The 55th GST Council meeting, held on December 21, 2024, resulted in a series of key decisions aimed at refining India's Goods and Services Tax (GST) framework. All the recommendations affecting small taxpayers have been discussed below.
1. Waiver of late fee on delayed furnishing of FORM GSTR-9C for the period from 2017-18 to 2022-23
a. The GST Council recommended that late fees will be applicable on delays in the filing of GSTR-9C. Up till now there was an understanding in the industry that late fees were applicable only on late filing of FORM GSTR-9. But this understanding is set to be altered by the CBIC through a circular.
b. However, for the annual returns pertaining to the period 2017-18 to 2022-23, the GST Council also recommended issuing a notification under section 128 of the CGST Act, 2017, for the waiver of the amount of late fee for delayed filing of FORM GSTR-9C, provided the said FORM GSTR-9C is filed on or before 31st March 2025. However, the late fees on late filing of FORM GSTR-9 will still be applicable for all these financial years.
2. Reduction in pre-deposit fees for filing appeals in certain cases
a. Amendment in section 107 and section 112 of CGST Act, 2017 to provide for amendment in the amount of pre-deposit with respect to the release of detained goods and means of transport as mentioned in Sec 129(3) of the CGST Act, 2017.
b. Up till now, as per the proviso to Sec 107(6), which talks about the penalty in case of detention during transportation, 25% of the penalty used to be the pre-deposit amount, but it is recommended to reduce it to 10%. This pre-deposit amount is to be paid before the filing of appeals before the Appellate Authority.
c. Further, it has been proposed to insert a new proviso to section 112(8) of the CGST Act, 2017, providing for payment of a pre-deposit at 10% for filing appeals before the Appellate Tribunal in cases involving only the demand of a penalty without involving the demand of tax. It is not clear whether this demand will pertain to Sec 129(3) notices or not.
3. Composition Scheme
One recent change, w.e.f. 10-10-2024*, was the introduction of GST on renting of commercial property under the Reverse Charge Mechanism (RCM) if the recipient of services is a registered person.
This entry in RCM notification # meant that if any registered person was conducting business on rented premises (mostly commercial property), then he was liable to pay GST at 18% on RCM through the electronic cash ledger and claim input tax credit if he was so eligible. An earlier notification had already brought rented residential property under the purview of RCM if let out to a registered person. So, now with this entry, all the properties are now covered under RCM entries.
Many a time, the small business units and units whose customers were unregistered persons had taken registration under the Composition Scheme. As a composition dealer also has to pay GST on RCM, this entry was increasing the expenses, as a composition dealer cannot claim the credit of taxes paid.
The GST Council has recommended excluding the taxpayer under the Composition Scheme from the purview of this entry* of the notification.
However, the period from the date when the notification became effective, i.e., from 10.10.2024 till the date of issuance of the proposed notification, will be regularized on an "as is where is" basis."
*Sr. No. 5AB introduced vide Notification No. 09/2024-CTR dated 08-10-2024
# Notification No. 13/2017-CTR dated 28-6-2017
4. No GST on voucher sale
In a significant move to address long-standing concerns regarding the taxability of vouchers under GST, the GST Council made the following recommendations:
To omit sections 12(4) and 13(4) from the CGST Act, 2017, i.e., the time of supply provisions with respect to vouchers, and rule 32(6) from the CGST Rules, 2017, i.e., the manner of determination of valuation of vouchers.
Further clarification on the following issues has been issued widely. Circular No. 243/37/2024-GST dated 31st December, 2024 -
- Transactions in vouchers shall be treated neither as a supply of goods nor as a supply of services.
- Distribution of vouchers on a principal-to-principal basis shall not be subject to GST. That is when the vouchers are purchased by a distributor for sale to a sub-distributor/corporate/end customers, and revenue is generated through a trading margin, which is a difference between the acquisition cost and the selling price of the vouchers by the said distributor. This transaction shall not be subject to GST.
- However, where vouchers are distributed on a principal-to-agent basis, the commission/fee or any other amount charged by the agent for such distribution is taxable under GST.
- Additional services such as advertisement, co-branding, marketing and promotion, customization and technology support, customer support, etc., related to vouchers would be leviable to GST on the amount paid for these services.
- Unredeemed vouchers (breakage), i.e., vouchers that remain unused/unredeemed at the end of their expiry period, would not be considered as supply under GST, and no GST is payable on income booked in the accounts in respect of breakage.
5. Reduction in compensation cess rate on supplies to merchant exporters
It has been recommended to reduce the rate of Compensation Cess to 0.1% on supplies to merchant exporters at par with the GST rate on such supplies.
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