converts to coastal run subject to its reconversion to foreign going vessel in six months.
8. Services of water supply, public health, sanitation conservancy, solid waste management and slum improvement and upgradation supplied to Governmental Authorities will be exempted.
B. Measures for facilitation of trade:
1. Amnesty Scheme for filing of appeals against demand orders passed on or before the 31st day of March, 2023 in cases where appeal could not be filed within the allowable time period has been extended upto 31st January 2024, subject to the condition of payment of an amount of pre-deposit of 12.5% of the tax under dispute, out of which at least 20% (i.e. 2.5% of the tax under dispute) should be debited from Electronic Cash Ledger.
2. Clarifications to be issued 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. Further, clarification to be issued with respect to that when no consideration is paid by the company to the director in any form, directly or indirectly, for providing personal guarantee to the bank/ financial institutes on their behalf, the open market value of the said transaction/ supply may be treated as zero and hence, no tax to be payable in respect of such supply of services.
3. Sub-rule (2) in Rule 28 of CGST Rules, 2017 shall be inserted, to provide for taxable value of supply of corporate guarantee provided between related parties as one per cent of the amount of such guarantee offered, or the actual consideration, whichever is higher; to clarify through the circular that after the insertion of the said sub-rule, the value of such supply of services of corporate guarantee provided between related parties would be governed by the proposed sub-rule (2) of rule 28 of CGST Rules, 2017, irrespective of whether full ITC is available to the recipient of services or not.
4. Clarification on various issues related to Place of Supply relating to supply of service of transportation of goods, including by mail or courier, in cases where the location of supplier or the location of recipient of services is outside India; supply of advertising services; supply of the co-location services to be issued.
5. Issuance of clarification relating to export of services to clarify the admissibility of export remittances received in Special INR Vostro account, as permitted by RBI, for the purpose of consideration of supply of services to qualify as export of services.
6. To allow suppliers of SEZ units/ developer to make supply of goods or services to the Special Economic Zone developer or the Special Economic Zone unit for authorised operations on payment of integrated tax and claim the refund of tax so paid.
C. Other measures pertaining to law and procedures:
ISD (Input Service Distributor) procedure as laid down in Section 20 of the CGST Act, 2017 may be made mandatory prospectively for distribution of ITC in respect of input services procured by Head Office (HO) from a third party but attributable to both HO and Branch Office (BO) or exclusively to one or more BO through amendments in Section 2(61) and section 20 of CGST Act, 2017 as well amendment in rule 39 of CGST Rules, 2017.
Source: Press Information of Bureau
