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Rate Cut; 3 Kinds Of Offences Decriminalised, Tax Limit For Prosecution Hiked

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The GST Council, which is headed by the Union finance minister and comprises representatives of all states and UTs, took several decisions on Saturday. It recommended to decriminalise certain offences and bring down GST on certain items to nil. The three kinds of offences to be decriminalised that have been recommended by the Council are related to — obstruction or preventing any officer in the discharge of his duties; deliberate tempering of material evidence; and failure to supply the information.

Also Read: GST Council Agrees To Cut Tax Rates On These Items To 5%, Nil; Issues Rate Clarification Too

Addressing the media after the 48th GST Council meeting, Finance Minister Nirmala Sitharaman said the meeting had 15 items on agenda, of which 8 were completed and the rest will be finished at the next meeting.

Sitharaman added that the Council did not take up the agenda of setting the appellate tribunal GSTAT due to paucity of time. It also could not discuss the taxation on tobacco and gutkha.

Revenue Secretary Sanjay Malhotra said GST on online gaming and casinos was not discussed as the report of a Group of Ministers (GoM), chaired by Meghalaya Chief Minister Conrad Sangma, on the issue submitted its report only a couple of days ago.

GST Council’s Major Decisions Today:

1) Certain offences decriminalised

2) Threshold tax amount limit for launching a prosecution in any criminal offence defined under the GST laws increased from Rs 1 crore to Rs 2 crore for all offences except fake invoices.

3) To decrease the workload of courts and ease of doing business, the fee payable by taxpayer for compounding of GST offences has been reduced to 25-100 per cent of the tax amount, from 50-150 per cent currently.

4) The GST Council also recommended to reduced the tax rate on husk of pulses, including chilka and concentrates to nil, compared with 5 per cent currently.

5) To reduce GST on ethyl alcohol to 5 per cent from 18 per cent currently, for blending purposes.

6) The Council also decided to issue circulars related to GST rates on Rab and fryums on which confusion among tax authorities remains and said they attract 18 per cent tax

7) It also issued clarification on the cess applicability on SUV cars. The higher rate of compensation cess of 22 per cent is applicable to motor vehicle fulfilling all four conditions, namely, it is popularly known as SUV, has engine capacity exceeding 1500 cc, length exceeding 4000 mm and a ground clearance of 170 mm or above.

8) It also decided to issue clarification on certain equipment and materials used  by petroleum companies for exploration, etc.

9) It was also decided to include the supply of mentha arvensis under the reverse charge mechanism, as has already been done for mentha oil. The reverse charge is a mechanism where the recipient of the goods or services is liable to pay GST, instead of the supplier.

10) It has also clarified that the no-claim bonus on insurance does not attract any GST.

The Council conducted its 48th meeting on Saturday via videoconferencing.

Abhishek Jain, partner (indirect tax) at KPMG in India, said, “Today’s GST Council meet was predominantly characterised by various clarifications being issued and trade/ compliance facilitation measure such as conditions applicable for levy of higher rate of compensation cess for SUVs, decriminalisation under GST, etc. As such, the industry players will have to wait a little more on decisions on other pressing issues such as setting up of Appellate Tribunal, rate rationalisation, online gaming taxation, etc.”

M S Mani, partner at Deloitte India, said, “The clarification on no-claim bonus not forming part of the taxable value for levy of GST would help insurance companies in the GST audits that are underway, while the increase in prosecution threshold was expected, it is necessary to gradually increase it further so that only very serious high value cases are subjected to the rigours of prosecution.”

Archit Gupta, founder and CEO of Clear, said, “There is some relief via increasing the threshold of tax amount for criminal proceedings to be activated, it has been raised from Rs 1 crore to Rs 2 crore. Perhaps, this should have been further raised.”

He added that With focus on digitisation, the government now has more resources to catch offending taxpayers and, therefore, may be in a position to offer relief to other taxpayers by raising this threshold further. “Ease of doing business has been high on the government’s agenda and therefore taxpayers were expecting further relief on this matter.”

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