48th GST Council meeting | No tax increase on any item; nod to decriminalise certain offences: Nirmala Sitharaman

The 48th GST Council meeting was held under the leadership of Union Finance Minister Nirmala Sitharaman was held in New Delhi on December 17, 2022.

At the conclusion of the meeting Ms. Sitharaman said “In this GST Council meeting, there has not been any tax increase on any item. Everything that has been done is to issue clarifications where ambiguity of interpretations prevails.”

“Majority of all that has been discussed is fitment committee’s recommendations have been brought to the Council on many items where there is confusion of rates. In the case of SUVs, we have clarified that the higher rate of 22% compensation cess is applicable to motor vehicles fulfilling four conditions - popularly known as an SUV and has an engine capacity of 1500 cc, length beyond 4,000 mm and ground clearance of 170 mm.”

“But even as we brought in this clarification, there was a request to add to this MUVs. What has been agreed by the Council is this clarification goes ahead but if anything has to be added on to this 22% cess rate, the Fitment Commitee will look into it. This whole question arose when some asked if sedans are also included in this,” said Ms. Sitharaman.

"The meeting had to be concluded by 1.30 p.m. as most State ministers had other engagements, so about seven agenda items, including the GoM report on setting up of GST Appellate Tribunals, could not be taken up. It also could not discuss taxation on tobacco and gutkha due to paucity of time,” said Ms. Sitharaman.

These pending items will be taken up at the next GST Council meet, which Ms. Sitharaman expressed hope will be held as in-person meeting. “We are trying to take up the GST Tribunal issue at the earliest possible,” she said.

GST Council agrees to decriminalise certain offences; threshold of launching prosecution doubled to ₹2 cr, said Revenue Secretary Sanjay Malhotra.

The Revenue Secretary also said “Tax rate on husk of pulses reduced to nil from 5%.”

“While a group of ministers of the GST Council submitted its report on the tax regime for casinos, online games and horse racing to the Finance Minister a couple of days, it was not circulated or included in the agenda as there was too little time for members to study its recommendations,” Revenue Secretary Sanjay Malhotra said. This report will also now be likely taken up at the next GST Council meeting.

“The major decisions the GST Council took today included one path-breaking recommendation regarding decriminalising three kinds of offences under the GST law — they pertain to Obstruction to or preventing officers from discharging their duty, deliberate tampering of evidence, failure to supply the information. Moreover, the threshold limits of tax amounts for launching prosecution under any criminal offence defined under the GST laws has been raised from ₹1 crore to ₹2 crore for all offences, other than those involving fake invoices. In the same line, in order to reduce the workload of courts, the compounding amount under certain offences has been reduced from 50% to 200% of the amount, to 25% to 100% of the amount,” Mr. Malhotra said.

While the Central government will include these decriminalisation changes in the Finance Bill for 2023-24, States will have to also suitably amend their legislations to bring the changes into effect, he added, noting that it will thus, take time to bring these changes into effect.

The GST levied on Husk of pulses including chilka and concentrates including chuni/churi, khanda — a key ingredient of cattle feed, will be reduced from 5% to zero. Ethyl alcohol, which is taxed at 5% for blending into petrol for oil marketing companies, and now the same 5% rate will be extended to refineries as well instead of the present 18%. “This will further reduce our dependence on imported crude and save precious foreign exchange,” the Revenue Secretary said.

To dispel confusion about the GST rate to be levied on Fryums, the Council has decided to clarify that Fryums manufactured using the process of extrusion is specifically covered by a GST rate of 18%.

The Council also decided that the incentive paid to banks by the Central Government under the scheme for promotion of RuPay Debit Cards and low value BHIM-UPI transactions are in the nature of subsidy and thus not taxable.

A proposed system to allow unregistered suppliers and composition tax payers to supply goods intra-State through e-commerce operators, that got an in-principle nod from the Council in June, will now kick off October 1, 2023. The Council on Saturday approved amendments to the GST Act and Rules to enable this system and granted time for e-commerce firms to develop requisite functionalities on their portals.

On the larger pending overhaul of GST rates structure and the rationalisation of inverted duty structures, Ms. Sitharaman indicated that the Group of Ministers of the GST Council, chaired by Karnataka Chief Minister Basavaraj Bommai on rationalising the GST Rate structure is yet to submit its report. “I can’t say anything at this moment because the GoMs’ report on rate rationalisation is yet to come,” she said. 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.