Highlights of the 50th Goods and Service Tax (GST) Council Meeting, Held on 11th July 2023

Introduction

The 50th GST Council Meeting was held on 11th July 2023 at Vigyan Bhawan, New Delhi. The meeting was led by Union Finance Minister Nirmala Sitharaman and other ministers representing their states and union territories. The meeting has discussed several taxation issues, including tax exemption on certain drugs, the definition of utility vehicles, goods sold in theaters, tightening of norms for GST registration and claiming an input tax credit, etc.

Key Highlights of the 50th GST Council Meeting

1. Taxation on Multi-Utility Vehicles  

The GST Council discussed the taxation of multi-utility vehicles at the 50th GST Council Meeting. The fitment committee, consisting of esteemed tax officials from the central and state governments, has proposed that a 22 percent cess be imposed on all types of utility vehicles, irrespective of the name they called. However, this levy would apply only if these vehicles meet specific criteria, which include:

• Having a length exceeding 4 meters
• An engine capacity surpassing 1,500 cc
• A ground clearance of more than 170 mm in an ‘un-laden condition’

2. Input Tax Credit Claims

A new GST rule is introduced saying that if the Input Tax Credit (ITC) claimed in the GSTR-3B return exceeds the amount available as per the automatically generated statement GSTR-2B by a specific threshold, the registered individual may receive a notification on the portal regarding this difference. Such individuals need to provide the reasons for any excess Input Tax Credit (ITC) claims made or else  deposit such an amount into the ledger.

3. GST on goods sold in multiplexes

The 50th GST Council Meeting, held on July 11, 2023, discussed the taxation of goods sold at movie theaters. The council decided that multiplexes should tax 5% GST on food and beverages instead of 18%.

4. Exemption on certain medicines

The Council has decided to provide tax exemption on a cancer medicine named Dinutuximab. The council has also decided to provide an exemption from Integrated GST on the import of medicines and Food for Special Medical Purposes (FSMP) used for the treatment of rare diseases, both for personal use and by centers of excellence. The drug, branded as Qarziba, is used to treat high-risk neuroblastoma, a rare type of cancer that affects children. The exemption is expected to bring relief to cancer patients and their families.

5. GST Appellate Tribunal

The Council has recommended that the rules governing the appointment and conditions of the President and members of the proposed GST Appellate Tribunals (GSTATs) will be notified by the Centre, effective from 01.08.2023. This significant development is expected to improve the dispute resolution mechanism and establish a dedicated platform for handling GST-related appeals.

6. Relaxation in GST rates

The relaxations provided in FY 2021-22 for different tables of FORM GSTR-9 and FORM GSTR-9C will continue for FY 2022-23 as well. This means that businesses with a turnover of up to 2 crores will not be required to file GSTR-9. Additionally, there will be no reverse charge mechanism (RCM) on services supplied by a director of a company to the company in his private or personal capacity, such as renting of immovable property.

7. Change in tax rates for certain items

The Council has decided to reduce tax rates from 18 percent to 5 percent on specific items. These items include uncooked snack palettes, fish-soluble paste, LD slag, and imitation zari thread. The objective behind these adjustments is to promote certain industries and encourage better utilization of resources.

8. GST Exemption on Satellite Launch Services

The Council meeting has decided that a GST exemption will be granted for services provided by ISRO, Antrix Corporation Limited, and New Space India Limited (NSIL). This exemption may also be extended to similar services offered by other private organizations.

9. GST Registration Norms

The GST Council decided to implement more stringent regulations for registration. This step is being taken to address the issue of fake registrations within the Goods and Services Tax system. The aim is to prevent the misuse of GST Registration for issuing invoices without the actual supply of goods or services, which leads to fraudulent practices and revenue loss for the government.

10. GST on Online Gaming

The GST Council has approved a uniform tax rate of 28% for casinos, horse racing, and online gaming, as recommended by the Group of Ministers (GoM). The GoM suggested that online gaming and horse racing be included as taxable actionable claims in the GST law. The tax for casinos will be based on the face value of chips purchased, while horse racing will be on the full value of bets placed with bookmakers/totalisators. The tax will be on the full value of the bets placed in online gaming.

Other Remarkable Discussions of the GST Meeting

• The GST Council discussed the reorganization of the group of ministers (GoM) on rate rationalization, which has remained vacant since Karnataka’s new government took office.
• The TCS (Tax Collected at Source) liability of suppliers involved in e-commerce trading through the government’s Open Network for Digital Commerce (ONDC). The council is expected to clarify the TCS liability of suppliers engaged in e-commerce trading via the ONDC.
• During the 50th GST Council Meeting, finance ministers from several states, including Delhi, Punjab, Tamil Nadu, West Bengal, Himachal Pradesh, Karnataka, Chhattisgarh, and Rajasthan, expressed concern over the decision to bring GST under the ambit of the Prevention of Money Laundering Act (PMLA), thereby granting the Enforcement Directorate the authority to inspect small businesses for GST violations.

The 50th GST Council meeting was conducted with several noteworthy discussions. The Chairperson unveiled a short video film titled ‘GST Council – 50 steps towards a journey’ in the presence of Council members, symbolizing the progress made in the Goods and Service Tax journey. Additionally, the postal department released a special cover and customized ‘My Stamp’ to mark the occasion.