53rd Meeting PIB Summary

Summary of on the 53rd GST Council Meeting
Source : The document from the Press Information Bureau.
This outlines the key recommendations and decisions made during the 53rd GST Council
Meeting held on June 22, 2024, under the chairpersonship of Union Minister for Finance &
Corporate Affairs Smt. Nirmala Sitharaman. The meeting included various finance ministers
and senior officers from the Ministry of Finance and States/UTs. Below is a detailed note on the
key recommendations and decisions:
Contents
A. Changes in GST Tax Rates: .............................................................................................. 3
I. Recommendations Relating to GST Rates on Goods: .......................................................... 3
B. Measures for Facilitation of Trade: .................................................................................. 5
1) Conditional Waiver of Interest and Penalty: .................................................................. 5
2) Reduction of Government Litigation: ......................................................................... 7
3) Reduction in Pre-Deposit for Filing Appeals: ............................................................. 9
4) Taxation of Extra Neutral Alcohol (ENA): ................................................................. 11
5) Reduction in TCS Rate for ECOs: ............................................................................ 13
6) Time for Filing Appeals in GST Appellate Tribunal: ................................................... 15
7) Relaxation in Section 16(4) of CGST Act: ................................................................ 17
8) Change in Due Date for FORM GSTR-4: ................................................................... 19
9) Amendment in Rule 88B of CGST Rules: ................................................................. 21
10) Insertion of Section 11A in CGST Act: .................................................................. 23
11) Refund Mechanism for Additional IGST: .............................................................. 25
12) Valuation of Import of Services by Related Persons: ............................................ 27
13) Input Tax Credit on Ducts and Manholes: ............................................................ 29
14) Place of Supply for Custodial Services by Banks: ................................................. 31
15) Valuation of Corporate Guarantees: .................................................................... 33
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16) Reverse Charge Mechanism (RCM) Invoices: ...................................................... 35

17) Various Clarifications to Reduce Litigation: .......................................................... 37
18) Transitional Credit for ISD Invoices: .................................................................... 39
19) New Optional Facility in FORM GSTR-1A: ............................................................ 41
20) Exemption for Annual Return Filing: .................................................................... 43
21) Amendment in Section 122(1B) of CGST Act: ...................................................... 45
22) Adjustment of Payments for Demand Pre-Deposit: ............................................. 47
23) Biometric-based Aadhaar Authentication:............................................................ 49
24) Common Time Limit for Issuance of Demand Notices: ......................................... 51
Key Features: ................................................................................................................. 51
Extended Time Limit for Reduced Penalty Payments ........................................................... 52
25) Sunset Clause for Anti-Profiteering:.................................................................... 54
26) Amendment to Restrict IGST Refund: ................................................................. 56
27) Threshold for B2C Inter-State Supplies: .............................................................. 58
28) Mandatory Monthly Filing of FORM GSTR-7:......................................................... 60

A. Changes in GST Tax Rates:
I. Recommendations Relating to GST Rates on Goods:

Increase in GST Rates:
1. Milk Cans: GST rate set at 12% for milk cans made of steel, iron, and aluminum.
Decrease in GST Rates:
1. Paper Products: Reduction in GST rate on cartons, boxes, and cases of both corrugated
and non-corrugated paper or paper-board from 18% to 12%.
Exemptions in GST:
1) Imports for MRO Activities: Uniform rate of 5% IGST on parts, components, testing
equipment, tools, and tool-kits of aircrafts to support Maintenance, Repair, and
Overhaul (MRO) activities.
2) SEZ Imports: Exemption of Compensation Cess on imports by SEZ Unit/developers for

authorized operations from July 1, 2017.
3) Defence Imports:
a. Extension of IGST exemption on imports of specified items for defence forces

for five more years, till June 30, 2029.
b. Ad-hoc IGST exemption on imports of technical documentation for AK-203 rifle
kits for the Indian Defence forces.
4) Indian Railways:
a. Exemption of services provided by Indian Railways to the general public,

including platform tickets, retiring rooms, waiting rooms, cloakroom services,
and battery-operated car services.
b. Exemption for services provided by Special Purpose Vehicles (SPVs) to Indian
Railways, allowing use of infrastructure during the concession period.
5) Accommodation Services: Exemption for accommodation services up to Rs. 20,000

per month per person, provided for a minimum continuous period of 90 days.

6) Co-Insurance Premium: Declaration of co-insurance premium as 'no supply' under

Schedule III of the CGST Act, 2017.
7) Reinsurance Services: Declaration of ceding commission/re-insurance commission

between insurer and reinsurer as 'no supply' under Schedule III of the CGST Act, 2017.
8) Reinsurance Services for Specified Insurance Schemes: Regularization of GST

liability on reinsurance services of specified insurance schemes.
9) Statutory Collections by RERA: Exemption of statutory collections made by Real

Estate Regulatory Authority (RERA) under GST.
10) Incentive Sharing in RuPay Debit Cards and BHIM-UPI Transactions: Clarification
that further sharing of incentive among stakeholders as per NPCI-defined scheme is not
taxable.

B. Measures for Facilitation of Trade:
1) Conditional Waiver of Interest and Penalty:
o Insertion of Section 128A in CGST Act to provide for conditional waiver of

interest or penalty or both, for demands raised under Section 73 for FY 2017-18
to 2019-20, if full tax is paid by March 31, 2025.
The primary objective of inserting Section 128A is to offer relief to taxpayers who faced
challenges during the initial years of GST implementation (FY 2017-18, 2018-19, and 2019-20).
It acknowledges the difficulties in compliance due to frequent changes in the GST framework
and the impact of the COVID-19 pandemic.
Key Provisions of Section 128A:
1. Conditional Waiver:
o The section provides for a conditional waiver of interest and penalties related to
demands raised under Section 73 (dealing with tax not paid, short paid, or
erroneously refunded, excluding fraud or wilful misstatement).
o The waiver is applicable for the fiscal years 2017-18, 2018-19, and 2019-20.
2. Payment of Full Tax Demanded:
o The waiver of interest and penalties is contingent upon the taxpayer paying the
full amount of tax demanded in the notice issued under Section 73 by March 31,
2025.
o This means that if the taxpayer settles the tax dues within the specified period,
they will be exempt from paying any associated interest or penalties.
3. Exclusion of Fraud Cases:
o The waiver does not apply to cases involving fraud, suppression of facts, or
wilful misstatement. Such cases fall under Section 74, which has different
provisions for penalties and interest.
4. Implementation Timeline:
o The proposed Section 128A will be effective retrospectively, covering demands
raised for the specified fiscal years.
o Taxpayers must comply with the conditions and timelines specified to benefit
from the waiver.

Rationale Behind the Amendment:
1. Challenges During Initial Years:

o The initial years of GST implementation were marked by frequent changes in
regulations, compliance procedures, and technical issues with the GST portal.
o Many taxpayers faced difficulties in timely and accurate compliance due to the
evolving nature of the GST framework.
2. Impact of COVID-19:
o The COVID-19 pandemic further exacerbated compliance challenges, causing
delays in audits, assessments, and return filings.
o The economic impact of the pandemic led to cash flow issues for many
businesses, making it difficult to meet tax liabilities on time.
3. Encouragement for Compliance:
o By offering a conditional waiver, the government aims to encourage taxpayers to
settle their outstanding tax dues without the additional burden of interest and
penalties.
o This measure is intended to reduce litigation and administrative burden on tax
authorities by resolving a significant number of disputes amicably.
4. Focus on Genuine Cases:
o The exclusion of fraud, suppression, and wilful misstatement cases ensures
that only genuine taxpayers who faced compliance challenges are provided
relief.
o It ensures that the waiver does not benefit those who deliberately evaded taxes.
Implementation:
1. Legislative Process:
o The insertion of Section 128A will require an amendment to the CGST Act, 2017.
This amendment will be introduced and passed by the Parliament.
o Once passed, the government will notify the specific conditions and timelines
for the waiver through appropriate notifications.
2. Taxpayer Actions:
o Taxpayers eligible for the waiver must pay the full amount of tax demanded as
per the notice issued under Section 73 by March 31, 2025.
o They must ensure compliance with all specified conditions to avail the waiver
benefits.
3. Administrative Mechanism:
o The tax authorities will need to update their systems and processes to
implement the new provisions.
o Clear guidelines and procedures will be issued to ensure smooth
implementation and to address any ambiguities or disputes that may arise.

2) Reduction of Government Litigation:
Fixing monetary limits for filing appeals by the Department before GSTAT, High Courts, and
Supreme Court.
Objectives: The primary objectives of this recommendation are:
1. Efficiency in Litigation: To ensure that the judicial system is not burdened with cases
of insignificant monetary value, allowing focus on more substantial and impactful
cases.
2. Resource Optimization: To optimize the use of government resources by reducing
unnecessary litigation.
3. Reduction in Disputes: To reduce the number of appeals, thereby minimizing disputes
and fostering a more cooperative compliance environment.
Key Provisions:
1. Monetary Limits for Filing Appeals:

o GSTAT (GST Appellate Tribunal): Appeals by the Department will only be filed
if the monetary amount involved is Rs. 20 lakhs or more.
o High Courts: Appeals by the Department will only be filed if the monetary
amount involved is Rs. 1 crore or more.
o Supreme Court: Appeals by the Department will only be filed if the monetary
amount involved is Rs. 2 crores or more.
2. Principles for Application:
o The aggregate amount of tax, interest, penalty, or late fee in dispute should be
considered when applying these monetary limits.
o In cases of erroneous refunds, the disputed refund amount will be considered.
o For composite orders involving multiple appeals, the total disputed amount
across all appeals should be taken into account.
3. Certain possible Exclusions: The monetary limits do not apply to cases where:
o A provision of the CGST, SGST/UTGST, IGST, or Cess has been held ultra vires.
o Matters involve recurring issues or significant legal interpretations, such as
valuation, classification, refunds, or place of supply.
o Adverse comments / costs imposed against the government / officers.
o The Board as it deems may necessary to contest a case in the interest of justice
or revenue.

1. Judicial Efficiency:
o By setting monetary thresholds, the judicial system can focus on cases with
significant revenue implications or those that raise important legal questions.
o This measure aims to reduce the burden on courts and tribunals, allowing them
to handle more critical and high-value cases efficiently.
2. Resource Optimization:
o The government can save substantial administrative and legal resources by not
pursuing low-value cases, which often involve higher costs than the revenue
involved.
o This will allow tax authorities to concentrate on more significant cases, ensuring
better resource allocation and management.
3. Encouragement for Compliance:
o By reducing the volume of litigation, the government aims to foster a more
cooperative compliance environment.
o Taxpayers may be more willing to settle disputes amicably if they are aware that
low-value disputes are unlikely to be pursued aggressively by the government.
4. Consistency and Clarity:
o The establishment of clear monetary limits provides consistency in the
government's approach to litigation.
o Taxpayers and tax practitioners will benefit from greater clarity regarding the
likelihood of government appeals in various cases.
Expected Outcomes:
1. Reduced Litigation:
o A significant reduction in the number of cases filed by the government, leading
to less congestion in courts and tribunals.
o Faster resolution of high-value and significant cases, benefiting both the
government and taxpayers.
2. Improved Compliance:
o Encouragement for taxpayers to comply voluntarily and settle disputes
amicably.
o Reduction in the perception of an adversarial tax administration, fostering a
more collaborative relationship between taxpayers and tax authorities.
3. Efficient Resource Utilization:
o Better utilization of government resources, with a focus on high-impact cases.
o Reduced administrative burden on tax authorities, allowing them to focus on
enforcement and compliance activities with higher revenue potential.

Conclusion: This is a Trade Friendly measure. The recommendation to set monetary limits for
filing appeals by the Department is a strategic move to enhance judicial efficiency, optimize
resources, and reduce unnecessary litigation. This initiative aims to streamline the litigation
process, encourage voluntary compliance, and ensure that government resources are focused
on cases with substantial revenue impact or significant legal issues.
3) Reduction in Pre-Deposit for Filing Appeals:

Key Provisions and Amendments:
1. Reduction of Pre-Deposit Amounts:

o Appeal to Appellate Authority:
▪ Previous Requirement: Taxpayers were required to pre-deposit 10% of
the disputed tax amount, subject to a maximum of Rs. 25 crores for
CGST and Rs. 25 crores for SGST.
▪ New Requirement: The pre-deposit amount has been reduced to 10%
of the disputed tax amount, subject to a maximum of Rs. 20 crores for
CGST and Rs. 20 crores for SGST.
o Appeal to Appellate Tribunal:

▪ Previous Requirement: Taxpayers were required to pre-deposit an
additional 20% of the disputed tax amount (over and above the 10%
already deposited for the first appeal), subject to a maximum of Rs. 50
crores for CGST and Rs. 50 crores for SGST.
▪ New Requirement: The pre-deposit amount for appeals to the

Appellate Tribunal has been reduced to an additional 10% of the
disputed tax amount (over and above the 10% already deposited for the
first appeal), subject to a maximum of Rs. 20 crores for CGST and Rs. 20
crores for SGST.
1. Ease Financial Burden:

o The reduction in pre-deposit requirements aims to alleviate the financial strain
on businesses, particularly those facing cash flow issues. By lowering the
amount that needs to be deposited upfront, businesses can maintain better
liquidity and working capital.

2. Encourage Compliance:
o Lowering the pre-deposit threshold encourages taxpayers to file appeals
without the fear of significant financial burden. This promotes a more compliant
environment where taxpayers are more likely to pursue their rights to appeal.
3. Streamline Dispute Resolution:
o The amendments are designed to streamline the dispute resolution process by
making it more accessible to taxpayers. This is expected to lead to a more
efficient resolution of tax disputes, benefiting both the taxpayers and the tax
administration.
Implementation Details:
1. Legislative Changes:
o The recommended changes will require amendments to Sections 107 and 112
of the CGST Act.
o These amendments will be introduced and passed by the Parliament to take
effect.
2. Administrative Updates:
o Tax authorities /GSTN will need to update their systems and processes to
reflect the new pre-deposit amounts.
o Clear guidelines to be issued to ensure smooth implementation and to address
any procedural issues that may arise.
o
3. Monitoring and Compliance:
o A centralized system will track the pre-deposits and ensure compliance with
the new requirements. This will help in monitoring the appeals and ensuring that
the reduced pre-deposit amounts are correctly applied.
Conclusion:
The reduction in pre-deposit amounts for filing appeals under GST is a significant step towards
easing the financial burden on taxpayers and encouraging compliance. This amendment is
expected to improve cash flow for businesses, make the appeal process more accessible, and
streamline the resolution of tax disputes.

4) Taxation of Extra Neutral Alcohol (ENA):
Amendment to exclude rectified spirit/ENA from the scope of GST when supplied for
manufacturing alcoholic liquors for human consumption.
Background: ENA is a high-purity ethyl alcohol used primarily as an industrial solvent and as a
base for manufacturing alcoholic beverages. Historically, there has been confusion and debate
over whether ENA falls under the purview of GST or should be taxed under state excise laws
when used in the production of alcoholic beverages.
Key Discussions and Recommendations:
1. Legal Opinions and Supreme Court Judgments:

o The issue has been deliberated in multiple GST Council meetings, with
references to various Supreme Court judgments and the opinion of the learned
Attorney General of India.
o The Supreme Court, in several cases, including the Deccan Sugar & Abkari
Company Ltd case, held that ENA, being an industrial input, should be covered
under GST.
o The opinion of the Attorney General highlighted that ENA is used as an input for
manufacturing alcoholic beverages and is thus an industrial item, falling under
GST. This opinion overruled earlier judgments like the Bihar Distillery case,
where it was held that states could levy taxes on ENA.
2. Divergent Practices:
o There has been a lack of clarity on the taxation of ENA, leading to divergent
practices among manufacturers and suppliers. Some states have been
collecting VAT or state excise duty on ENA, while others have not been taxing it
consistently.
o This inconsistency has caused revenue implications and legal disputes,
prompting the need for a clear resolution.
3. Council Deliberations:
o The GST Council, considering the opinions and judgments, recommended
amending the GST Law to explicitly exclude rectified spirit/ENA from the scope
of GST when supplied for manufacturing alcoholic liquor for human
consumption.
o The Council decided to maintain the status quo on ENA taxation until a definitive
decision could be reached. However, it was clear from the discussions that
there was a need to resolve the ambiguity to prevent revenue loss and legal
challenges .

Recommendations:
1. Amendment in GST Law:

o The Council recommended amending sub-section (1) of Section 9 of the CGST
Act, 2017, to specifically exclude ENA used for the manufacture of alcoholic
liquor for human consumption from GST.
o This amendment aims to provide legal clarity and ensure uniformity in the
application of taxes across states .
2. Maintaining State Revenue:
o The decision would defiantly bring concern to states' about losing revenue from
alcohol taxation. By excluding ENA from GST when used for alcoholic
beverages, states retain the authority to levy excise duties on alcoholic
products, thus preserving an important revenue source .
3. Addressing Ambiguity:
o The amendment seeks to resolve the ambiguity and divergent practices
regarding the taxation of ENA, ensuring a more straightforward and consistent
tax structure.
o This measure is expected to reduce litigation and compliance issues related to
the taxation of ENA .
Conclusion:
The GST Council's recommendation to amend the GST law to exclude ENA used for
manufacturing alcoholic liquor for human consumption aims to provide clarity and consistency
in taxation. This move is intended to address legal ambiguities, ensure proper revenue
collection for states, and streamline the tax administration for industrial inputs like ENA.

5) Reduction in TCS Rate for ECOs:
Reduction of Tax Collected at Source (TCS) rate for supplies made through Electronic
Commerce Operators (ECOs) from 1% to 0.5%.
Key Provisions:
1. Current TCS Rate:

o Under Section 52(1) of the CGST Act, Electronic Commerce Operators are
required to collect TCS on net taxable supplies made through their platforms.
o The current rate of TCS is 1%, which is split into 0.5% CGST and 0.5%
SGST/UTGST, or 1% IGST for inter-state supplies.
2. Proposed Reduction:
o The GST Council has recommended reducing the TCS rate from 1% to 0.5%.
o This reduced rate will be split into 0.25% CGST and 0.25% SGST/UTGST for
intra-state supplies, or 0.5% IGST for inter-state supplies.
Rationale Behind the Reduction:
1. Ease Financial Burden on Suppliers:

o The reduction in the TCS rate is intended to lower the compliance cost for
suppliers using ECO platforms. By halving the TCS rate, the GST Council aims
to provide financial relief and improve cash flow for these businesses.
2. Encourage Digital Transactions:
o Lowering the TCS rate is expected to incentivize more suppliers to engage in
digital commerce. This move aligns with the government's broader goal of
promoting digital transactions and a cashless economy.
3. Support Small and Medium Enterprises (SMEs):
o Many suppliers on ECO platforms are small and medium enterprises (SMEs).
Reducing the TCS rate will particularly benefit these smaller entities, which
often face tighter cash flow constraints compared to larger businesses.
Implementation:
1. Amendment to Section 52(1) of CGST Act:

o The proposed reduction in the TCS rate will require an amendment to Section
52(1) of the CGST Act.
o This legislative change will formalize the new TCS rates and ensure they are
uniformly applied across all ECO platforms.
2. Notification by the Government:

oFollowing the GST Council's recommendation, the government will issue the
necessary notifications to implement the reduced TCS rates. This will include
detailed guidelines and timelines for the transition to the new rates.
3. Compliance and Monitoring:
o The GST Network (GSTN) will update its systems to accommodate the reduced
TCS rates. ECOs will need to adjust their billing and collection systems to
ensure compliance with the new rates.
o Continuous monitoring will be undertaken to ensure that the reduced TCS rates
are correctly applied and that there is no revenue loss due to non-compliance.
Expected Outcomes:
1. Improved Cash Flow for Suppliers:

o The reduction in the TCS rate will result in immediate cash flow benefits for
suppliers. With less money being deducted at source, suppliers will have more
liquidity to manage their operations and growth.
2. Increased Adoption of Digital Platforms:
o By easing the financial burden, more suppliers are expected to adopt and utilize
ECO platforms for their transactions. This will drive growth in the digital
commerce sector and contribute to the overall digital economy.
3. Enhanced Compliance:
o Simplifying the TCS regime by reducing the rate is expected to improve
compliance. Suppliers will find it easier to manage their finances and comply
with TCS requirements, reducing the incidence of disputes and administrative
burdens.
Conclusion:
The reduction in the TCS rate for Electronic Commerce Operators from 1% to 0.5% is a
significant measure aimed at supporting suppliers, particularly SMEs, by easing their financial
burden and encouraging the adoption of digital commerce. This initiative is part of the GST
Council's ongoing efforts to streamline compliance, promote digital transactions, and support
business growth.

6) Time for Filing Appeals in GST Appellate Tribunal:
o Amendment to allow a three-month period for filing appeals before the

Appellate Tribunal to start from a date notified by the Government.
Key Provision:
• Amendment to Section 112: The GST Council recommended that the three-month
period for filing appeals before the GSTAT should start from a date to be notified by the
Government. This is specifically for appeal/revision orders passed before the
notification date.
1. Providing Sufficient Time:

o This amendment ensures that taxpayers have adequate time to file appeals in
the Appellate Tribunal, especially for orders issued prior to the notification date.
This helps in cases where taxpayers might have missed the original appeal
window due to various reasons such as lack of awareness or administrative
delays.
2. Reducing Litigation and Improving Compliance:
o By extending the appeal filing period, the amendment aims to reduce litigation.
Taxpayers will be less likely to rush through the appeal process, potentially
leading to more thorough and accurate appeal submissions.
o Improved compliance is expected as taxpayers get a fair opportunity to contest
decisions without the pressure of a stringent deadline.
Implementation:
1. Notification by the Government:

o The Government will issue a notification specifying the new date from which the
three-month period for filing appeals will begin.
o This notification will provide clarity and a definitive timeline for taxpayers.
2. Administrative Guidelines:
o Detailed guidelines will be issued to ensure that the transition to the new appeal
filing timeline is smooth.
o These guidelines will help taxpayers understand the procedural aspects and
comply with the new timelines effectively.

3. System Updates:
o The GST Network (GSTN) and related administrative systems will need updates
to accommodate the changes in the appeal filing timeline.
o This includes modifications to the GST portal to reflect the new deadlines and
ensure seamless filing of appeals.
Expected Outcomes:
1. Enhanced Taxpayer Confidence:

o The provision of additional time to file appeals will enhance taxpayer confidence
in the GST appellate system.
o Taxpayers will feel more secure knowing that they have sufficient time to
prepare and file their appeals.
2. Streamlined Dispute Resolution:
o A clearer and extended timeline for filing appeals will contribute to a more
streamlined dispute resolution process.
o Tax authorities and appellate bodies can expect more well-prepared cases,
potentially leading to quicker and more efficient resolutions.
3. Legal Certainty and Fairness:

o The amendment promotes legal certainty and fairness by ensuring that all
taxpayers have a reasonable opportunity to contest decisions. It also aligns with
the broader objective of maintaining a taxpayer-friendly GST regime.
Conclusion:
The amendment to Section 112 of the CGST Act, recommended by the GST Council, is a
significant step towards providing adequate time for taxpayers to file appeals before the GST
Appellate Tribunal. This change is expected to enhance compliance, reduce litigation, and
ensure a fair and efficient appellate process.

7) Relaxation in Section 16(4) of CGST Act:
Amendment to extend the time limit for availing input tax credit for invoices or debit notes under
Section 16(4) retrospectively from July 1, 2017.
Context: Section 16(4) of the Central Goods and Services Tax (CGST) Act, 2017, prescribes the
time limit for availing input tax credit (ITC) in respect of any invoice or debit note pertaining to a
financial year. The GST Council, during its 53rd meeting, recommended amendments to relax
these provisions, especially for the initial years of GST implementation.
Key Provisions of Section 16(4):
• Original Provision: As per Section 16(4) of the CGST Act, a registered person can avail
ITC for any invoice or debit note for the supply of goods or services by the earlier of the
following dates:
o The due date for filing the return under Section 39 for the month of September
following the end of the financial year to which such invoice or invoice relating
to such debit note pertains.
o The date of furnishing of the relevant annual return.
Proposed Relaxations:
1. Initial Years of GST Implementation:

o Scope: This relaxation applies to the financial years 2017-18, 2018-19, 2019-
20, and 2020-21.
o Extended Deadline: The time limit for availing ITC in respect of any invoice or
debit note under Section 16(4) of the CGST Act, for these initial years, is deemed
to be extended up to November 30, 2021, through any return filed in FORM
GSTR-3B.
o Retrospective Effect: The GST Council recommended amending Section 16(4)
of the CGST Act retrospectively, with effect from July 1, 2017, to implement this
extension.
2. Returns Filed After Revocation of Registration:
o Scope: This applies to cases where returns have been filed after the revocation
of cancellation of registration.
o Condition: The relaxation is applicable where the returns for the period from the
date of cancellation of registration or the effective date of cancellation till the
date of revocation of such cancellation are filed by the registered person within
thirty days of the order of revocation.
o Retrospective Amendment: The Council recommended a retrospective
amendment to Section 16(4) of the CGST Act, effective from July 1, 2017, to
include this conditional relaxation.

1. Challenges in Initial Years:

o The initial years of GST implementation were marked by frequent changes in
regulations, technical issues with the GST portal, and a general lack of familiarity
among taxpayers. These factors contributed to delays in compliance and filing.
2. Encouraging Compliance:
o By extending the deadlines retrospectively, the government aims to encourage
taxpayers to rectify past non-compliance without facing the penalty of losing ITC
eligibility. This helps in ensuring that businesses can claim their rightful credits
and maintain healthy cash flows.
3. Support for Businesses:
o The relaxation acknowledges the difficulties faced by businesses, especially
MSMEs, during the transition to the GST regime. It provides them with an
opportunity to regularize their ITC claims, thereby reducing financial stress.
Implementation:
1. Legislative Amendments:
o The recommended changes will require amendments to Section 16(4) of the
CGST Act. These amendments will be introduced in the Parliament and, once
passed, will have retrospective effect from July 1, 2017.
2. Administrative Procedures:
o The GST Network (GSTN) and other administrative bodies will need to update
their systems and processes to reflect the extended deadlines. This includes
modifications to the GST portal to allow for retrospective ITC claims.
3. Guidelines and Notifications:
o Detailed guidelines and notifications will be issued to ensure that taxpayers
understand the process and conditions for availing the extended ITC. This will
include instructions on how to file returns and claim credits for past periods
within the new deadlines.
Conclusion:
The relaxation in Section 16(4) of the CGST Act is a significant relief measure aimed at
addressing the challenges faced by taxpayers during the initial years of GST implementation.
By extending the deadlines for availing ITC and including provisions for returns filed after
revocation of registration, the GST Council aims to foster a more compliant and taxpayer-
friendly environment.

8) Change in Due Date for FORM GSTR-4:
Extension of due date for filing return in FORM GSTR-4 for composition taxpayers from April 30
to June 30, effective for returns from FY 2024-25 onwards.
Current Provisions:
• Existing Due Date: The current due date for filing the return in FORM GSTR-4 is April
30th following the end of the financial year.
• Composition Scheme: Composition taxpayers, who have opted for the composition
scheme under Section 10 of the CGST Act, are required to file FORM GSTR-4 annually.
This scheme allows eligible taxpayers to pay a fixed percentage of their turnover as tax
and file quarterly returns (via FORM CMP-08) and an annual return (via FORM GSTR-4).
Recommended Changes:
1. Extended Due Date:

o New Due Date: The due date for filing FORM GSTR-4 has been extended from
April 30th to June 30th following the end of the financial year.
o Applicability: This change will apply for returns starting from the financial year
2024-25 onwards.
Rationale Behind the Change:
1. More Time for Compliance:

o The extension provides composition taxpayers with an additional two months to
gather necessary information, prepare, and file their annual returns. This is
expected to reduce the burden on taxpayers and help in better compliance.
2. Easing the Compliance Process:
o The extended timeline will help in minimizing the last-minute rush and potential
errors in return filing. It allows taxpayers more time to reconcile their accounts
and ensure accurate reporting.
3. Alignment with Other Return Deadlines:
o The new due date aligns the annual return filing for composition taxpayers more
closely with other annual compliance requirements, providing a more
manageable schedule for small businesses.
Implementation:
1. Amendment to Rules:
o The Council recommended an amendment to clause (ii) of sub-rule (1) of Rule
62 of the CGST Rules, 2017, to formalize the change in the due date.

o Necessary amendments to FORM GSTR-4 will also be made to reflect the new
due date.
2. Notifications and Guidelines:
o The Government will issue the necessary notifications to implement the
change. Detailed guidelines and updates will be provided to ensure that
taxpayers are aware of the new deadlines and comply accordingly.
3. System Updates:
o The GST Network (GSTN) will update its systems to reflect the new filing
deadlines. This includes changes to the GST portal to ensure that taxpayers can
file their returns within the new timeframe without issues.
Expected Outcomes:
o The extended due date is expected to improve compliance rates among
composition taxpayers by providing them with adequate time to complete and
file their annual returns.
2. Reduced Errors:
o With more time to prepare their returns, taxpayers are less likely to make errors,
leading to more accurate reporting and reduced instances of notices and
demands for rectification.
3. Better Resource Management:
o Tax professionals and accountants will have more time to manage their
workload effectively, reducing the pressure during the busy financial year-end
period.
Conclusion:
The change in the due date for filing FORM GSTR-4 from April 30th to June 30th is a significant
step towards easing the compliance burden on composition taxpayers. This extension provides
additional time for accurate and timely filing of returns, improving overall compliance and
reducing the risk of errors.

9) Amendment in Rule 88B of CGST Rules:
Amendment to provide that amount in the Electronic Cash Ledger on the due date of filing
GSTR-3B, and debited while filing the return, are not included in calculating interest for delayed
filing.
Key Provision:
• Rule 88B Amendment: The amendment to Rule 88B aims to provide that any amount
available in the Electronic Cash Ledger (ECL) on the due date of filing the return in FORM
GSTR-3B, and which is subsequently debited while filing the return, shall not be
included in the calculation of interest under Section 50 of the CGST Act for delayed filing
of the return.
1. Ease Interest Burden on Taxpayers:

o The primary objective is to ease the interest burden on taxpayers. If the amount
required to settle the tax liability is available in the ECL on the due date but is
debited only when the return is filed late, the taxpayer should not be penalized
with interest on that amount.
2. Encourage Timely Tax Payment:
o This amendment encourages taxpayers to maintain sufficient balance in their
ECL, even if they face delays in filing returns. It ensures that taxpayers who have
made provisions to pay their taxes on time are not unduly burdened with
additional interest.
3. Clarity and Fairness:
o The amendment provides clarity and ensures a fair approach in the calculation
of interest. It distinguishes between delays in return filing and actual delays in
tax payment, thereby promoting a more equitable tax administration.
Implementation:
o The amendment will be incorporated into Rule 88B of the CGST Rules, 2017.
This requires formal notification by the government to bring the changes into
effect.
2. System Updates:
o The GST Network (GSTN) and related administrative systems will need to
update their processes to reflect the amended provisions. This includes
ensuring that interest calculations exclude amounts available in the ECL on the
due date of return filing.

3. Guidelines and Communication:

o Detailed guidelines and communications will be issued to taxpayers, tax
professionals, and GST officers to ensure that the amended rule is properly
understood and implemented. This includes instructions on how to handle
cases of delayed return filing where sufficient ECL balance was maintained.
Expected Outcomes:
1. Reduced Financial Burden:

o Taxpayers will benefit from reduced financial burden due to lower interest
charges in cases where they have maintained adequate ECL balances.
o The amendment is expected to improve compliance as taxpayers are
incentivized to keep their ECL adequately funded, knowing that this will protect
them from interest on delayed filings.
3. Fair Treatment:
o The GST system will be seen as more taxpayer-friendly and fair, as the interest
provisions will now better reflect the taxpayers' intent and actions regarding
timely tax payment.
Conclusion:
The amendment to Rule 88B of the CGST Rules is a positive step towards reducing the interest
burden on taxpayers and promoting fair tax practices. By excluding amounts available in the
ECL on the due date from interest calculations for delayed return filing, the GST Council aims
to create a more equitable and efficient tax compliance environment.

10) Insertion of Section 11A in CGST Act:
To allow regularization of non-levy or short levy of GST where tax was not paid due to common
trade practices.
Key Provision:
• Section 11A: The new section empowers the government to allow the regularization of
non-levy or short-levy of GST where the tax was not paid or was underpaid due to
common trade practices, provided this is done on the recommendation of the GST
Council.
1. Addressing Historical Practices:

o The initial years of GST implementation saw various interpretations and
practices by taxpayers, leading to instances where GST was not levied or was
levied short due to prevailing trade practices.
o Section 11A is designed to address these situations by providing a mechanism
to regularize such cases without penalizing taxpayers for genuine mistakes
made during the early stages of GST implementation.
2. Reducing Litigation and Disputes:
o This provision aims to reduce litigation and disputes arising from past practices.
By regularizing non-levy or short-levy cases, it helps in resolving potential
conflicts between taxpayers and tax authorities amicably.
o It promotes a more cooperative compliance environment and reduces the
administrative burden on tax authorities and taxpayers.
3. Promoting Fairness and Equity:
o The amendment ensures that taxpayers are not unduly penalized for actions
based on common trade practices. It acknowledges the complexities and
challenges faced during the transition to the new GST regime and provides a fair
approach to dealing with such issues.
Implementation:
o The insertion of Section 11A will require an amendment to the CGST Act, 2017.
This amendment will be introduced and passed by the Parliament to formalize
the provision.
o The government, upon the GST Council's recommendation, will have the
authority to regularize specific cases of non-levy or short-levy.

o Detailed guidelines and notifications will be issued to outline the process for
regularization under Section 11A. These guidelines will specify the conditions,
documentation, and procedures that taxpayers need to follow.
o Tax authorities will be provided with clear instructions on how to implement the
provisions of Section 11A, ensuring consistent and fair application.
Expected Outcomes:
1. Resolution of Past Issues:

o The new section will help resolve issues related to non-levy or short-levy of GST
that arose due to common trade practices in the early years of GST
implementation.
o It will provide clarity and closure to taxpayers who were unsure about their tax
liabilities due to varying interpretations of the law.
o By regularizing past practices, the provision will encourage taxpayers to comply
with GST regulations more confidently, knowing that genuine errors made in the
past will be addressed fairly.
o This will lead to improved voluntary compliance and a more robust GST system.
3. Reduction in Legal Burden:
o The reduction in disputes and litigation will alleviate the legal burden on both
taxpayers and the tax administration. This will free up resources and allow tax
authorities to focus on more significant compliance and enforcement activities.
Conclusion:
The insertion of Section 11A in the CGST Act is a strategic measure to address non-levy or
short-levy of GST due to common trade practices. This provision aims to provide a fair and
efficient mechanism for regularizing past issues, reducing litigation, and promoting a more
cooperative compliance environment.

11) Refund Mechanism for Additional IGST:
Introduction of a mechanism for claiming a refund of additional IGST paid due to upward price
revisions after export.
Key Provisions:
1. Mechanism for Claiming Refunds:

o Situation Addressed: The mechanism addresses cases where exporters are
required to pay additional IGST due to an upward revision in the price of goods
after the goods have already been exported.
o Claiming Refunds: Exporters will be able to claim refunds for the additional
IGST paid because of the price revision. This new mechanism aims to simplify
the refund process and ensure that exporters are not financially burdened due
to post-export price adjustments.
Rationale Behind the Recommendation:
1. Support for Exporters:

o Financial Relief: Exporters often face financial challenges due to fluctuations
in the prices of goods after export. This mechanism is designed to provide
financial relief by allowing them to recover the additional taxes paid.
o Encouraging Exports: By ensuring that exporters can reclaim additional IGST
paid, the government aims to promote and support export activities, making
Indian goods more competitive in the global market.
2. Simplifying Compliance:
o Streamlined Process: The new refund mechanism simplifies the compliance
process for exporters, reducing administrative burdens and making it easier to
manage tax liabilities.
o Clarity and Certainty: Providing a clear and structured process for claiming
refunds helps reduce uncertainties and disputes between exporters and tax
authorities.
Implementation:
1. Legislative and Procedural Changes:

o Amendments: Necessary amendments will be made to the relevant sections
of the CGST and IGST Acts to formalize the new refund mechanism.
o Notifications: The government will issue detailed notifications outlining the
procedure for claiming refunds, including documentation requirements and
timelines.
2. System Updates:

o GST Network (GSTN): The GSTN will update its systems to accommodate the
new refund process. This includes changes to the GST portal to facilitate refund
applications and processing.
o Training and Awareness: Training sessions and awareness campaigns will be
conducted for exporters and tax professionals to ensure smooth
implementation and compliance with the new mechanism.
Expected Outcomes:
1. Increased Export Competitiveness:

o By allowing exporters to claim refunds for additional IGST paid, the mechanism
helps improve the competitiveness of Indian goods in international markets,
supporting the government's goal of boosting exports.
o The streamlined refund process is expected to enhance overall compliance,
reducing the incidence of disputes and ensuring that tax liabilities are accurately
managed.
3. Economic Growth:
o Supporting exporters through efficient tax refund mechanisms contributes to
economic growth by promoting international trade and increasing foreign
exchange earnings.
Conclusion:
The recommendation for a new refund mechanism for additional IGST paid due to post-export
price revisions is a significant step towards supporting exporters and enhancing the
competitiveness of Indian goods in global markets. This mechanism aims to simplify
compliance, provide financial relief, and encourage export activities, aligning with the broader
objectives of promoting trade and economic growth.

12) Valuation of Import of Services by Related Persons:
Clarification on the deemed open market value of services provided by foreign affiliates to
related domestic entities.
Key Recommendations:
1. Valuation Based on Invoice Value:

o In cases where a foreign affiliate provides services to a related domestic entity
and the recipient is eligible for full ITC, the value declared in the invoice by the
domestic entity may be deemed the open market value. This is in accordance
with the second proviso to Rule 28(1) of the CGST Rules.
2. Nil Value for Uninvoiced Services:
o If no invoice is issued by the domestic entity for services provided by the foreign
affiliate, and the recipient is eligible for full ITC, the value of such services may
be deemed to be declared as Nil. This value is also considered as the open
market value per the second proviso to Rule 28(1) of the CGST Rules.
1. Simplifying Compliance:
o The primary aim is to simplify the compliance process for businesses dealing
with related party transactions. By deeming the invoice value as the open
market value, the need for complex valuations is eliminated.
2. Ensuring Revenue Neutrality:
o The amendment ensures that transactions between related parties do not lead
to revenue loss. When full ITC is available, the tax paid is effectively neutral, as
the recipient can fully claim the credit.
3. Reducing Litigation and Disputes:
o Clear guidelines reduce ambiguity in the valuation of services provided by
related persons, thereby minimizing potential disputes and litigation with tax
authorities.
Implementation:
o The GST Council's recommendation will be implemented through amendments
to the CGST Rules. This involves updating Rule 28 to reflect the new valuation
norms.
o Tax authorities will issue detailed guidelines and notifications to ensure that
taxpayers and tax officers are well-informed about the new valuation process.

This includes training sessions and explanatory notes to facilitate understanding

and compliance.
3. Monitoring and Compliance:
o The GST Network (GSTN) will update its systems to incorporate the changes.
Compliance checks will be implemented to ensure that taxpayers adhere to the
new valuation rules.
Expected Outcomes:
1. Enhanced Clarity:
o Taxpayers will benefit from greater clarity in the valuation of services imported
from related persons. This will help in accurate tax reporting and reduce the
burden of maintaining extensive documentation for valuation purposes.
o Simplified valuation rules encourage better compliance among businesses,
leading to more consistent and accurate GST filings.
3. Legal Certainty:
o The amendments provide legal certainty, ensuring that businesses are not
subjected to varying interpretations by different tax authorities. This fosters a
more predictable and stable tax environment.
Conclusion:
The GST Council's recommendation to clarify the valuation of import of services by related
persons simplifies the compliance process and provides clear guidelines for businesses. By
deeming the invoice value as the open market value and allowing a Nil value for uninvoiced
services, the amendment ensures ease of doing business and reduces potential disputes.

13) Input Tax Credit on Ducts and Manholes:
Clarification that ITC is available for ducts and manholes used in optical fibre cable networks.
Key Provision:
• ITC on Ducts and Manholes:

o The GST Council clarified that input tax credit is not restricted for ducts and
manholes used in the network of optical fiber cables (OFCs).
o This clarification falls under clause (c) and clause (d) of sub-section (5) of
section 17 of the CGST Act, 2017.
Rationale Behind the Clarification:
1. Resolving Ambiguities:
o There has been confusion among taxpayers and tax practitioners regarding the
eligibility of ITC on ducts and manholes used for OFCs. The clarification aims to
resolve these ambiguities and provide a clear guideline.
2. Encouraging Infrastructure Development:
o By confirming the availability of ITC on ducts and manholes, the GST Council
aims to encourage infrastructure development in the telecommunications
sector. This is crucial for expanding and maintaining optical fiber networks,
which are vital for enhancing digital connectivity.
3. Promoting Fair Tax Practices:
o The clarification ensures that businesses engaged in laying and maintaining
optical fiber networks can claim ITC on these essential components. This
promotes fair tax practices and supports businesses in managing their tax
liabilities effectively.
Implementation:
1. Guidelines and Notifications:

o Following the GST Council’s recommendation, the government will issue
detailed guidelines and notifications to formalize the clarification. These
documents will provide explicit instructions on how taxpayers can claim ITC on
ducts and manholes.
o Tax authorities will update their systems and procedures to reflect this
clarification. This includes ensuring that ITC claims on ducts and manholes are
processed correctly and efficiently.

3. Education and Awareness:

o The government and tax authorities will conduct awareness campaigns and
provide educational materials to inform businesses about the clarification. This
will help ensure that all eligible taxpayers can take advantage of the ITC
provision.
Expected Outcomes:
o The clarification is expected to improve compliance by removing uncertainties
regarding ITC eligibility. Businesses will have clear guidelines to follow, reducing
the risk of disputes and errors in ITC claims.
2. Support for Telecommunications Sector:
o By confirming the availability of ITC on essential infrastructure components, the
clarification supports the growth and development of the telecommunications
sector. This is particularly important for expanding digital infrastructure and
connectivity across the country.
3. Economic Benefits:
o Enabling ITC on ducts and manholes will help businesses manage their tax
liabilities more effectively, leading to better financial health and potentially
lower costs for infrastructure projects. This can have broader economic
benefits by promoting investment in digital infrastructure.
Conclusion:
The GST Council's clarification on the availability of ITC for ducts and manholes used in optical
fiber cable networks is a significant step towards resolving ambiguities and promoting fair tax
practices. This measure supports the telecommunications sector, encourages infrastructure
development, and enhances compliance by providing clear guidelines for ITC claims.

14) Place of Supply for Custodial Services by Banks:
Clarification that the place of supply for custodial services provided by Indian banks to Foreign
Portfolio Investors is determined by Section 13(2) of IGST Act, 2017.
Key Provision:
• Place of Supply Determination: The GST Council recommended that the place of
supply for custodial services provided by Indian banks to Foreign Portfolio Investors
should be determined as per Section 13(2) of the IGST Act, 2017.
Section 13(2) of the IGST Act, 2017:
• General Rule for Place of Supply: According to Section 13(2) of the IGST Act, the place
of supply of services (except for specific services mentioned from sub-sections (3) to
(13)) where the location of the supplier or the location of the recipient is outside India
shall be the location of the recipient of services.
o Exception: If the location of the recipient of services is not available in the
ordinary course of business, the place of supply shall be the location of the
supplier of services.
Implications of the Clarification:
1. For Indian Banks:

o When providing custodial services to FPIs, Indian banks need to consider the
location of the recipient (FPI) as the place of supply.
o If the FPI is located outside India, the service will be treated as an export of
services, which is a zero-rated supply under GST.
2. For Foreign Portfolio Investors:

o FPIs will be considered as the location of the recipient, and hence the place of
supply will be outside India.
o This classification helps in determining the applicability of IGST and ensuring
compliance with international taxation norms.
3. Tax Compliance:
o Ensures that there is no ambiguity regarding the place of supply for custodial
services, leading to better tax compliance and reduced litigation.

o Provides clarity to banks and FPIs on their tax liabilities and reporting
requirements under the GST regime.
Practical Example:
• If an Indian bank provides custodial services to an FPI based in the USA, the place of
supply will be the USA (location of the recipient).
• This transaction will be treated as an export of services and will be zero-rated under
GST.
Conclusion:
The clarification on the place of supply for custodial services provided by Indian banks to
Foreign Portfolio Investors is a significant step towards ensuring clarity and compliance with
the IGST Act. It helps in determining the correct tax jurisdiction and supports seamless
international financial transactions.

15) Valuation of Corporate Guarantees:
Amendment of Rule 28(2) of CGST Rules retrospectively to clarify valuation issues for
corporate guarantees between related parties.
Key Provisions:
1. Amendment to Rule 28(2):

o Effective Date: The amendment to Rule 28(2) is retrospective, effective from
October 26, 2023.
o Valuation Criteria: The value of the supply of services by way of providing a
corporate guarantee between related persons shall be deemed to be:
▪ 1% of the amount of the guarantee offered, or
▪ The actual consideration, whichever is higher.
2. Circular Clarification:
o A circular was issued to provide clarity on various issues related to the valuation
of corporate guarantees. This circular ensures that the valuation method is
uniformly applied across different scenarios and avoids disputes.
o The circular also clarifies that this valuation rule does not apply to the export of
such services or where the recipient is eligible for full input tax credit (ITC).
1. Uniformity and Clarity:

o The primary aim of the amendment is to provide a clear and uniform method for
valuing corporate guarantees, which helps in reducing litigation and ensuring
consistency in the application of GST laws.
2. Revenue Neutrality:
o The amendment ensures that transactions involving corporate guarantees
between related parties are taxed in a manner that reflects their true economic
value. This approach maintains revenue neutrality and fairness in the GST
system.
3. Compliance and Simplification:
o By establishing a clear valuation method, the amendment simplifies
compliance for businesses and tax practitioners. It eliminates ambiguities that
could lead to varied interpretations and potential disputes.

Implementation:
o The retrospective amendment to Rule 28(2) of the CGST Rules has been
formalized through a government notification. This ensures that the new
valuation method is legally binding from the specified effective date.
2. Administrative Guidelines:
o Detailed guidelines and explanatory notes have been issued to assist taxpayers
and tax officials in implementing the amended valuation rule. These guidelines
cover various scenarios and provide practical examples to facilitate
understanding.
3. System Updates:
o The GST Network (GSTN) and other administrative systems will be updated to
reflect the new valuation method. This includes modifications to the GST portal
to ensure accurate reporting and compliance by taxpayers.
Expected Outcomes:
1. Reduced Litigation:
o The clear and uniform valuation method is expected to significantly reduce
litigation related to the valuation of corporate guarantees. This will lead to a
more efficient and less contentious tax administration system.
o Businesses will find it easier to comply with GST regulations concerning
corporate guarantees. The simplicity and clarity of the new rule will encourage
better compliance and reduce the likelihood of errors.
3. Fair Taxation:
o The amendment ensures that the valuation of corporate guarantees reflects
their true economic value, leading to fairer taxation of such transactions. This
contributes to the overall integrity and equity of the GST system.
Conclusion:
The amendment to Rule 28(2) of the CGST Rules regarding the valuation of corporate
guarantees between related persons is a significant step towards providing clarity and
uniformity in GST compliance. This measure is expected to reduce litigation, enhance
compliance, and ensure fair taxation of corporate guarantees.

16) Reverse Charge Mechanism (RCM) Invoices:
Clarification on the relevant financial year for availing ITC under RCM, based on when the
invoice was issued by the recipient.
Key Points:
1. Reverse Charge Mechanism (RCM):

o Under the RCM, the recipient of goods or services is liable to pay GST instead of
the supplier. This is applicable in cases where supplies are received from
unregistered suppliers or for specific notified categories of supplies.
o The recipient is required to issue an invoice for such supplies, reflecting the tax
payable under RCM.
2. Section 16(4) of the CGST Act:
o Section 16(4) specifies the time limit for availing ITC on any invoice or debit note.
The ITC can be claimed until the earlier of:
▪ 30th November of the Next Financial year to which such invoice pertains.
▪ The date of furnishing the relevant annual return.
3. Clarification on Relevant Financial Year for RCM Invoices:
o The Council recommended clarifying that for supplies received from
unregistered suppliers under RCM, where the recipient issues the invoice, the
relevant financial year for calculating the time limit for availing ITC under Section
16(4) is the financial year in which the recipient issues the invoice.
o This means that the time limit for claiming ITC starts from the financial year in
which the recipient of the goods or services issues the invoice for the RCM
supplies.
Scenario Analysis:
• Delayed Self-Issued Invoice:

o If a recipient issues a self-tax invoice for RCM supplies three years after the
actual receipt of supplies, the relevant financial year for the ITC time limit
calculation starts from the year the invoice is issued.
• Example:
o Suppose a business receives supplies in FY 2020-21 but issues the self-tax
invoice under RCM in FY 2023-24. According to the clarification, the relevant
financial year for ITC purposes is 2023-24.
• ITC Eligibility Window:
o Based on Section 16(4), ITC for the invoice issued in FY 2023-24 can be claimed
up to 30th Nov 2024 or the date of filing the annual return for FY 2023-24,
whichever is earlier.

Implications:
1. Ensures Clarity:
o This clarification ensures that taxpayers clearly understand the period within
which they can claim ITC for supplies received under RCM. It removes any
ambiguity regarding which financial year should be considered for calculating
the ITC time limit.
2. Consistency in ITC Claims:
o By establishing that the relevant financial year is when the invoice is issued by
the recipient, it promotes consistency in ITC claims. Taxpayers will have a
uniform reference point for calculating the time limit, simplifying compliance.
3. Facilitates Compliance:
o The clarification aids in easier compliance for businesses dealing with RCM
supplies. Knowing the exact timeframe for ITC eligibility helps businesses plan
their accounting and tax reporting more effectively.
Conclusion:
The GST Council's recommendation to clarify the relevant financial year for ITC calculation for
RCM supplies addresses a crucial compliance aspect. It ensures that taxpayers have a clear
understanding of the time limits for availing ITC, thereby reducing potential disputes and
enhancing compliance with GST regulations.

17) Various Clarifications to Reduce Litigation:
Clarifications on a range of issues including ESOP/ESPP/RSU taxation, life insurance services,

motor insurance claims, warranty services, repair expenses, inter-company loans, annuity
payments, and more.
Detailed Circulars for the below would be issued soon..
Key Clarifications Issued:
1. Taxability of Reimbursement of Securities/Shares:

o Clarification on the taxability of reimbursement of securities/shares provided as
Employee Stock Option Plans (ESOPs), Employee Stock Purchase Plans
(ESPPs), and Restricted Stock Units (RSUs) by a company to its employees.
o
2. Reversal of ITC for Life Insurance Services:
o Clarification on the requirement of reversing input tax credit (ITC) concerning the
premium amount in life insurance services, which is not included in the taxable
value as per Rule 32(4) of the CGST Rules.
o
3. Taxability of Wreck and Salvage Values in Motor Insurance Claims:
o Clarification on the taxability of wreck and salvage values in motor insurance
claims, ensuring uniformity in treatment across the sector.
o
4. Warranty/Extended Warranty by Manufacturers:
o Clarification in respect of warranty and extended warranty provided by
manufacturers to end customers, detailing how these should be treated under
GST.
o
5. ITC on Repair Expenses for Motor Vehicle Insurance:
o Clarification regarding the availability of ITC on repair expenses incurred by
insurance companies when settling motor vehicle insurance claims in
reimbursement mode.
o
6. Taxability of Loans between Related Persons or Group Companies:
o Clarification on the taxability of loans granted between related persons or within
group companies, providing guidance on how these financial transactions
should be treated.

7. Time of Supply for Annuity Payments under HAM Projects:

o Clarification on the time of supply concerning annuity payments under Hybrid
Annuity Model (HAM) projects, ensuring consistent application of time of supply
rules.
8. Time of Supply for Spectrum Allocation:

o Clarification on the time of supply for the allotment of spectrum to telecom
companies, particularly in cases where the payment of license fee and
spectrum usage charges is to be made in instalments.
9. Place of Supply for Goods Supplied to Unregistered Persons:

o Clarification relating to the place of supply of goods supplied to unregistered
persons, especially when the delivery address is different from the billing
address.
10. Post-Sale Discounts and ITC Reversal:

o Clarification on the mechanism for providing evidence by suppliers to comply
with the conditions of Section 15(3)(b)(ii) of the CGST Act concerning post-sale
discounts, particularly about ITC reversal by the recipient.
11. Special Procedures for Specific Commodities:

o Clarifications on various issues pertaining to special procedures for the
manufacturers of specified commodities like pan masala and tobacco, ensuring
clear guidelines for compliance and taxation.

18) Transitional Credit for ISD Invoices:
Amendment to provide for transitional credit for invoices pertaining to services provided before
the GST implementation date.
Context and Explanation:
Transitional credit for ISD (Input Service Distributor) invoices pertains to the credits that an ISD
could carry forward from the pre-GST regime to the GST regime. The transitional provisions are
specifically governed by Section 140(7) of the CGST Act, 2017.
1. Eligibility and Distribution:

o An ISD registered under the pre-GST regime could distribute the Service Tax
credit for services received prior to July 1, 2017. This distribution could be done
even if the invoices were received on or after the appointed date (i.e., the GST
implementation date).
o The credit distribution to branch offices/units had to be done through the service
tax return under the existing law. These branches or units could then claim the
transitional credit as per sub-section (1) of Section 140 of the CGST Act by filing
FORM GST TRAN-1.
2. Issue of Denial of Credit:
o There were instances where ISDs had claimed transitional credit for invoices
received before the GST implementation date, but the credit was denied
because it wasn't distributed through the service tax return. This led to disputes
and different interpretations by tax authorities, causing denial of credit transition
.
3. High Court Rulings and Recommendations:
o The Hon’ble High Court of Bombay, in the case of Siemens Ltd Vs. Union of India,
highlighted the issue of denial of transition credit and recommended that the
GST Council consider amendments to Section 140(7) to ensure that credit
available before the appointed day is not lost.
4. Law Committee Deliberations:
o The Law Committee, in its meeting on May 30, 2024, discussed the issue and
agreed that transitional credit should be available for ISDs even for cases where
inputs and input services were received with invoices prior to June 30, 2017. The
Committee recommended an amendment to Section 140(7) to allow such
transitions retrospectively from July 1, 2017.

Amendment in Section 140(7):
Proposed Change:
• The amendment suggested that the expression "received on or after the appointed day"
be changed to "received before, on or after the appointed day," allowing for a time limit
for such transitions.
Practical Implications:
1. Filing Requirements:
o ISDs must file the required forms and distribute the credit correctly to the
respective branches or units, ensuring compliance with the rules laid out in the
CGST Act.
2. Credit Claims:
o Branches receiving the distributed credit should ensure they claim it in their
Electronic Credit Ledger as transitional credit using FORM GST TRAN-1.

19) New Optional Facility in FORM GSTR-1A:
Introduction of FORM GSTR-1A to allow taxpayers to amend or declare additional details

before filing FORM GSTR-3B.
Introduction and Purpose: The introduction of FORM GSTR-1A is a new optional facility
provided to taxpayers. It is intended to enhance the accuracy and completeness of the data
reported in the GST returns. The key purpose is to allow taxpayers to:
1. Add any missed details of outward supplies for the current tax period.
2. Amend any details already declared in FORM GSTR-1 for the same period.
Key Features:
1. Optional Nature:
o FORM GSTR-1A is optional and can be filed without any late fees.
o It allows for a one-time submission for each return period.
2. Availability Period:
o The form is available on the GST portal after the due date of filing FORM GSTR-
1 or the actual date of filing FORM GSTR-1, whichever is later.
o For quarterly taxpayers, it will be available after filing FORM GSTR-1 (Quarterly)
or its due date, whichever is later, till the filing of FORM GSTR-3B of the same
tax period.
3. Auto-population in GSTR-3B:
o Tax liabilities declared in both FORM GSTR-1A and GSTR-1 for a tax period will
be auto-populated in FORM GSTR-3B for that period.
o For taxpayers under the QRMP (Quarterly Return Monthly Payment) scheme,
the tax liability from FORM GSTR-1A along with details furnished in FORM
GSTR-1 and IFF (Invoice Furnishing Facility) of Month M1 and M2 will be
reflected in FORM GSTR-3B (Quarterly).
4. Restrictions on Amendments:
o Amendments related to changing the recipient's GSTIN are not allowed in FORM
GSTR-1A.
5. Integration with GSTR-2B:
o In addition to the GSTR-2B already generated, GSTR-2B will also include all
supplies declared by the respective suppliers in FORM GSTR-1A.
o Supplies declared or amended in FORM GSTR-1A will be made available in the
next open FORM GSTR-2B.
6. Example for Clarification:
o If a supplier issues two invoices, INV1 and INV2, in January 2023, and furnishes
the details of INV1 in FORM GSTR-1 on February 8, 2023, but misses INV2.
o The details of INV2 can be furnished in FORM GSTR-1A on February 15, 2023.

o Consequently,
1. INV1 will be reflected in the recipient’s FORM GSTR-2B for January
available on February 14, 2023,
2. while INV2 will be reflected in FORM GSTR-2B for February available on
March 14, 2023.
• Enhanced Accuracy: Taxpayers can ensure that all their outward supplies are correctly
reported, thereby reducing discrepancies and the chances of notices from tax
authorities.
• Flexibility: The option to amend or add details offers flexibility and rectification
opportunities before the final submission of returns.

20) Exemption for Annual Return Filing:
Exemption for filing annual return in FORM GSTR-9/9A for taxpayers with an aggregate annual
turnover of up to Rs. 2 crores for FY 2023-24.
Context and Background:
Annual returns in GST, filed in FORM GSTR-9 or GSTR-9A, summarize the activities of a
financial year, reconciling monthly returns and providing a comprehensive overview of the tax
paid, credits claimed, and other relevant details. However, the compliance burden for filing
these returns can be significant, particularly for small taxpayers.
Key Points on Exemption:
1. Exemption Threshold:
o Taxpayers with an aggregate annual turnover of up to ₹2 crores are exempt from
filing the annual return in FORM GSTR-9 for the financial year 2022-23 and
subsequent years.
2. Historical Context:
o This exemption aligns with previous relaxations where the filing of annual
returns was made optional for taxpayers with an aggregate turnover of up to ₹2
crores for the financial years 2017-18, 2018-19, and 2019-20.
o Notifications such as No. 47/2019-CT, No. 31/2021-CT, No. 10/2022-CT, and
No. 32/2023-CT have successively extended this exemption for FY 2020-21,
2021-22, and 2022-23.
3. Rationale:
o The primary objective of this exemption is to reduce the compliance burden on
small taxpayers, making it easier for them to manage their GST obligations
without needing to hire professional services for preparing and filing annual
returns.
o Simplifying compliance helps smaller businesses focus on their operations
while ensuring they remain within the legal framework of GST.

4. Implementation:
o The exemption is provided under the powers conferred by Section 44 of the
CGST Act and relevant notifications issued by the Central Government.
5. Specific Provisions:
o For those eligible for the exemption, no late fees or penalties will be imposed for
not filing the annual return for the exempted financial years.
o The auto-population of ITC in the relevant tables of FORM GSTR-9 will now be
based on FORM GSTR-2B, providing more accurate data for reconciliation
purposes.
• Reduced Compliance Costs: Small taxpayers save on costs associated with hiring
professionals to file complex annual returns.
• Simplified Procedures: The administrative and procedural load on small businesses is

significantly reduced, fostering a more conducive business environment.

21) Amendment in Section 122(1B) of CGST Act:
Clarification that penal provisions apply only to e-commerce operators required to collect tax
under Section 52.
Section 122 of the CGST Act, 2017, outlines the penalties applicable to various offenses under
GST. Sub-section (1B) specifically pertains to the penalties for electronic commerce operators
(ECOs). Recent changes have been proposed to address certain ambiguities and to ensure the
section is applied as intended.
Key Points of the Amendment:
1. Clarification of Applicability:
o The amendment clarifies that the penal provisions under Section 122(1B) apply
only to those ECOs who are required to collect tax at source (TCS) under
Section 52 of the CGST Act. This means that ECOs not required to collect TCS
will not be subject to penalties under this subsection for non-compliance by
unregistered persons or composition taxpayers supplying through their
platforms.
2. Specific Provisions of the Amendment:

o The proposed amendment specifies the conditions under which an ECO will be
liable for penalties:
▪ If the ECO allows supply through its platform by an unregistered person
who is not exempt from registration.
▪ If the ECO allows an inter-State supply by a person not eligible to make
such a supply.
▪ If the ECO fails to furnish correct details in the statement to be furnished
under sub-section (4) of Section 52 regarding any outward supply by a
person exempt from registration.
o The penalty for these offenses will be ₹10,000 or the amount of tax involved if
the supply was made by a registered person, whichever is higher.
3. Rationale for the Amendment:

o The amendment is aimed at ensuring that only those ECOs who have the
obligation to collect TCS are penalized for non-compliance by suppliers using

their platforms. This prevents undue burden on ECOs who do not have this
obligation.
4. Retrospective Effect:
o The amendment is proposed to be applied retrospectively from October 1,
2023, which is the date when Section 122(1B) initially came into effect. This
ensures consistency and clarity from the onset of this provision.
• For Electronic Commerce Operators:

o ECOs required to collect TCS must ensure compliance with the conditions
specified to avoid penalties.
o ECOs not required to collect TCS can operate without the fear of being
penalized for non-compliance by unregistered persons or composition
taxpayers using their platforms.
• For Unregistered Persons and Composition Taxpayers:

o They must be aware of the conditions under which they can supply goods or
services through ECOs to avoid penal actions indirectly affecting their
transactions.

22) Adjustment of Payments for Demand Pre-Deposit:
Amendment in Rule 142 to prescribe a mechanism for adjusting payments made in FORM GST
DRC-03 against pre-deposit for filing appeals.
Context and Background: In the GST framework, taxpayers often need to make pre-deposits
when appealing against tax demands. This ensures a commitment to the appeal process and
discourages frivolous appeals. However, complexities arise when adjusting payments made
against such demands, especially when payments are made using FORM GST DRC-03. To
streamline this process and provide clarity, amendments and mechanisms have been
introduced.
Key Points on Adjustment of Payments:
1. Current Process Flow:

o Adjudication and Demand Creation: When an adjudication order or an appeal
order is issued, a summary is uploaded in the system using FORM GST DRC-07
or FORM GST APL-04, creating a demand. A corresponding debit entry is posted
in the Electronic Liability Ledger Part II (ELL-II) of the taxpayer.
o Payment Towards Demand: Taxpayers can view the created demand on their
dashboard and make payments, which are then credited against the said
demand in ELL-II.
2. Issues Identified:
o Payments intended for demands are sometimes made through FORM GST
DRC-03 without proper linkage to specific demand orders.
o This leads to difficulties in processing and adjusting these payments accurately
3. Introduction of FORM GST DRC-03A:

o To address the above issues, a new form, FORM GST DRC-03A, has been
introduced. This form will allow taxpayers to adjust payments made through
FORM GST DRC-03 against specific demand orders.
o This adjustment ensures that the amounts paid are correctly applied to the
intended demands, cleaning up the Electronic Liability Ledger and providing
clarity on outstanding liabilities.

4. Proposed Amendments:
o Amendment to Rule 142: A new sub-rule (2B) is proposed to be inserted in Rule
142 of the CGST Rules, 2017, to facilitate the use of FORM GST DRC-03A for
adjustments. This ensures that any payment made through FORM GST DRC-03
can be adjusted as if it was made against the demand on the date of such
intimation through FORM GST DRC-03.
5. Operational Mechanism:
o Filing FORM GST DRC-03A: Taxpayers who have made payments through
FORM GST DRC-03 but need to adjust these payments against specific
demands can file an application in FORM GST DRC-03A. This form will include
details such as GSTIN, ARN of DRC-03A, date of filing, amount paid, and
reference numbers of the orders against which the payments were intended.
o Acknowledgement and Adjustment: Upon filing FORM GST DRC-03A, the
amounts will be adjusted as if they were made towards the specified demand
orders on the original date of payment through FORM GST DRC-03. This
adjustment will also account for any pre-deposit required for filing appeals
under Sections 107 and 112 of the CGST Act.
6. Stay of Recovery Proceedings:

o The amendment clarifies that when taxpayers make pre-deposit payments as
required under Section 112(8) of the CGST Act using the new mechanism, the
recovery of the remaining demand amount is stayed until the appeal is disposed
of. This prevents unnecessary recovery actions while appeals are pending.
• For Taxpayers: Provides a clear mechanism to adjust voluntary payments against

specific demand orders, reducing disputes and ensuring accurate reflection of
liabilities.
• For Tax Authorities: Streamlines the process of managing and acknowledging
payments, improving efficiency in handling taxpayer compliance.

23) Biometric-based Aadhaar Authentication:
Pan-India rollout of biometric-based Aadhaar authentication for registration applicants in a

phased manner.
Context and Purpose: The GST Council has recommended the roll-out of biometric-based
Aadhaar authentication for GST registration applicants on a pan-India basis. This measure aims
to enhance the authenticity of registrations and curb fraudulent activities such as fake billing
and bogus registrations.
Key Features:
1. Implementation:
o Biometric-based Aadhaar authentication is proposed to be implemented in
phases across all states and Union Territories (UTs).
o Initially, a pilot project was conducted in Gujarat, Andhra Pradesh, and
Puducherry, which showed significant success in reducing fraudulent
registrations.
2. Process:
o The process involves risk-based biometric authentication for high-risk
applicants identified through data analytics and risk parameters. This includes
capturing the photograph and verifying the original documents at designated
GST Suvidha Kendras (GSKs).
o For those opting for Aadhaar authentication, the date of submission of the
application will be considered the date of Aadhaar authentication or fifteen days
from the application submission, whichever is earlier.
o Amendments have been made to Rule 8 of the CGST Rules, 2017 to mandate
biometric-based Aadhaar authentication for high-risk applicants. This includes
the insertion of a second proviso to sub-rule (4A) making it mandatory for those
not opting for Aadhaar authentication to visit GSKs for photo capturing and
document verification.
o Sub-rule (4B) has been introduced to provide for exemption from biometric-
based Aadhaar authentication in states/UTs where the pilot is not undertaken.

4. Facial Recognition:
o In addition to fingerprint and iris scans, an advanced system of facial
recognition-based Aadhaar authentication is also being developed to provide
flexibility in the biometric authentication process.
• For Taxpayers:
o Ensures that only genuine businesses are granted GST registration.
o Reduces the chances of identity theft and fraudulent activities.
• For Authorities:
o Helps in the early detection and prevention of fraudulent registrations.
o Streamlines the verification process through the use of technology and data
analytics.

24) Common Time Limit for Issuance of Demand Notices:
Amendment to provide a common time limit for issuing demand notices and orders,
irrespective of fraud or wilful misstatement.
Sections 73 and 74 of the CGST Act, 2017, outline the time limits for issuing demand notices
and orders related to tax discrepancies. Section 73 deals with cases other than fraud,
suppression, or willful misstatement, while Section 74 covers cases involving such fraudulent
activities.
The amendment and introduction of a new Section 74A aim to streamline these processes by
establishing a common time limit for all cases, regardless of the nature of the discrepancy. This
change is intended to reduce administrative burden and ensure a more uniform approach to tax
recovery.
Key Features:
1. Amendment in Sections 73 and 74:
• Section 73: Pertains to non-fraudulent cases.

o Current provisions: Demand order must be issued within three years from the
due date for furnishing the annual return for the relevant financial year or from
the date of erroneous refund, with the notice issued at least three months prior
.
o Amendment: Proposes aligning the notice and order issuance periods with
those under Section 74 to provide consistency.
• Section 74: Pertains to fraudulent cases.
o Current provisions: Demand order must be issued within five years from the due
date for furnishing the annual return for the relevant financial year or from the
date of erroneous refund, with the notice issued at least six months prior.
o Amendment: Introduces flexibility and a common approach to the time limits
for issuing notices and orders across both sections.
2. Introduction of Section 74A:
• Scope: Applies to tax discrepancies for the financial year 2023-24 onwards,
considering this will be approved in the coming Budget.
• Provisions: Detailed clause of 74A to be analysed

Extended Time Limit for Reduced Penalty Payments
Context and Background: Under the current GST framework, taxpayers can avail themselves
of a reduced penalty if they pay the tax demanded along with interest within 30 days of the
issuance of a demand notice. This provision is stipulated in sub-section (8) of Section 73 and
sub-section (8) of Section 74 of the CGST Act. However, stakeholders have indicated that this
30-day period is often insufficient for taxpayers to analyze the demand notice, arrange funds,
and make the payment.
Key Amendment:
The GST Council has recommended extending the time limit for taxpayers to avail the benefit
of reduced penalty from 30 days to 60 days. This extension aims to provide taxpayers with
more time to comply with the demand notices and benefit from reduced penalties.
Detailed Provisions:
1. Current Provisions:
o Section 73(8): For non-fraud cases, if the taxpayer pays the tax along with
interest within 30 days of the issue of the demand notice, no penalty is payable,
and all proceedings are concluded.
o Section 74(8): For fraud cases, if the taxpayer pays the tax along with interest
and a penalty of 25% of the tax within 30 days of the issue of the demand notice,
all proceedings are concluded.
2. Proposed Change:
o The Law Committee recommended increasing the time limit from 30 days to 60
days under both Section 73(8) and Section 74(8). This recommendation is
based on feedback that 30 days is too short a period for taxpayers to analyze the
demand notice, decide on compliance, and arrange the necessary funds for
payment.
3. Rationale:
o Providing a 60-day period will give taxpayers adequate time to evaluate the
demand notice, seek professional advice if needed, and make informed
decisions about the payment. This change is expected to improve compliance
and reduce the number of disputes arising from the inability to meet the 30-day
deadline.

4. Impact:
o For Taxpayers: More time to comply with demand notices, reducing the rush
and potential errors in payment. It also provides better financial management
and planning for businesses.
o For Authorities: Likely to see higher compliance rates and reduced litigation
over late penalty payments, streamlining the enforcement process.
Conclusion:
Extending the time limit from 30 to 60 days for availing reduced penalties under Sections 73(8)
and 74(8) of the CGST Act is a taxpayer-friendly measure. It balances the need for timely
compliance with the practical challenges faced by businesses in managing tax demands and
payments.

25) Sunset Clause for Anti-Profiteering:
Amendment to include a sunset clause for anti-profiteering provisions, with new applications
accepted only until April 1, 2025.
Context and Background: Anti-profiteering measures were introduced under Section 171 of
the CGST Act, 2017, as a transitional provision to ensure that the benefits of tax rate reductions
or input tax credit (ITC) are passed on to the consumers. The National Anti-Profiteering
Authority (NAA) was established to oversee these measures. As GST has stabilized over the
years, there has been a significant reduction in complaints regarding profiteering.
Key Points of the Amendment:
1. Need for Reassessment:

o The Law Committee observed that GST implementation has largely stabilized,
and the number of complaints regarding profiteering has significantly
decreased. Over the past year, only an average of fewer than one complaint per
month has been initiated.
o Anti-profiteering provisions were initially intended to be transitional. The current
scenario suggests the necessity of reassessing the relevance of these
provisions.
2. Recommendation for Sunset Clause:

o The Law Committee recommended introducing a sunset clause in Section 171
of the CGST Act. This clause will specify a date beyond which no new
applications for examination of profiteering can be filed.
o The suggested date for the sunset clause is 1st April 2025. This means that from
this date onwards, the Authority will not accept any new applications related to
anti-profiteering.
3. Handling of Pending Cases:

o The Competition Commission of India (CCI) has been handling anti-profiteering
cases since December 2022. However, due to its non-core function and the
number of pending cases, it is proposed that the Principal Bench of the GST
Appellate Tribunal (GSTAT) be given the mandate to adjudicate these cases.
o Amendments are proposed to enable the Principal Bench of GSTAT to handle
anti-profiteering cases, ensuring their expeditious disposal.

o Amend Section 171 to include a proviso empowering the government to notify a
date from which the Authority will not accept new applications for examination
.
o Amend Section 109 of the CGST Act to empower the Principal Bench of GSTAT
to handle anti-profiteering cases and to notify the scope of cases that can be
heard only by the Principal Bench.
• For Businesses:
o This sunset clause provides clarity and a finite timeline for compliance and
potential disputes related to anti-profiteering measures.
o It reduces the ongoing compliance burden related to maintaining
documentation specifically for anti-profiteering purposes beyond the notified
date.
• For Consumers:
o Ensures that any benefits due to tax rate reductions or ITC are passed on to
consumers until the sunset date.
o Post-sunset date, regular market mechanisms and consumer protection laws
will continue to safeguard consumer interests.
Conclusion:
The introduction of a sunset clause for anti-profiteering provisions marks a significant step
towards simplifying the GST compliance landscape. This change reflects the maturity of the
GST regime and the reduced necessity for stringent transitional provisions as businesses and
the tax ecosystem have adapted to the new tax structure.

26) Amendment to Restrict IGST Refund:
Amendments to restrict refund of IGST for goods subjected to export duty, including supplies
to SEZs.
Context This amendment aim to prevent the misuse of refund provisions and ensure that the
benefits are availed only by genuine exporters.
Key Amendments:
1. Amendment to Section 16 of the IGST Act, 2017:

o Insertion of Sub-section (5):
▪ A new sub-section (5) has been proposed to be added to Section 16 of
the IGST Act, which stipulates that no refund of unutilized input tax credit
(ITC) on account of zero-rated supply of goods or integrated tax paid on
account of zero-rated supply of goods shall be allowed where such zero-
rated supply of goods are subjected to export duty.
2. Amendment to Section 54 of the CGST Act, 2017:

o Insertion of Sub-section (15):
▪ A corresponding amendment is proposed for Section 54 of the CGST
Act, which states that no refund of unutilized ITC or integrated tax paid
on account of zero-rated supply of goods shall be allowed where such
goods are subjected to export duty.
Rationale for the Amendments:
• Preventing Misuse:
o These amendments aim to prevent the misuse of IGST refund mechanisms. By
restricting refunds for goods subjected to export duty, the amendments ensure
that exporters cannot exploit the refund provisions to gain undue benefits.
• Policy Objective:
o The primary policy objective is to ensure domestic availability and price stability
of goods subject to export duty. Allowing refunds for such goods could
undermine the intent of export duties, which is to control inflationary tendencies
and ensure sufficient supply within the domestic market.
Impact on Exporters:
• Exporters of Goods Subject to Export Duty:

o Exporters dealing with goods that are subjected to export duty will no longer be
able to claim refunds of unutilized ITC or IGST paid on such goods. This could
affect their cash flow and necessitate adjustments in their financial planning.
• General Exporters:
o Exporters of goods not subjected to export duty will continue to claim refunds
as per the existing provisions. The amendments specifically target the subset of
goods under export duty, without impacting other zero-rated supplies.
Implementation:
• Legislative Changes:
o The proposed amendments require changes to both the IGST Act and the CGST
Act. These changes will come into effect following the necessary legislative
process and notifications by the government.
• Guidance and Compliance:
o Exporters and tax practitioners will need to stay informed about these changes
to ensure compliance. Proper guidance and updated accounting practices will
be essential to navigate the new refund restrictions.
Conclusion:
The amendments to restrict IGST refunds for goods subjected to export duty reflect the
government's efforts to prevent tax evasion and ensure the intended policy outcomes of export
duties. Exporters dealing with such goods will need to adjust their operations and financial
strategies accordingly.

27) Threshold for B2C Inter-State Supplies:
Reduction of the reporting threshold for B2C inter-state supplies in Table 5 of FORM GSTR-1
from Rs. 2.5 lakh to Rs. 1 lakh.
Context and Background: The GST Council has proposed an amendment to reduce the
threshold for reporting Business-to-Consumer (B2C) inter-State supplies. This amendment
aims to enhance tax compliance and provide more detailed data to tax authorities for better
verification and audit processes.
Key Features:
1. Current Threshold:
o The existing threshold for reporting invoice-wise details of inter-State B2C
supplies in FORM GSTR-1 is ₹2.5 lakhs. This means that suppliers only need to
provide detailed information for individual invoices that exceed this amount.
2. Proposed Change:
o The threshold for reporting invoice-wise details for inter-State B2C supplies is
proposed to be reduced from ₹2.5 lakhs to ₹1 lakh. This adjustment aims to
increase the granularity of data available to tax authorities, facilitating better tax
compliance and cross-verification of Integrated Goods and Services Tax (IGST)
settlements.
3. Rationale:
o Tax administrations have argued that lowering the threshold will provide more
comprehensive data, aiding in the verification of B2C supplies by suppliers. This
change is expected to improve the accuracy of tax reporting and enable
consuming states to cross-verify the IGST settlement more effectively.
4. Implementation:
o The amendment will initially lower the threshold to ₹1 lakh in a phased manner.
This gradual approach is intended to balance the need for more detailed
reporting with the compliance burden on taxpayers.

5. Impact on Taxpayers:
o Taxpayers will need to furnish detailed invoice-wise data for inter-State B2C
supplies with invoice values exceeding ₹1 lakh in their FORM GSTR-1. This
change increases the reporting requirements and may require adjustments in
their accounting and reporting systems to comply with the new thresholds.
• For Small and Medium Enterprises (SMEs):

o SMEs engaging in inter-State B2C transactions will need to update their
reporting systems to capture and report detailed invoice data for transactions
above ₹1 lakh. This may increase their administrative workload, but it also
provides an opportunity to improve their record-keeping and compliance
practices.
• For Tax Authorities:

o Enhanced data granularity will enable tax authorities to perform more detailed
audits and cross-verifications, reducing tax evasion and increasing overall
compliance.
Conclusion:
The reduction in the threshold for B2C inter-State supply reporting is a significant step towards
improving tax compliance and transparency in the GST regime. Taxpayers need to adapt to
these changes to ensure accurate and timely reporting, while tax authorities will benefit from
more detailed data for better oversight.

28) Mandatory Monthly Filing of FORM GSTR-7:
Recommendation for monthly filing of FORM GSTR-7 by TDS deductors, with no late fee for
delayed filing of NIL returns.
Context and Background: FORM GSTR-7 is a return to be filed by taxpayers who are required
to deduct tax at source (TDS) under Section 51 of the CGST Act, 2017. This form captures the
details of TDS deducted, TDS liability payable, and TDS refund claimed if any.
Current Provisions:
• As per the current provisions, registered persons required to deduct tax at source are
required to file FORM GSTR-7 only for the months in which deductions have been made.
This has made it challenging for tax administrations to monitor compliance and ensure
timely filing of returns.
Key Changes and Recommendations:
1. Mandatory Filing Each Month:

o The Law Committee has recommended that filing FORM GSTR-7 should be
made mandatory for each month, irrespective of whether any TDS deductions
have been made. This change aims to improve monitoring and compliance by
TDS deductors.
2. Nil Returns:
o If no deductions are made during a month, the TDS deductors will still be
required to file a nil return in FORM GSTR-7. This helps in keeping a track of all
registered TDS deductors and ensures they are regularly filing their returns.
o The recommendation includes a provision that no late fee should be payable for
delayed filing of such nil returns. This is intended to encourage compliance
without penalizing taxpayers for periods with no activity.
3. Invoice-Level Reporting:
o The format of FORM GSTR-7 is to be amended to allow for invoice-level
information. Currently, the form requires only GSTIN-wise details of the tax
deducted at source. This change will enable deductees to accept or reject TDS
deducted at the invoice level, improving accuracy and reconciliation of tax
details.

4. Technical and Administrative Adjustments:

o GSTN (Goods and Services Tax Network) may provide functionality for single-
click filing of nil returns on the common portal or via a mobile application. This
will simplify the process for taxpayers, making it easier and more convenient to
comply with the filing requirements.
• For TDS Deductors:

o TDS deductors must now ensure they file FORM GSTR-7 every month, even if
no tax has been deducted. This necessitates regular tracking and timely filing to
avoid any compliance issues.
• For Deductees:
o Deductees will benefit from the improved accuracy in TDS reporting due to
invoice-level details, facilitating better reconciliation and acceptance of TDS
credits.
• For Tax Authorities:

o Enhanced monitoring and compliance tracking of TDS deductors will be
possible, helping to identify non-compliant entities more effectively.
Conclusion:
The mandatory monthly filing of FORM GSTR-7, along with the requirement for nil returns and
invoice-level reporting, represents a significant step towards improving GST compliance and
ensuring accurate TDS deductions. These changes aim to streamline processes and provide
better oversight for tax authorities, while also simplifying compliance for taxpayers.
Over all Summary of 53rd GST council meeting : The 53rd GST Council meeting introduced
several significant amendments to streamline compliance, enhance transparency, and reduce
tax evasion. Key decisions included extending the time limit for availing reduced penalties,
implementing biometric-based Aadhaar authentication for GST registration, and introducing a
sunset clause for anti-profiteering provisions. These measures reflect the Council's commitment
to improving the GST regime's efficiency and robustness.

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Source : The document from the Press Information Bureau.

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16) Reverse Charge Mechanism (RCM) Invoices: ...................................................... 35

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A. Changes in GST Tax Rates:

I. Recommendations Relating to GST Rates on Goods:

Decrease in GST Rates:

2) SEZ Imports: Exemption of Compensation Cess on imports by SEZ Unit/developers for

a. Extension of IGST exemption on imports of specified items for defence forces

a. Exemption of services provided by Indian Railways to the general public,

5) Accommodation Services: Exemption for accommodation services up to Rs. 20,000

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6) Co-Insurance Premium: Declaration of co-insurance premium as 'no supply' under

7) Reinsurance Services: Declaration of ceding commission/re-insurance commission

8) Reinsurance Services for Specified Insurance Schemes: Regularization of GST

9) Statutory Collections by RERA: Exemption of statutory collections made by Real

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B. Measures for Facilitation of Trade:

1) Conditional Waiver of Interest and Penalty:

o Insertion of Section 128A in CGST Act to provide for conditional waiver of

Key Provisions of Section 128A:

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Rationale Behind the Amendment:

1. Challenges During Initial Years:

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2) Reduction of Government Litigation:

Objectives: The primary objectives of this recommendation are:

1. Monetary Limits for Filing Appeals:

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Rationale Behind the Amendment:

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3) Reduction in Pre-Deposit for Filing Appeals:

1. Reduction of Pre-Deposit Amounts:

o Appeal to Appellate Tribunal:

▪ New Requirement: The pre-deposit amount for appeals to the

Rationale Behind the Amendment:

1. Ease Financial Burden:

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4) Taxation of Extra Neutral Alcohol (ENA):

Key Discussions and Recommendations:

1. Legal Opinions and Supreme Court Judgments:

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1. Amendment in GST Law:

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5) Reduction in TCS Rate for ECOs:

1. Current TCS Rate:

Rationale Behind the Reduction:

1. Ease Financial Burden on Suppliers:

1. Amendment to Section 52(1) of CGST Act:

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1. Improved Cash Flow for Suppliers:

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6) Time for Filing Appeals in GST Appellate Tribunal:

o Amendment to allow a three-month period for filing appeals before the

Rationale Behind the Amendment:

1. Providing Sufficient Time:

1. Notification by the Government: