25-June-2024-Editorial

53RD MEETING OF THE GST COUNCIL 

The 53rd meeting of the GST Council introduced several measures aimed at easing compliance for small businesses and providing tax exemptions on various services. These changes are expected to benefit a broad range of stakeholders, from students to manufacturers, and signal potential shifts in the GST framework. 

Key Decisions: 

Aadhaar-based Biometric Authentication: 

• Nationwide rollout to curb fraudulent input tax credit claims. 
• Enhances tax compliance by verifying identity through Aadhaar. 

Exemption for Hostel Accommodation: 

• Hostel accommodations outside educational institutions exempt from GST for rents up to Rs 20,000 per person per month. 
• Applies for stays up to 90 days, reducing costs for students and working individuals. 
• Previously, such rents incurred a 12% GST. 

Indian Railways Services: 

• GST exemption on platform tickets. 
• Aims to reduce the financial burden on passengers and make railway travel more affordable. 

Reduction in GST Rate on Cartons: 

• GST rate on various types of carton boxes reduced from 18% to 12%. 
• Benefits manufacturers and consumers by lowering packaging costs. 

GST Reduction on Milk Cans and Solar Cookers: 

• Uniform GST rate of 12% for all milk cans, regardless of the material. 
• Reduction in GST on solar cookers to promote eco-friendly cooking solutions. 

Waiver of Interest and Penalties for Non-Fraudulent Cases: 

• Waives interest and penalties for demand notices under Section 73 of the GST Act. 
• Applicable to cases without fraud, suppression, or misstatements, easing the burden on compliant businesses. 

New Monetary Limits for Filing Appeals: 

New thresholds for departmental appeals: 

• Rs 20 lakh for appeals to the GST Appellate Tribunal.  
• Rs 1 crore for High Court. 
• Rs 2 crore for the Supreme Court. 

Aims to reduce litigation and streamline judicial processes. 

Central Support and Conditional Loans to States: 

• ‘Scheme for Special Assistance to States for Capital Investment’ introduced. 
• Some loans are conditional on states implementing reforms and capital projects. 
• Encourages states to meet criteria to access these loans. 

Petrol and Diesel under GST: 

• Central government expressed intent to bring petrol and diesel under GST. 
• Pending consensus among states on applicable tax rates, this step aims at uniform fuel taxation. 

Goods and Services Tax (GST): 

• GST is a value-added tax applied to the supply of goods and services within India.  
• Introduced on July 1, 2017, through the 101st Constitution Amendment Act, 2016. 
• Promotes the concept of ‘One Nation, One Tax’ for a unified tax system. 

GST Council 

• The GST Council is a constitutional body that recommends measures for the implementation of GST in India. 
• Simplifies the existing tax structure by making it uniform across the country. 

Constitutional Provisions: 

• The 101st Amendment Act, 2016, paved the way for GST. 
• Article 279-A empowers the President to constitute the GST Council. 
• The Council was constituted by a Presidential order in 2016. 

Members: 

• Union Finance Minister (Chairperson). 
• Union Minister of State (Finance). 
• State finance ministers or nominated ministers. 

Functions: 

• Makes recommendations on key GST-related issues: 
• Model GST laws and GST rates. 
• Rate slabs and special rates for natural calamities or specific states. 
• Decides on various rate slabs of GST and their modifications. 

Working: 

• Decisions require a majority of three-fourths of the weighted votes of members present and voting. 
• A quorum of 50% of the total members is needed. 
• Central Government’s vote carries one-third weightage; state governments’ combined votes carry two-thirds weightage. 
• Recommendations were previously considered binding but are now advisory following the Supreme Court ruling in the Mohit Minerals case (2022). 

Conclusion: 

The 53rd GST Council meeting has introduced significant measures to ease compliance and reduce the financial burden on various sectors. These steps, coupled with the Council’s efforts to streamline GST rates and compliance processes, highlight the ongoing evolution of India’s GST framework to better serve the economy and its stakeholders.