• Notification Date: 29-06-2023
• Notification No: N/A

Anticipating the Outcomes of the Upcoming GST Council Meeting

Unlike at the preliminary stage of GST implementation, where the GST council used to meet every month, the duration gap of meetings now is more on a requirement basis. The next meeting is scheduled on 11th July 2023 at Vigyan Bhawan, New Delhi, and will be directed by Hon’ble Union Finance Minister Nirmala Sitharaman. The upcoming GST Council meeting would be special as it is the 50th GST Council Meet and will mark the 6th Birthday of the Goods and Services Act, 2017. 

The main agenda for the meeting is to discuss several key issues, which include the following: 

Setting up of the GST Appellate Tribunals (GSTATs), 

GST on Casinos, Online Gaming, and Horse Racing, 

Amendments in the e-Invoicing Timelines, 

Automation of GST Return Scrutiny and Expansion of the Taxpayer Base, 

Inverted Duty Structure (IDS) on Textiles. 

The key matters that will be considered in the council meeting are abbreviated below: 

1. Setting up of the GST Appellate Tribunals (GSTATs):  

GST appellate tribunals discussion shall witness notable progress, as establishing GSTATs has now been a long-pending demand by taxpayers and is expected to reduce the burden on taxpayers and courts by streamlining and expediting indirect tax litigations. At present, taxpayers only have one option for filing their appeals and that is through the route of High Courts, which is a very time-consuming process for the taxpayers. The order against the appeal that the commissioner must pass will be delayed due to a delay in implementing corrective measures by the government which has been causing businesses to have an enormous blockage of working capital, besides inflationary pressure on the market. If GSTATs are set up, they will be the second forum of appeal and would also serve as a common forum for dispute resolution between the Centre and the states. While the foundation stone has already been laid down in this year’s Union Budget, the industry is expecting the GST Council to complete the procedural aspects to ensure GSTAT is up and running at the earliest. 

2. GST on Casinos, Online Gaming, and Horse Racing: 

During the last year, Council set up a Group of Ministers (GoM) to deliberate the taxation on online gaming, casinos, and horse racing. Currently, GST on online gaming is charged at 18 per cent for skilled games without betting and 28 per cent for games of chance, such as betting and gambling. While the GoM decided on a 28 per cent GST rate on all the earnings from all three categories i.e., casinos, online gaming, and horse racing, GoM is yet to reach a consensus on the base value for applying the tax rate. Recently Karnataka High Court also quashed a $3 billion demand differentiating between the game of skills vs the game of chance. However, the notices and demands are being raised at various jurisdictional levels, therefore, the industry expects that a final decision be taken in this meeting so that there is clarity on taxability. 

3. Amendments in the e-Invoicing Timelines: 

Even though it’s been over two years since the implementation of e-invoicing until now, there has been no time limit for generating e-invoices. Taxpayers usually consolidate and generate e-invoices for a week or even a month and sometimes backdate their e-invoices. But, recently, the seven-day time limit for reporting e-invoices on Invoice Registration Portal (IRP) surprised enterprises. It was announced that the seven-day limit will apply only to taxpayers with a turnover of Rs 100 crore and more. However, an advisory was issued postponing the time limit provision to report e-invoices by three months. The authorities are yet to announce the new implementation date. Hence, the Council may discuss it in the upcoming Council meeting and propose an amendment to the GST law for clarity to taxpayers. 

4. Automation of GST Return Scrutiny and Expansion of the Taxpayer Base:  

Hon’ble Finance-Minister (FM), Smt. Nirmala Sitharaman recently asked the GST department to automate the GST returns scrutiny process and implement a plan to increase the taxpayer base through the enhanced use of technology. After a review with senior officials of government, the FM directed the CBIC to study the cases already booked, form a comprehensive analysis, and come up with recommendations on tech-based solutions. While the department is expected to take measures on this account as instructed by FM, there is a chance that this could come up for discussion in the upcoming Council meeting, especially on the matter of return scrutiny and revenue augmentation including the grievance redressal, employee welfare and the improvement of taxpayer services. The CBIC has already proposed additional validation on registration and return filing to curb fake invoicing which might get vetted in this meeting.  

5. Inverted Duty Structure (IDS) on Textiles: 

No timeline has been offered to rectify the Inverted Duty Structure. (IDS) (the term ‘IDS’ refers to a situation where the rate of tax on inputs purchased is more than the rate of tax on outward supplies. That means an Inverted Duty Structure arises when the tax paid on Inward Supplies is higher than the tax payable on outward supplies). IDS results in ITC accumulation and this problem persists in the textile industry for a long time. It could be amended either by rationalizing input or output GST rates or by permitting the industry to claim the cash refund of the accumulated ITC (but Government has yet to plan and implement this refund route which will indeed be beneficial for the taxpayers as well as the economy. Moreover, the inverted structure is encouraging imports of synthetic textiles, furnishing a significant blow to domestic manufacturers of textiles, especially in Gujarat. 

While GST compliance and administration are settled, the expectations from council meetings have also changed from the ease of compliance to bringing clarity on disputed issues and safeguarding the interest of honest taxpayers by reducing departmental interactions. We hope GST legislation and administration get matured in the next couple of years. We do not require frequent notification/clarifications by the authorities.