GST Council Approves Key Compliance Reforms, Focuses on Simplifying Tax Processes

By Ritwik Ghosh,Kolkata India

GST Council Approves Key Compliance Reforms, Focuses on Simplifying Tax Processes

In its recent conclave, the Goods and Services Tax Council eschewed major discussions in favor of ratifying a plethora of procedural and compliance-related measures, anticipated to provide significant relief and clarity to industries and taxpayers alike.

The Council’s resolutions included extending deadlines for input tax credits, adjusting monetary thresholds for appeals within the GST Appellate Tribunal, reducing pre-deposit requirements for appeals, and introducing a sunset clause for anti-profiteering provisions. These steps are hailed as beneficial for the trade and industry sectors.

Post-meeting, Finance Minister Nirmala Sitharaman emphasized the goal of simplifying the GST framework for taxpayers. “Our objective is to reduce compliance burdens. Notices are not being issued indiscriminately. Only 1.96% of active taxpayers have received notices from the Central GST as of December 31, 2023,” she stated.

Key Announcements:

  • Extended Deadlines and Reduced Pre-Deposits: The Council has extended the due date for claiming input tax credits and reduced pre-deposit amounts for filing appeals, aimed at easing cash flow for taxpayers.
  • Sunset Clause for Anti-Profiteering: A sunset date of April 1, 2025, has been set for new applications under anti-profiteering provisions, marking a significant procedural shift.

Experts welcomed these developments, noting the Council’s responsiveness to business concerns and its commitment to enhancing the ease of doing business.

MS Mani, Partner at Deloitte India, remarked, “Today’s tweaks indicate a clear intent to streamline GST processes while making it tougher for non-compliant taxpayers.”

Future Outlook:

The next GST Council meeting, slated post-Budget in August, is expected to address unresolved issues. Notably, the Council will revisit the 28% GST on online gaming, horse racing, and casinos, which was not discussed in the current session.

Bihar Deputy Chief Minister Samrat Choudhary, the new Chair of the Group of Ministers on rate rationalization, will present a status report on the ongoing rate rationalization exercise at the next meeting.

The issue of GST compensation cess will also be on the agenda. In October, the Council decided to discuss the allocation of revenue collected from this cess, which funds state compensation for COVID-19 revenue losses.

Inclusion of Petrol and Diesel in GST:

Addressing a query on incorporating petrol and diesel into GST, Sitharaman clarified that while the central government supports this inclusion, the decision lies with the states. The legislative framework is already in place, pending state consensus on tax rates.

Trade Facilitation Measures:

The Council has proposed waiving interest and penalties for demand notices issued under Section 73 of the CGST Act for fiscal years 2017-18, 2018-19, and 2019-20, provided the taxpayer pays the full tax amount by March 31, 2025. Additionally, the pre-deposit requirement for filing appeals has been halved to 10%, with a cap of Rs 20 crore each for CGST and SGST.

Amendments to Section 112 of the CGST Act will allow a three-month appeal period from a government-notified date for orders passed before the notification date.

Industry Reactions:

Saurabh Agarwal, Tax Partner at EY, lauded the reforms, stating, “The Council’s efforts to address past errors and provide clarity on ENA taxation and input tax credits demonstrate a positive move towards reducing litigation.”

Ankur Gupta of SW India noted that waiving penalties and interest for certain disputes will alleviate financial burdens on taxpayers, especially those with weak grounds for appeal.

KPMG’s Abhishek Jain highlighted the government’s focus on easing business operations, anticipating further reliefs for industries such as online gaming, insurance, aviation, and shipping in forthcoming sessions.


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