The latest GST council meeting, held on 22 June 2024 set the stage for the announcements in the upcoming budget. The Council delved into multiple industry issues and addressed many matters, largely in favour of the industry.
Every year at this time, the financial community, economists, industry leaders, and taxpayers eagerly await the Hon. Finance Minister’s announcements. The Modi 3.0 administration is still concentrating on fiscal consolidation.
Important announcements and suggestions related to the Goods and Services Tax (GST) are made on a regular basis during this year’s GST Council sessions. The statements in the next budget were framed by the most recent GST council meeting, which took place on June 22, 2024. The Council looked into a number of industry-related concerns and resolved numerous issues, mostly to the industry’s advantage. Reviewing the fine print of the specific legal changes, including notifications and circulars, is crucial.
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Several changes were recommended, to give effect to which, the GST law would need to be amended. Some of the salient ones having a major impact on the industry include:
1. The CGST Act’s proposed section 11A introduction
Because of typical trade practices, this rule would enable the government to regularize non- or short-term tax levies:Under this clause, a number of industries (such as international airlines, shipping corporations, online gaming organizations, etc.) would look forward to regularizing their continuing disputes involving industrial practices.
2. A retrospective change to the CGST Act’s section 16(4)
This suggests extending the deadline for filing claims for the input tax credit (ITC) from FY2017–18 to FY2020–21 till November 30, 2021. The industry is eager to learn what became of the ITC during this time, which was either not claimed at all or reversed once a claim was made because it was made too late.
3. The CGST Act’s proposed section 128A amnesty program:
One of the most awaited provisions of the GST law is this one: if the taxpayer pays the full amount of tax required in the notice by March 31, 2025, interest and/or penalties will be waived conditionally for tax demands without alleging fraud, etc. during the period FY2017–18 to FY2019–20. The industry is interested in how certain concerns—like demands which last for many periods, demands that are reduced or accepted on certain grounds in a notice, etc.—are handled.
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In addition to the above, some matters, not specifically mentioned by the GST Council,but requiring resolution, are:
1. The online gaming sector
A major source of worry has been the 28% GST tax that is levied on player deposits without making a distinction between “games of chance” and “games of skill.” The business has often argued that the GST ought to only be applied to the income from commissions and fees, not to the amount deposited (or bet value, in the case of ongoing issues for previous periods). Is it possible, under the proposed Section 11A, to settle issues from the previous time by recognizing industry practices?
2. Multiplicity of investigative authorities
There have been cases where several authorities have opened investigations or proceedings against the same taxpayer for the same issue or period. The CGST Act’s Section 6(2)(b) makes it abundantly evident that once a proper officer has started an investigation or process, no other authority may start one in the same subject. This is a huge area of concern for the business, and in order to prevent duplication of efforts, comprehensive instructions that should be followed in letter and spirit must be issued right away.
3. Guidelines to prevent punishing the buyer for the seller’s noncompliance
In order to be eligible for an Input Tax Credit (ITC), the seller must have remitted the taxes that were collected. But there’s no way for a buyer to find out, which puts an unjustifiable burden on them. The government need to eliminate such an irrational requirement or provide a tool for purchasers to verify such information.
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Certain expectations under customs are as follows:
1. Explicitness about the solar sector’s eligibility for MOOWR benefits
According to Customs Instruction No. 13/2022, dated July 9, 2022, power generating equipment will not be eligible for MOOWR benefit. The Delhi High Court, however, invalidated the earlier instruction in the ACME Heergarh Powertech Private Limited case. It explicitly addressed the cancellation of the licenses that had already been granted and made a special observation regarding the general illegality of the instructions. It is advised to remove these limitations and let the solar power generating enterprises access to the benefits of the MOOWR plan, given the government’s emphasis on renewable energy.
2. Amnesty or settlement plans for customs disputes are introduced
It is past time for the government to introduce an amnesty/settlement program for Customs disputes in order to further reduce the number of ongoing disputes, even though there have been schemes to settle disputes under historical indirect taxes and an amnesty system is now proposed under the GST law.
Now, all eyes will be on the Hon’ble FM’s speech on July 23 to see how many of the demands made by the industry above are fulfilled. In the following years, there will be a positive decrease in the list of expectations as the laws settle.
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