Recommendations of 52nd GST Council Meeting

The 52nd GST Council meeting, chaired by Union Minister for Finance & Corporate Affairs Smt. Nirmala Sitharaman, took place in New Delhi. The council made several recommendations related to changes in GST tax rates, measures for facilitating trade, and streamlining compliances in GST. Here are the key highlights:

Recommendations on GST Rates:

Changes in GST Rates for Goods:

1. Food Preparation of Millet Flour:
   • 0% GST if sold in other than pre-packaged and labelled form.
   • 5% GST if sold in pre-packaged and labelled form.
2. Imitation Zari Thread or Yarn:
   • Imitation zari thread or yarn made out of metallised polyester film/plastic film will attract a 5% GST rate.
3. Foreign Going Vessels:
   • Foreign-going vessels will pay 5% IGST on conversion to coastal run. Conditional IGST exemption recommended when converting to coastal run, subject to reconversion to foreign-going vessel in six months.
4. Extra Neutral Alcohol (ENA):
   • ENA used for manufacturing alcoholic liquor for human consumption will be kept outside GST.
5. Molasses:
   • GST on molasses reduced from 28% to 5%.

Changes in GST Rates for Services:

1. Exemptions for Governmental Authorities:
   • Exemptions recommended for services of water supply, public health, sanitation, conservancy, solid waste management, slum improvement, and upgradation supplied to Governmental Authorities.
2. Job Work Services for Processing of Barley into Malt:
   • Clarification that job work services for processing of barley into malt attract 5% GST, as applicable to “job work in relation to food and food products.”
3. GST on Bus Transportation Services through ECOs:
   • Bus operators organized as companies may be excluded from the purview of section 9(5) of CGST Act, 2017. This allows them to pay GST on their supplies using their Input Tax Credit (ITC).

Measures for Facilitation of Trade:

1. Amnesty Scheme for Filing of Appeals:
   • An amnesty scheme has been recommended for filing appeals against demand orders in cases where appeals could not be filed within the allowable time period.
2. Clarifications on Taxability of Personal Guarantee:
   • Clarifications provided regarding the taxability of personal guarantees offered by directors to banks and corporate guarantees provided for related persons.
3. Automatic Restoration of Provisionally Attached Property:
   • Amendment recommended for automatic restoration of provisionally attached property after completion of one year.
4. Clarifications on Place of Supply:
   • Circular to clarify the place of supply in various scenarios, including transportation of goods, advertising services, and co-location services.
5. Clarification on Export of Services:
   • Circular recommended to clarify the admissibility of export remittances received in Special INR Vostro accounts for the purpose of considering the supply of services as export.
6. Supplies to SEZ Units/Developers for Authorized Operations:
   • Amendment recommended to allow supplies to SEZ units/developers for authorized operations for IGST refund route.

Other Measures Pertaining to Law and Procedures:

1. Alignment of CGST Act with Tribunal Reforms Act:
   • Amendments recommended to align provisions of the CGST Act, 2017 with the provisions of the Tribunal Reforms Act, 2021 regarding the appointment of President and Member of the proposed GST Appellate Tribunals.
2. Amendment in ISD Procedure:
   • Amendments recommended in Section 2(61) and Section 20 of the CGST Act, 2017, and Rule 39 of CGST Rules, 2017 to make ISD procedure mandatory prospectively.

These recommendations aim to simplify tax procedures, provide clarifications, and ensure the smooth functioning of the GST system. The changes will be given effect through relevant circulars, notifications, and law amendments.