48th GST Council Meeting: Important Changes to be Noted

The 48th GST council was held on 17th December, 2022 in New Delhi. Smt. Nirmala Sitharaman, the minister of finance, presided over the meeting, which also included senior officials from the Ministry of Finance for States and Union Territories as well as Union Minister of State for Finance Pankaj Choudhary.

The following article will discuss the important changes, recommendations, hints, and projections of the GST council meeting.

NCB is Exempted From GST

The No Claim Bonus (NCB) provided by the Insurance Companies is not subject to GST, according to the GST Council. The council made it clear that the offered NCB is a valid deduction for the valuation of insurance services.

An insurance company will reward an insured for not filing any claims during the course of a policy year by giving them an NCB. When renewing a policy, the insured receives the NCB, which is a discount of 20% to 50%. In the first year of insurance, if the policyholder doesn’t make any claims, they get a 20 percent bonus. If the policyholder doesn’t make a claim for two years in a row, the NCB is raised to 25%.

Refund Claiming Process for Unregistered Person

When a contract or agreement for the supply of services, such as the construction of a flat or house or a long-term insurance policy, is canceled and the time period for the concerned supplier to issue a credit note has passed, there is no procedure for claiming a refund of the tax paid by the unregistered buyers.

The Council has recommended the issuance of a circular and an amendment to the Central Goods and Services Tax Rules, 2017, which would specify the process for unregistered buyers to follow when submitting a refund application.

Amendments in Rule 161 for Recovery of GST Dues After Insolvency

The only entry in CGST Rule 161 is for the order for the reduction or enhancement of any demand under Section 84 to be issued in FORM GST DRC-25. The process for recovering GST dues will be made clear by the inclusion of the treatment of statutory dues under GST law against an insolvent entity. To accommodate the changes that will be made to Rule 161, Form GST DRC-25 will also be modified appropriately.

Alterations to the Appealing Process

The GST Council has decided to clarify the requirements for submitting a certified copy of the order appealed against and for the appellate authority to issue a final acknowledgment by amending Sub-rule (3) of Rules 108 and 109 of the CGST Rules, 2017.

Additionally, Rule 109C and FORM GST APL-01/03 W will be added to the CGST Rules, 2017 to allow for the withdrawal of an appeal application up to a specific stage. This would aid in lowering the number of lawsuits filed before appellate authorities.

For GST Registration, PAN-linked mobile and email will be used in addition to biometric authentication.

For biometric-based Aadhaar authentication and risk-based physical verification of registration applicants, the GST Council proposed running a pilot in the State of Gujarat. To make this possible, it was also suggested that rules 8 and 9 of the CGST Rules, 2017 be amended.

The Council also recommended that the PAN-linked mobile number and email address (fetched from the CBDT database) be captured and recorded in Form GST REG-01 and that OTP-based verification be done on such PAN-linked mobile number and email address at the time of registration.

Reversal of ITC under New GST Provision in the Event of Supplier Non-Payment of Tax

In order to specify the mechanism for reversing an input tax credit by a registered person in the event that the supplier does not pay tax by a specified date and the mechanism for making the credit available again in the event that the supplier does pay tax later, the Council recommended inserting Rule 37A in the CGST Rules, 2017.

In accordance with section 16(2)(c) of the CGST Act of 2017, this would make it simpler to fulfill the requirement for claiming an input tax credit. Interest may also need to be paid, depending on when such reversal is made.

No GST on Incentives to Banks under the Promotion of Rupay Cards Scheme

The Goods and Services Tax should not be applied to incentives given to banks as part of the Rupay Debit Card Promotion Scheme, the Council recommended. The company that oversees retail payments in the nation, NPCI, is the source of RuPay. At the moment, more than 1,100 banks—including public sector banks, private sector banks, regional rural banks, and cooperative banks—issue RuPay cards.

GST Offenses will no longer considered crimes

In order to initiate a GST prosecution, the minimum tax amount is recommended to be raised from Rs. 1 crore to Rs. 2 crore, with the exception of the offense of issuing invoices without providing goods, services, or both. The council decreased the amount of compounding from the current range of 50% to 150% of the tax amount to the range of 25% to 100%.

Additionally, it has been decided to decriminalize some of the offenses listed under clauses (g), (j), and (k) of sub-section (1) of section 132 of the CGST Act, 2017, namely obstruction or preventing any officer in the performance of his duties, purposeful tampering with material evidence, and failure to provide the information.

Other Notable Points

• The FORM GSTR-1 will be changed to allow the supplier to report information about supplies made through ECOs that are covered by sections 52 and 9(5) of the CGST Act, 2017, as well as reporting by the ECO in respect of supplies made under section 9(5) of the CGST Act, 2017

• As with mentha oil, the supply of Mentha Arvensis under the Reverse Charge Mechanism (RCM) has also been covered by GST.

• According to the GST Council’s recommendation, the E-Commerce Facilitation Scheme for Micro Enterprises may be implemented beginning on October 1, 2023, taking into account the time required for the development of necessary functionality on the portal as well as for providing enough time for preparation by the E-Commerce Operators.

• For some category of goods, which includes concentrates like chuni/churi, khanda, and the husk of pulses like chilka, the GST Council suggests setting the GST rate at “Nil.”