GST Council Meeting: 10 Major Procedural Changes Announced Despite No Rate Cuts

The 57th meeting of the GST Council concluded without any changes to the existing tax rates, but it introduced a series of significant procedural reforms aimed at making the GST regime simpler, faster, and more automated. The council prioritized improvements in registration, returns, refunds, Input Tax Credit (ITC), business closure, goods transportation, and e-commerce regulations. These measures are designed to reduce the compliance burden on taxpayers and streamline the overall taxation process.

Growth in Tax Base and Revenue

The council reviewed the performance of the two-rate GST system over the past year, noting a substantial increase in the tax base, while 8 percent. 58 lakh crore per month. 64 lakh crore per month. 13 percent during this period.

Streamlined Registration for Low-Risk Businesses

To facilitate ease of doing business, the council decided to continue the system of providing registration within three working days for low-risk applicants. 5 lakh per month. Currently, 61 percent of registrations are being processed through this automated system. On top of that, amendments to registration details, such as trade names, details of directors or partners, and addresses of additional places of business, will now be automatically accepted by the system.

Faster and Automated Refund Process

The timeline for issuing notices regarding the acceptance or deficiency of refund claims is being reduced from 15 days to 10 days. If no action is taken within these 10 days, the claim will be deemed accepted. Based on risk assessment, 90 percent of the refund amount will be approved by the system, and the order will be issued within three working days. The process for refunding excess amounts in the cash ledger will also be fully automated to ensure liquidity for businesses.

Protection for Honest Buyers and ITC Expansion

A committee of officers will be formed to study the issue of protecting honest buyers who possess valid invoices, have received goods, and made full payments to suppliers but are denied Input Tax Credit due to supplier defaults, while the committee is expected to submit its report within three months, and the matter will be discussed in the next council meeting. Also, ITC will now be available on health and life insurance taken for employees, while the council also provided for credit in cases involving telecom towers, pipelines laid outside factories, free samples, and expired stock that must be destroyed by law.

Relief from Double Taxation and Support for Small Businesses

The council addressed the issue of double taxation on services that are bought and sold again within the same business chain. This relief will benefit services such as hotel room bookings up to 7500 through agents, restaurant and catering services, and passenger transport. For small businesses with a turnover of up to 5 crore who only supply to consumers, an optional arrangement was approved in principle. This will allow them to file returns once a year and pay taxes on a quarterly basis, with detailed guidelines to be presented in the next meeting.

Simplified Goods Transport and Decriminalization

In a major relief for the logistics sector, vehicles carrying goods can now only be stopped based on specific intelligence, requiring prior permission from a Joint Commissioner or higher-ranking officer. Inspections will only occur in the state of origin and the state of destination, eliminating checks in transit states. Also, the council proposed removing the power of arrest under GST law. The threshold for prosecution will be increased from 1 crore to 5 crore, and the power to determine sentences will be left to the discretion of the courts. The maximum general penalty will also be reduced from 25000 to 10000.

Boosting Service Exports and E-commerce

Services such as testing, repair, certification, research, or processing performed in India for foreign clients will now be treated as export of services, even if the goods don't leave the country, while indian companies providing services to foreign clients through their overseas branches will also receive export benefits. For small e-commerce sellers, the registration process for inter-state sales will be simplified. A platform's warehouse in another state can be declared as the seller's principal place of business with the platform's consent, allowing small sellers to compete more effectively on a national scale.