New Delhi, Oct 8, KDC: The 57th meeting of the GST Council, chaired by Union Finance and Corporate Affairs Minister Nirmala Sitharaman in New Delhi, recommended a series of reforms aimed at simplifying GST registration, returns, refunds and dispute resolution, while easing compliance for taxpayers and improving movement of goods across states.
The Council recommended complete withdrawal of arrest powers under GST by omitting Section 69 of the Central GST Act, 2017. It also proposed raising the monetary threshold for prosecution from ₹1 crore to ₹5 crore, along with changes to provisions relating to GST offences and penalties.
The Council further recommended reducing the maximum general penalty under Section 125 of the CGST Act from ₹25,000 to ₹10,000. It also proposed a minimum threshold of ₹10,000 for issuing show-cause notices and a reduced penalty of 5% in specified non-fraud cases where tax and interest are paid within the prescribed period.
On refunds, the Council recommended a system-based mechanism to expedite processing and reduce manual intervention. Under the proposed first phase, full refunds of excess balances in the electronic cash ledger would be sanctioned automatically, while 90% of eligible claims relating to zero-rated supplies and inverted duty structure would be provisionally sanctioned through an automated, risk-based system.
The Council also recommended measures to simplify GST registration and cancellation. These include clearer documentation requirements, a more user-friendly GST portal and automatic acceptance of several registration amendments. A simplified registration mechanism was also recommended for small sellers operating through e-commerce platforms.
For small taxpayers, the Council recommended waiver of late fees on delayed returns for those with annual turnover of up to ₹5 crore, provided the delayed return is filed by the end of the month in which it was due. It also approved in principle an optional Annual Return Quarterly Payment scheme for taxpayers with turnover up to ₹5 crore engaged exclusively in supplies to unregistered persons.
To facilitate movement of goods, the Council proposed that vehicles carrying goods should generally be intercepted only on the basis of specific intelligence and with authorisation from an officer not below the rank of Joint Commissioner. It also recommended restricting interception in transit States, subject to specified exceptions such as the absence of an e-way bill or documents showing the origin or destination of goods.
The Council also recommended wider input tax credit eligibility, including removal of certain restrictions covering outdoor catering, health and life insurance, telecommunications towers, pipelines outside factory premises and certain other supplies.
Among other measures, the Council recommended reforms concerning exports of services, treatment of intellectual property rights, passenger transport and rental services using electric vehicles, delivery services through e-commerce operators, helicopter passenger transport from specified northeastern locations, storage of seeds meant for sowing and several other sectors.
The GST Council also recommended an optional scheme for small consumer-facing businesses with turnover up to ₹5 crore, along with measures to facilitate export of services and streamline compliance processes.
The Finance Ministry clarified that the recommendations would take effect through the relevant circulars, notifications and amendments to law, which alone will have the force of law. (KDC)
