Indirect Tax and GST Updates December 2024

GST Calendar –Compliances for December ’2024

Nature of Compliances	Due Date
GSTR-7 (Tax Deducted at Source ‘TDS’)	January 10,2025
GSTR-8 (Tax Collected at Source ‘TCS’)	January 10,2025
GSTR-1	January 11,2025
IFF- Invoice furnishing facility (Availing QRMP)	January 13,2025
GSTR-6 Input Service Distributor	January 13,2025
GSTR-2B (Auto Generated Statement)	January 14,2025
GSTR-3B	January 20,2025
GSTR-5 (Non-Resident Taxable Person)	January 20,2025
GSTR-5A (OIDAR Service Provider)	January 20,2025
PMT-06 (who have opted for QRMP scheme)	January 25,2025

Proposed Amendments to the CGST Act -17(5)

Revision to Section 17(5)(d)

•  A retrospective modification is suggested for section 17(5)(d) of the CGST Act, replacing the phrase ‘plant or machinery’ with ‘plant and machinery.’
• Following this amendment, the recent Supreme Court judgment (Civil Appeal No. 2948 of 2023, dated 3 October 2024), which held that the definition of plant and machinery does not apply to section 17(5)(d), will be rendered partially ineffective.

 Relief in Appeals Limited to Penalties

• Pre-deposit requirement for appeals before an appellate authority reduced from 25% to 10% for cases involving only penalties. 
• New proviso recommended to be added to section 112(8) of the CGST Act, setting a 10% pre-deposit requirement for appeals before an appellate tribunal in penalty-only cases

Updates to the Input Service Distributor (ISD) Framework

• Effective 1 April 2025, sections 2(61) and 20(1) of the CGST Act will explicitly incorporate inter-state reverse charge mechanism (RCM) transactions under the ISD mechanism, covering supplies taxed under sections 5(3) and 5(4) of the IGST Act, 2017.
• Corresponding amendments will also be made to section 20(2) of the CGST Act and rule 39(1A) of the CGST Rules to align with these changes

 Streamlined Tax Payments for Non-Registered Persons

•  A new rule 16A is proposed to enable tax authorities to issue temporary identification numbers for individuals not 

     registered under GST but required to make tax payments under rule 87(4) of the CGST Rules.

• Rule 87(4) and Form GST REG-12 will be revised to reflect this provision

 Flexibility for Composition Scheme Taxpayers

• Rule 19 of the CGST Rules is set to be revised to permit taxpayers under the composition scheme to update their ‘category of registered person’ via Table 5 of Form GST CMP-02.
• Currently, such updates are managed through Form GST REG-14.

Enhancements to the Invoice Management System (IMS)

• Section 38 of the CGST Act and rule 60 of the CGST Rules will be revised to establish a legal framework for generating Form GSTR-2B based on taxpayer activities within the IMS.
• Section 34(2) of the CGST Act will be modified to permit the reversal of input tax credit (ITC) by recipients, enabling a corresponding reduction in suppliers’ tax liabilities.
• A new rule 67B will outline the procedure for adjusting suppliers’ tax liabilities using credit notes.
• Section 39(1) of the CGST Act and rule 61 of the CGST Rules will be updated to ensure that Form GSTR-3B can only be submitted after Form GSTR-2B becomes accessible on the GST portal.

GST Council Meeting: Industry Anticipates Key Decisions on Tax Relief and Higher Levies

The upcoming GST Council meeting has drawn significant attention from industry stakeholders as discussions are expected to center around critical policy changes. Two major proposals are likely to dominate the agenda:

Tax Relief on Health Insurance Premiums

Industry representatives and policy experts have advocated for a reduction in GST rates on health insurance premiums, currently taxed at 18%. The push for relief aims to make health insurance more affordable and accessible to a larger section of the population, aligning with the government’s goal of universal healthcare coverage. If approved, this measure could boost insurance penetration in the country while providing financial respite to policyholders.

Higher GST on Luxury Items

In a bid to streamline tax revenues and discourage non-essential consumption, the Council may deliberate on increasing GST rates on luxury goods. This could include items such as high-end automobiles, luxury watches, and premium services. The move is seen as an attempt to balance fiscal priorities while promoting equity in taxation.

 Recent Developments in India’s GST Landscape

Taxation on Popcorn Sparks Debate

The GST Council’s recent decision to impose differential tax rates on popcorn has led to public and political debate. The rates are as follows:

• Non-branded salted popcorn: 5% GST

• Pre-packaged and branded popcorn: 12% GST
• Caramel popcorn: 18% GST

Critics argue that such distinctions add complexity to the tax system, deviating from the original intent of GST as a ‘Good and Simple Tax.’ 

GST on Online Food Delivery Services

The GST Council is considering a proposal to reduce the GST rate on food delivery charges from e-commerce platforms like Zomato and Swiggy from 18% to 5%. This change aims to make food delivery services more affordable for consumers. 

Aviation Fuel Excluded from the GST Regime

The GST Council has rejected the aviation industry’s proposal to include aviation turbine fuel (ATF) under the GST regime. Currently, state governments determine the taxation of ATF, leading to varying rates across the country. The decision maintains the status quo, with states retaining control over ATF taxation.

GST on Used Vehicles

The Council has decided to impose an 18% GST on the sale of all used or old vehicles, including electric vehicles, when sold by registered dealers. Sales conducted directly between individuals will not attract this tax. This move aims to standardize the taxation process in the second-hand vehicle market.

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