Top Stories CBIC and Finance Ministry’s Top Initiatives: 2024 Year End Recap The year 2024 has seen numerous initiatives and reforms introduced by the Finance Ministry in indirect taxes. This article provides a comprehensive overview of all the key changes in Goods and Services Tax (GST) and customs regulations, including updates discussed up to the 55th GST Council meeting By Navasree A.M – On December 26, 2024 4:22 pm – 7 mins read The year of 2024 is passing and there have been a lot of changes and steps taken in the area of indirect taxes by the Ministry of Finance in GST, Customs related areas. The changes  were decided and recommended by the ministry of finance and were implemented by the CBIC and its officials. GST – 2024 – A RECAP BUSINESS & TRADE For ease of doing trade and business, the following were implemented: Conditional Waiver of Interest and Penalties (Section 128A): Taxpayers facing GST demands for FY 2017-18 to FY 2019-20 under Section 73 can avail a waiver of interest and penalties if the full tax amount is paid by 31st March 2025. Reduction of Government Litigation: Monetary limits have been set for filing appeals by the department before GST tribunals and courts to reduce litigation, as per Circular No. 207/01/2024-GST.

Lower Pre-Deposit for Appeals (Sections 107 & 112): Pre-deposit for appeals with the Appellate Authority reduced to ₹20 crores (from ₹25 crores). And, Pre-deposit for appeals with the Appellate Tribunal reduced to 10% (maximum ₹20 crores from ₹50 crores). Reduced TCS Rates for E-Commerce Operators: TCS rates reduced from 1% to 0.5% (split equally between CGST and SGST/UTGST or IGST), effective 10th July 2024. Extended Due Date for GSTR-4 (Composition Taxpayers): Due date for GSTR-4 filing extended from 30th April to 30th June for FY 2024-25 onwards, easing compliance for composition taxpayers. Relaxation in Input Tax Credit (Section 16(4)): Time limit for availing input tax credit extended retrospectively to 30th November 2021 for FY 2017-18 to FY 2020-21, benefitting taxpayers who missed deadlines in GST’s early years.

Interest Calculation Simplification (Rule 88B): Taxpayers won’t incur interest on delayed filings if sufficient funds were available in the Electronic Cash Ledger on the due date, as per Notification No. 12/2024-Central Tax. Optional Amendments in GSTR-1 (FORM GSTR-1A): Taxpayers can amend or add details in GSTR-1 before filing GSTR-3B to ensure correct tax liability is reflected. Guidelines for Investigations: Consolidated guidelines issued on 30th March 2024 for ensuring Ease of Doing Business during investigations. Proactive Issue Resolution: Notifications and circulars issued to address contentious GST issues, reducing possible legal disputes. Taxability of Vouchers: The 55th GST Council has addressed long-standing issues related to the taxability of vouchers by recommending the omission of Sections 12(4) and 13(4) of the CGST Act, 2017, and Rule 32(6) of the CGST Rules, 2017, to resolve ambiguities. It clarified that transactions involving vouchers will not be treated as a supply of goods or services. The distribution of vouchers on a principal-to-principal basis will not attract GST, but if distributed on a principal-to-agent basis, any commission or charges by the agent will be taxable. Take Your SME to the Next Level with IPO Insights – Click here to Register Services related to vouchers, such as advertising, marketing, and customer support, will be subject to GST.

Additionally, unredeemed vouchers (breakage) will not be considered a supply, and no GST is payable on income from breakage. Clarifications to Resolve Ambiguities and Legal Disputes: The 55th GST Council issued clarifications to resolve ambiguities and legal disputes on several issues. Firstly, it clarified that Electronic Commerce Operators (ECOs) are not required to reverse Input Tax Credit (ITC) on supplies made under Section 9(5) of the CGST Act, 2017, where they are required to pay tax. Secondly, in an Ex-Works contract, if goods are delivered by the supplier at their place of business, the recipient is deemed to have “received” the goods and can claim ITC, subject to conditions under Sections 16 and 17 of the CGST Act. Lastly, the Council clarified that the late fee for delayed filing of FORM GSTR-9C applies, but for returns from FY 2017-18 to 2022-23, the late fee will be waived if FORM GSTR-9C is filed by 31st March 2025, provided the fee exceeds the amount payable for FORM GSTR-9. Amendment in Section 17(5)(d) – 55th GST Council: The phrase “plant or machinery” is replaced with “plant and machinery” retrospectively, effective from 01.07.2017, to ensure consistent interpretation as per the Explanation at the end of Section 17 of the CGST Act. Amendment in Sections 107 and 112- 55th GST Council:: For appeals involving only penalties (no tax demand), the pre-deposit requirement is reduced from 25% to 10% before the Appellate Authority and Appellate Tribunal. Amendment in Section 2(69) – 55th GST Council: Definitions for ‘Local Fund’ and ‘Municipal Fund’ are added to clarify their meaning in the context of the CGST Act. Amendments for Input Services Distributor (ISD) Mechanism – 55th GST Council: Inter-state reverse charge mechanism (RCM) transactions are explicitly included under the ISD mechanism, with amendments effective from 01.04.2025.

Temporary Identification Number Provision – 55th GST Council: New Rule 16A allows tax officers to grant a temporary identification number to individuals who are not liable to register but need to make payments as per Rule 87(4) of CGST Rules. Amendment in Rule 19 – 55th GST Council: The category of registered person for taxpayers opting for the composition levy is updated to allow modification through FORM GST CMP-02 and FORM GST REG-14. Amendment in Invoice Management System (IMS)- 55th GST Council: Changes include the introduction of FORM GSTR-2B based on taxpayer actions, provisions for credit note reversals, adjustments to output tax liability for credit notes, and the requirement for FORM GSTR-3B to be filed only after FORM GSTR-2B is available. Further, the 55th GST Council recommended several key changes, including reducing the GST rate on Fortified Rice Kernel (FRK), classified under 1904, to 5%.

It also recommended a full exemption from GST on gene therapy and contributions by general insurance companies from third-party motor vehicle premiums for the Motor Vehicle Accident Fund. Take Your SME to the Next Level with IPO Insights – Click here to Register Additionally, the Council clarified that vouchers would not attract GST, as they are neither considered a supply of goods nor services, and the related provisions would be simplified. The Council also clarified that no GST is payable on ‘penal charges’ levied by banks and NBFCs for non-compliance with loan terms. Furthermore, the Council recommended reducing the pre-deposit requirement for filing appeals before the Appellate Authority in cases involving only penalty amounts. 54TH GST COUNCIL RECOMMENDATIONS The 54th GST Council Meeting introduced several significant recommendations concerning GST rates and duties. The GST rate on extruded or expanded products, such as salted or savoury snacks, was reduced from 18% to 12%, aligning it with rates for items like namkeens and bhujia.

The GST rate on cancer drugs like Trastuzumab Deruxtecan, Osimertinib, and Durvalumab was reduced from 12% to 5%. A Reverse Charge Mechanism (RCM) was introduced on the supply of metal scrap by unregistered persons to registered persons, with a 2% TDS on B2B supplies of metal scrap by registered persons. Export duties on various rice varieties were reduced. A Group of Ministers (GoM) was constituted to address GST issues related to life and health insurance. The GST Council recommended a 5% GST on helicopter passenger transport on a seat-share basis and regularizing past GST liabilities for this service. It also clarified that flying training courses approved by DGCA are exempt from GST and that research and development services provided by government entities or institutions using grants are exempt. Further clarifications included that location charges or Preferential Location Charges (PLC) paid for construction services are part of the composite supply and taxed similarly to construction services. The GST on affiliation services provided by educational boards like CBSE was clarified as taxable, while those provided by State/Central boards to Government Schools were exempt.

The Council recommended the regularization of past GST liabilities for such services from 01.07.2017 to 17.06.2021. The Council also recommended that renting commercial property by unregistered persons to registered persons be brought under RCM to prevent revenue leakage. Additionally, services provided by Goods Transport Agencies (GTA) in the course of transportation of goods, such as loading, unloading, and warehousing, were clarified as part of a composite supply when bundled with transport services. The past GST liabilities for film distributors and sub-distributors prior to 01.10.2021 were recommended for regularization. Lastly, the Council recommended exemptions on services like application fees for electricity connections, meter rentals, and testing fees when part of the transmission and distribution of electricity, and regularizing past GST liabilities for these services. 53RD GST COUNCIL RECOMMENDATIONS The 53rd GST Council Meeting recommended several key changes in GST rates and exemptions. A uniform 5% IGST rate was introduced for imports of parts, components, testing equipment, tools, and toolkits used in aircraft maintenance, repair, and overhaul (MRO) activities. Steel, iron, or aluminium milk cans will now attract a GST rate of 12%, regardless of their intended use.

The GST rate on cartons, boxes, and cases made from paper or paperboard was reduced from 18% to 12%, and solar cookers, whether single or dual energy source, will be taxed at 12%. The GST rate on poultry keeping machinery was amended to include parts of such machinery, addressing interpretational issues. The Council extended IGST exemptions for defense forces imports, including specified items for defense, research equipment, and buoys under the RAMA programme. It also provided a retrospective exemption for the Compensation Cess on imports into Special Economic Zones (SEZ) and for aerated beverages supplied to authorized customers by Unit Run Canteens under the Ministry of Defense. Additionally, an ad-hoc IGST exemption was provided for technical documentation imports related to AK-203 rifle kits.

In terms of facilitation of trade, the Council amended Section 9(1) of the CGST Act to exclude rectified spirit or ENA from GST when used for manufacturing alcoholic liquor. Several exemptions were granted, including services provided by Indian Railways to the general public, services by Special Purpose Vehicles (SPV) to Indian Railways, and accommodation services with a value of up to Rs. 20,000 per month per person for stays of at least 90 days. Take Your SME to the Next Level with IPO Insights – Click here to Register The Council clarified that co-insurance premium apportionment and ceding/reinsurance commissions are not taxable under GST, with past cases regularized on an ‘as is where is’ basis. Further clarifications included the exemption of statutory collections made by Real Estate Regulatory Authorities (RERA) and the non-taxability of incentives shared by acquiring banks under specific schemes like the promotion of RuPay Debit Cards and low-value BHIM-UPI transactions. CUSTOMS Budget 2024-25

Major Announcements: Basic Customs Duty (BCD) Reductions: Shea nuts: 30% to 15% Critical minerals (e.g., Antimony, Cobalt, Gallium): BCD reduced to nil Graphite, Silicon Quartz, Silicon Dioxide: BCD reduced to 2.5% Prawn, shrimp, and fish feed: BCD reduced to 5% Live shrimp broodstock (Vannamei and Black Tiger): BCD reduced to 5% Various inputs (e.g., vitamin premixes, krill meal): BCD reduced subject to IGCR conditions BCD Increases: Ammonium nitrate: 7.5% to 10% PVC flex films: Increased to 25% Customs Duty Exemption: Cancer drugs (Trastuzumab Deruxtecan, Osimertinib, Durvalumab) exempted from duty. Important Notifications and Circulars: Instruction No. 06/2024-Customs (March 23, 2024): Issued SOP to curb illegal activities during elections, including the reporting of major seizures (over Rs. 1 crore) and real-time reporting of interceptions by enforcement agencies. Handing Over Antiquities to ASI (February 29, 2024): 101 antiquities seized by Customs were repatriated to ASI, preserving cultural heritage. RoDTEP Scheme Extension: DGFT extended the RoDTEP Scheme to exports from EOUs and SEZs.

Drawback Amendments: Notification Nos. 20/2024 and 50/2024- Customs issued for duty drawback on various goods. Customs Duty Disbursal: Automated PFMS-based disbursal of duty drawback payments started on June 5, 2024. Technological Innovations: Exchange Rate Automation: Automated system launched for exchange rates on ICEGATE, replacing manual publication (Circular No. 07/2024-Customs). ICETAB for Efficient Clearance: Mobile tablets for Customs officers to streamline cargo examination and reporting (Circular No. 10/2024-Customs). ICEGATE 2.0 Revamp: Enhanced website features for improved user experience, including AI chatbot, personalized dashboard, and online document filing. Customs Agreements and Collaborations: International Agreements: India signed cooperation agreements with Madagascar, Belarus, and Vietnam on Customs matters. India-Bhutan Trade Cooperation: SOP issued for riverine trade and joint Customs meetings.

Export Benefits & Schemes: Courier Exports: Export incentives (RoDTEP, Drawback) extended to courier exports (Circular No. 15/2024-Customs). IGST Refunds for Postal Exports: Automated IGST refunds through Dak Niryat Kendra (DNK) for postal exports. Women in Trade: Promoted women’s participation in international trade, supporting women traders and logistics providers (Circular No. 2/2024-Customs). Upcoming Changes: Mandatory Declarations for Synthetic Diamonds: New regulations requiring additional qualifiers for lab-grown diamonds starting December 1, 2024 (Circular No. 21/2024-Customs). SEZ & Warehouse Developments: SEZ Services: EDI enablement for SEZ sites, enhancing services like user registration and goods movement. Bonded Warehouse Digitization: Online system for warehouse license applications, goods transfer, and monthly returns (Circular No. 19/2024-Customs).