Font size:
Print
53rd Goods and Services Tax (GST) Council Meeting
Context:
The GST Council convened after nearly nine months and deliberated on clarifications, tweaks, forbearances, and procedural changes based on industry feedback.
Key Decisions and Reforms:
- Tax Relief and Exemptions: Exempted hostel accommodation up to ₹20,000/month and railway passenger services from GST.
- Uniform 12% GST rate approved for packing cartons, milk cans, and solar cookers.
- Taxpayer Benefits: Waived interest and penalties on GST dues for the first three years if paid by March 2025.
- Reduced pre-deposits for filing appeals, including those with upcoming GST Appellate Tribunals.
- Introduced a new form for correcting errors in previous returns.
- Structural Reforms: Ended the anti-profiteering clause to ease industry compliance.
- Mandated biometric-based Aadhaar authentication for GST registrations nationwide in phases to streamline processes and prevent fraud.
GST Council’s Recommendation: Biometric-based Aadhaar Authentication
- It aims to combat fraudulent Input Tax Credit (ITC) claims through fake invoices and formalise measures against GST fraud observed since the introduction of the GST regime.
-
- ITC claims are a means to reduce tax liability by indemnifying the tax already paid on inputs for the tax liability computed on the output.
-
- Fake Invoices are used to falsely claim ITC without actual supply of goods or services.
- Methods used to commit fraud identified by Central Board of Indirect Taxes and Customs (CBIC):
-
-
- Direct use of invoices without receipt of goods/services
- Diversion of goods to entities unrelated to output production
- Circular invoicing through shell/dummy companies to inflate turnover
-
- Impact and Motive of Fraud:
-
- Financial Impact: 29,273 bogus firms were detected evading Rs 44,015 crore in ITC, leading to Rs 4,646 crore in savings.
- Other Motives: Facilitates money laundering, inflates turnover for financial benefits and tax evasion.
About GST Council:
- Nationwide GST was proposed by the Kelkar Task Force on Indirect Taxes in 2000.
- It was formed to simplify India’s tax structure by replacing multiple Centre and state taxes with a unified Goods and Services Tax.
- It is a constitutional body, empowered by the 101st Amendment Act of 2016, under Article 279A.
- Composition:
-
- Chairman: The Union Finance Minister,
- Members: The Union Minister of State Finance and each state nominates its finance or taxation minister or another minister as a member.
- Functions:
- Recommends on GST-related issues like taxable goods/services, exemptions, model laws, and tax rates.
- Determines GST rate slabs and considers special rates during natural disasters or for specific states.
- Decision-Making Process: Decisions require a three-fourths majority of weighted votes of members present and voting.
-
- The Central Government’s vote holds one-third weight, while all state governments combined carry two-thirds weight.
- This collective weighting promotes the essence of cooperative federalism.
- The Constitution mandates that one-half of the total GST Council members must be present to constitute a quorum.
