GST Council keeps tax rate same, but defers key reforms

Setting up of a GST Appellate Tribunal, tax treatment for online gaming, tobacco and gutkha were some agenda items that were not addressed

December 17, 2022 03:14 pm | Updated January 07, 2023 10:32 am IST - New Delhi

Union Finance Minister Nirmala Sitharaman addresses a press conference after the 48th GST Council meeting, in New Delhi on December 17, 2022.

Union Finance Minister Nirmala Sitharaman addresses a press conference after the 48th GST Council meeting, in New Delhi on December 17, 2022. | Photo Credit: Twitter/@FinMinIndia

The Goods and Services Tax (GST) Council on Saturday clarified tax provisions on items ranging from fryums to sport utility vehicles (SUVs) to reduce disputes. It also approved decriminalisation of some offences but could not find the time to discuss half its agenda including the setting up of a keenly-awaited GST Appellate Tribunal.

The council, which met after a gap of six months over videoconference and under the chairmanship of Union Finance Minister Nirmala Sitharaman, decided to curtail its meeting after some States’ ministers cited ‘other committed business’ and requested that the meeting be concluded at about 1.:30 p.m.

As many as three ministerial groups’ reports on critical issues including the taxation regime for tobacco and gutkha businesses, the setting up a tribunal to settle disputes with taxpayers as envisaged under the GST law of 2017, and the determination of the tax treatment for online gaming, casinos and horse-racing were put on hold until the next meeting of the Council.

Of the 15 items on the agenda, eight were taken up and approved by the Council including a decision to scrap the 5% GST levy on a cattle feed ingredient — husk of pulses; and the reduction of the levy on ethyl alcohol used by refineries to blend with petrol to 5% from 18%. “Extending the 5% tax levy for ethyl alcohol, allowed for oil marketing companies to blend with petrol, to refineries will further reduce our dependence on imported crude and save precious foreign exchange,” Revenue Secretary Sanjay Malhotra said.

The Council’s major decision, he said, was to decriminalise GST offences that pertain to obstruction or preventing any officers from discharging their duty, deliberate tampering of material evidence and failure to supply the information, while doubling the threshold limits of tax amounts for initiating prosecution from ₹1 crore to ₹2 crore for all offences other than those involving fake invoices.

“In the same spirit, to reduce the workload of courts, the compounding amount under certain offences has been reduced from 50% to 150% of the amount, to 25% to 100% of the amount involved,” Mr. Malhotra said. However, these changes, he signalled, would take time to implement as States would have to amend their respective GST legislations, while the Centre would include these changes in the Finance Bill of 2023-24.

Several clarifications were approved about which rates would apply on items where there was disparate treatment by different tax authorities. This included a clarification that the ‘no claim bonus’ given to customers of insurance policies like motor and health, would attract no GST.

Also read | Explained | What is the controversy over GST levies on food?

On the larger overhaul of the complex GST rate structure and the rationalisation of inverted duty structures, Ms. Sitharaman indicated that the Group of Ministers dealing with the issue, chaired by Karnataka Chief Minister Basavaraj Bommai, was yet to submit its report.

The GoM had submitted an interim report prior to the last meeting of the Council in Chandigarh in June, based on which some rate changes were effected on items such as pre-packed, unbranded food items and milk products.

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