The GST Council accepts the recommendations of these GoMs; Several items to be removed from the exemption list

The two-day meeting of the GST Council, which started on Tuesday, has so far decided to accept recommendations from three Groups of Ministers (GoMs) formed on rate rationalization, GST system reforms and the movement of l gold and precious stones, sources said. CNBC-TV18. The Board had constituted various GoMs to study various issues and submit reports to it for final decision.
GoM on tariff rationalization

The GST Board has accepted the GoM’s interim report on tariff rationalization, the sources say. The group of ministers was formed in September last year and was led by the Chief Minister of Karnataka, Basavaraj S Bommai.

Its interim report included recommendations on correcting the inverted fee structure. It recommended that the refund of the input tax credit (ITC) for inverted rates be prohibited for edible oils. Reverse duty correction is likely to increase from 12% to 18% on printing, writing and drawing ink. It also recommended fixing the reverse service structure on LED lamps, fixtures and LED lamps by 12% to 18%, the sources said.

The rate correction was also proposed on solar water heater and system, finished leather and composite leather, contract labor supplied and tailoring and other works for textiles, from 5% to 12%, have- they stated.

The Council also accepted GoM’s view to remove the GST exemption on packaged curd, lassi, buttermilk, puffed rice, rolled rice, parched rice, papad, paneer, honey , food grains, cereals, jaggery and some vegetables, they added.

The Council accepted GoM recommendations on revising GST exemptions and rearranging products on the basis of appropriate rates, such as unroasted coffee beans, unprocessed green tea leaves, wheat bran, 5% de-oiled rice bran. The GoM has proposed to remove exemptions from cheques, in bulk or in book form and be taxed at 18%. It also provided for the removal of exemptions from a lower rate for e-waste from 5% to 18%.

The report also provided for the removal of the 5% reduced rate exemption for goods related to coal/petroleum methane.

Other exemptions accepted for withdrawal included reinsurance of exempt insurance plans, transportation of business class passengers from airports located in the Northeastern states, transportation of newspapers, magazines, railway equipment by rail/vessel /route, RBI services, IRDAI services to insurers, services provided by Sebi, registration/licensing services provided by FSSAI to food business operators, services provided by GSTN to government.

They also include hotel accommodation below Rs 1,000 per unit per day to be taxed at par with others at 12%, hospital rooms except intensive care with a daily rent of Rs 5,000 to be taxed at 5% without ITC, the exemption for cord blood banks to be withdrawn, the rental of religious places intended for the general public if the daily rent is higher than Rs 5,000 per day and businesses whose rent is higher than Rs 2,500 per month.
GoM Report on GST System Reforms

The GST Board has agreed and agreed to adopt the GoM report on GST system reforms, the sources told CNBC-TV18. The GoM was constituted in September last year under the leadership of Deputy Chief Minister of Maharashtra, Ajit Pawar.

The GoM recommendations were: To use mandatory biometric authentication for high-risk applicants for GST registration; and identify risky behaviors of new enrollees/applicants using artificial intelligence and place the information on the back office for the field agent to perform the mandatory physical verification of these taxpayers.

They also included an AI-based ban to generate reports allowing agents to perform post-registration verification and other necessary measures for high-risk taxpayers; online/on-site verification using geocoding and for officers to perform physical verification of high-risk taxpayers or obtain the correct address filed by taxpayers; inclusion of electricity bill metadata (CA#) as a data field when registering by new taxpayers.

The GoM report also states that the CA number will be verified to improve the quality of addresses registered in the GST system. He also suggested real-time validation of bank accounts through the integration of the GST system with the NPCI. He said the result of the audit will be made available to tax officials, the sources said.

The GST Network, the IT backbone of the GST Scheme, will take the necessary steps to make available information relating to: all bank accounts of a particular PAN; and for the development of a feedback mechanism to capture feedback from leads generated by systems to alert tax authorities.
GoM on the movement of gold and precious stones

The GST Council has also accepted the recommendations of the GoM constituted on the generation of electronic invoices for gold/gold jewelery and gemstones, the sources said. It was formed in February this year with Kerala Finance Minister KN Balagopal as the convener.

Among other things, it recommended allowing states to impose the requirement of an electronic waybill for intrastate movements of gold/precious stones, if they so choose.

The GoM has also recommended a minimum threshold of Rs 2 lakh, above which states can decide any amount as the threshold for generation of electronic invoice for intra-state movement of gold/precious stones .

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