GST Council Exempts Various Fees and Streamlines Registration to Curb
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New Delhi, India- On Saturday, the GST Council announced several tax exemptions, including hostel fees, platform tickets, railway waiting room charges, and golf cart fees. Employee stock options will also be exempt from GST. Additionally, the Council is revising the registration process to prevent fraud by bogus entities.
Finance Minister Nirmala Sitharaman clarified that while hostels operated by educational institutions were already exempt from GST, this exemption now extends to all hostels with monthly charges under Rs 20,000 per person, provided the occupant stays for at least 90 days. This move will benefit many students and working professionals in paying for guest accommodations.
Corporate guarantees, reinsurance, and e-commerce players also received relief, with the tax collected at source on net taxable supplies halved to 0.5%. The Council clarified that a 12% tax applies to all types of milk cans, solar cookers, and paper cartons. Furthermore, compensation cess on aerated beverages and energy drinks supplied to authorized defence canteen customers has been exempted.
The Council, which includes Union and state finance ministers, recommended amendments to the CGST Act to exempt tax on extra-neutral alcohol (ENA) used in manufacturing alcoholic liquor for human consumption. Previously, the Centre had relinquished its power to tax ENA.
To combat fraudulent input tax credit claims via fake invoices, the Council recommended a phased rollout of biometric-based Aadhaar authentication for GST registration. This system, piloted in Gujarat and Puducherry, will require registration at GST Suvidha Kendras or facilitation centres, a process expected to take about 15 minutes.
Several items related to tax rate reviews were not addressed in the meeting, but the Council introduced an amnesty scheme for defaulters and other measures to simplify business operations. Notably, the Centre decided to set thresholds for appealing to the GST Appellate Tribunal (Rs 20 lakh), high courts (Rs 1 crore), and the Supreme Court (Rs 2 crore). The government will not appeal cases below these thresholds unless policy issues are involved, according to Revenue Secretary Sanjay Malhotra.
Additionally, the pre-deposit amount for filing appeals has been reduced, and interest and penalties will be waived if taxpayers served notices under Section 73 of the CGST Act during FY18 to FY20 clear their dues by March. Section 73 addresses cases of unpaid tax, erroneous refunds, or wrongly availed input tax credits, excluding fraud.
Saurabh Agarwal, the tax partner at EY India, emphasized the need for a multi-faceted approach to dispute resolution, advocating for an amnesty scheme, a national authority for advance rulings, and full appointment of the GST Appellate Tribunal. He also suggested that industry engagement and audit efficiency could be improved through sectoral committees and standardized compliance manuals.
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