GST Council Meeting: FM Nirmala Sitharaman Led Panel Gives Nod To Biometric Authentication; Key Details

The 53rd meeting of the Goods and Services Tax (GST) Council was held on Saturday, June 22, at Bharat Mandapam in New Delhi. Presided over by Finance Minister Nirmala Sitharaman, the meeting marked a pivotal moment in the ongoing evolution of India's tax space. Key decisions were made to refine tax rates, introduce new measures to combat fraud and ease the burden on taxpayers.

The GST Council, which comprises union and state ministers, along with senior officials, deliberated on recommendations made by the Group of Ministers (GoM). The meeting saw active participation from Union Minister of State for Finance Pankaj Chaudhary, Chief Ministers of Goa and Meghalaya, and Deputy Chief Ministers of Bihar, Haryana, Madhya Pradesh, and Odisha, among others.

One of the most notable announcements was the rollout of biometric-based Aadhaar authentication across India. This measure aims to tackle the pervasive issue of fraudulent input tax credit claims made through fake invoices. By linking GST registration with biometric data, the government hopes to reduce the incidence of tax evasion.

"There is going to be a rolling out of biometric-based Aadhaar authentication on an all-India basis. This will help us to combat fraudulent input tax credit claims made through fake invoices in the cases," stated Finance Minister Sitharaman during the post-meeting briefing.

The council approved several changes to GST rates to bring uniformity and clarity. A 12% GST rate will now uniformly apply to all types of milk cans, regardless of their material composition, thus simplifying the tax structure and eliminating potential disputes.

In a move to support the horticulture sector, the GST on all types of carton boxes and cases made from both corrugated and non-corrugated paper or paperboard has been reduced from 18% to 12%. This reduction is particularly beneficial to apple growers in Himachal Pradesh and Jammu & Kashmir.

Similarly, solar cookers, whether single or dual energy source, and all types of sprinklers, including fire and water sprinklers, will also attract a uniform GST rate of 12%.

The GST Council proposed several exemptions aimed at reducing the financial burden on citizens. Specific services provided by Indian Railways, including the sale of platform tickets and the provision of retiring rooms, waiting rooms, cloakroom facilities, and battery-operated car services, will now be exempt from GST. This move is expected to make railway travel more affordable and accessible.

The council exempted hostel accommodations outside educational institutions, provided the stay does not exceed Rs 20,000 per person per month and is up to 90 days. This exemption benefits students and working professionals, particularly those residing in hostels run by social and community organizations.

To reduce the number of litigations, the GST Council has fixed monetary limits for filing appeals by the tax department before various appellate authorities. The limits are Rs 20 lakh for the GST Appellate Tribunal, Rs 1 crore for High Courts, and Rs 2 crore for the Supreme Court. This measure is expected to streamline the legal process and focus governmental resources on significant cases.

Additionally, the maximum amount for pre-deposit required for filing appeals has been reduced from Rs 25 crore CGST and Rs 25 crore SGST to Rs 20 crore CGST and Rs 20 crore SGST. This reduction aims to make it easier for businesses to challenge decisions without facing prohibitive costs.

The council has also taken steps to ease compliance requirements for taxpayers. The deadline for furnishing returns in form GSTR 4 has been extended from April 30 to June 30 for the fiscal year 2024-25 and subsequent years. This extension is designed to assist small taxpayers by giving them more time to meet their tax obligations.

In a bid to clear the backlog and resolve issues from the early years of GST implementation, the council recommended waiving interest penalties on demand notices for fiscal years 2017-18, 2018-19, and 2019-20. Taxpayers who settle the full amount by March 31, 2025, will benefit from this waiver, providing significant relief and encouraging timely payment.

The GST Council has also extended the deadline for availing input tax credit (ITC) on invoices or debit notes for fiscal years 2017-18 to 2020-21, setting it to November 30, 2021. This retrospective adjustment allows businesses to claim ITC for a longer period, promoting greater compliance and easing the financial strain on businesses.

In a move to clarify the taxability of certain substances, the council recommended an amendment to the GST laws to explicitly exclude rectified spirit/Extra Neutral Alcohol (ENA) from the scope of GST when supplied for manufacturing alcoholic liquors for human consumption. This exclusion aligns with previous recommendations and ensures consistency in the application of GST laws.

A recurring topic in GST discussions is the inclusion of petrol and diesel under the GST framework. Finance Minister Sitharaman reiterated the central government's intent to bring these fuels under GST, a move that could potentially streamline tax rates and reduce prices for consumers. However, she emphasized that this decision rests with the state governments, as they have significant control over fuel taxation.

Sitharaman recalled the foundational discussions led by former Finance Minister Arun Jaitley, who had envisioned the inclusion of petrol and diesel under GST. "GST was implemented, I distinctly remember senior minister Arun Jaitley talking about that the progress so exists already in that meaning, GST, petrol and diesel can be handled for which the law has been already embedded," she said. The central government maintains that this inclusion would benefit consumers and the economy, but it requires a consensus among the states.

The 53rd GST Council meeting was a landmark session that introduced a range of reforms aimed at simplifying the tax structure, combating fraud, and easing the burden on taxpayers. The rollout of biometric-based Aadhaar authentication, uniform GST rates on various commodities, and numerous exemptions and reductions reflect the council's focus on refining the GST system.