GST Council clears decisions around compliance, trade, FM says intent is to make GST easier

The Goods and Services Tax Council in its meeting on Saturday did not take up bigger issues for discussion but gave its approval to a large number of procedural and compliance related issues that is expected to give much needed clarity and relief to industry and taxpayers.
 
Its decisions to extend the due date for input tax credit, monetary limits to file appeals under the GST Appellate Tribunal, reduction in the quantum of pre-deposit for filing appeals and the sunset clause for anti-profiteering provisions are being seen as welcome measures that will help trade and industry.
 
In a press conference post the meeting, finance minister Nirmala Sitharaman underlined that the intent is to make the GST assessees’ life easier. “We are working towards less and less compliance. I want to underline on behalf of the Central goods and services tax that notices are not being sent left, right and centre because most often we are asked why so many notices,” she said, adding that only 1.96% of all active tax assesses have been sent any notice from the Central GST as of December 31, 2023.  

 
“Our intention is to make it easier, simpler, less cumbersome and sooner that we talk of more and more ease of doing business,” she said, adding that states would be sending their own notices.
 
Experts welcomed the announcements and said the GST Council is alive to the concerns of business and is committed to improving the ease of doing business.
 
“Businesses would hope that the issues which could not be taken up today due to paucity of time are resolved in the next meeting in August…Several procedures have been tweaked clearly indicating the desire to simplify the GST processes while making it difficult for non-compliant taxpayers,” said MS Mani, Partner, Deloitte India.
 
Big reforms:
 
The next meeting of the GST Council is likely post Budget in the middle of August, the Finance Minister said, adding that some of the agenda items that could not be taken up in this meeting will be taken up then.

 
While online gaming companies were hopeful that the Council would review the 28% GST on the sector, the Minister said that the 28% GST on online gaming, horse racing and casinos was not on the agenda for this meeting and did not come up for discussion.
 
However, the next meeting of the GST Council would discuss the status of the rate rationalisation exercise that has been underway for some time. Bihar Deputy Chief Minister Samrat Choudhary is the new Chair of the Group of Ministers on rate rationalisation.
 
“The Council has decided that next time when we meet, the new chair will give a report on the status on the rationalisation and what more has to be done,” said the Finance Minister, adding that the GoM will make a presentation in the next meeting.
 
The GST Council has as many as 11 new members with new ministers from states including Andhra Pradesh, Bihar, Chhattisgarh, Odisha and Sikkim amongst others.
 
According to sources, the issue of the GST compensation cess will also be taken up in the next meeting. In its last meeting in October, the GST Council had decided to discuss the modalities for appropriating the revenue collected by levying compensation cess on luxury, sin and demerit goods beyond March 2026. The Centre may be able to pay off the loans to compensate states against the Covid 19 revenue loss by November 2025.
 
GST on petrol and diesel:
 
On a question on the possible inclusion of petrol and diesel into GST, the Finance Minister said that while the intent of the Central government (at the time of the roll out of GST) was clear – to levy GST on the two items, a decision has to be taken by the states.
 
“Petrol and diesel even when GST was implemented—the proviso exists already in the Act, meaning petrol and diesel can be added to GST for which the law has been already embedded. What is pending is once the states agree, in the Council they have to decide what will be the rate of taxation. Once they decide, it will be put in the Act. The intent of the Central government even when GST was implemented was eventually sometime petrol and diesel can be brought into GST,” she said.
 
Trade facilitation:
 
Amongst the measures for facilitation of trade and industry, the Council has recommended, waiving interest and penalties for demand notices issued under Section 73 of the CGST Act for the fiscal years 2017-18, 2018-19 and 2019-20, in cases where the taxpayer pays the full amount of tax demanded in the notice upto March 31, 2025.
 
It has also recommended reducing the amount of pre-deposit for filing of appeals under GST to ease cash flow and working capital blockage for the taxpayers. The maximum amount for filing appeal with the appellate authority has been reduced from Rs. 25 crores CGST and Rs 25 crore SGST to Rs 20 crore CGST and Rs 20 crore SGST. Further, the amount of pre-deposit for filing appeal with the Appellate Tribunal has been reduced from 20% with a maximum amount of Rs 50 crore CGST and Rs 50 crore SGST to 10 % with a maximum of Rs 20 crore CGST and Rs 20 crore SGST.
 
The GST Council recommended amending Section 112 of the CGST Act, 2017 to allow the three-month period for filing appeals before the Appellate Tribunal to start from a date to be notified by the Government in respect of appeal and revision orders passed before the date of said notification. 
 
The Council has also recommended the sun-set date of April 1, 2025 for receipt of any new application regarding anti-profiteering. “The Council recommended amendment in section 171 and section 109 of CGST Act, 2017 to provide a sunset clause for anti-profiteering under GST and to provide for handling of anti-profiteering cases by Principal bench of GST Appellate Tribunal (GSTAT),” said an official release. 
 
“We commend the GST Council's commitment to ongoing reforms. Recent pronouncements on ENA taxation, input tax credit under reverse charge mechanism, and post-sale discounts provide welcome clarity. The proposed mechanism to address past errors arising from prevalent industry practices is a positive step,” said Saurabh Agarwal, tax partner, EY, adding that measures like waiving interest and penalties for disputes up to FY 2019-20 (with tax paid by March 2025), extending the ITC claim timeline for FY 2020-21, and reducing pre-deposit requirements for appeals demonstrate the government's intent to curb litigation.
 
Ankur Gupta, Practice Leader - Indirect Tax at SW India said measure exemption on interest and penalties for demand notices issued under Section 73 should reduce the financial burden of taxpayers who are willing to rectify their tax dues. “Considering the value of interest has been increased more than the tax amount for matters pertaining to FY 2017-18 to FY 2019-20, therefore,  taxpayers can take advantage of this exemption to clear their outstanding dues without the additional burden of interest and penalties in cases where the grounds of appeal are not strong or the benefit provided under this exemption is substantial,” he said.
 
Abhishek Jain, Indirect Tax Head & Partner, KPMG said that with enabling powers for regularizing larger industry tax positions, there is a general tone setting on some reliefs being expected and the new Government’s continuing focus on ease of doing business.  “Online gaming, insurance, aviation and shipping line sectors would expect a relief soon on some of the large issues concerning their industry.  Larger industry would also expect regularisation on issues like taxability of expats, free of cost supplies, corporate guarantee for the past,” he said.