1 hr ago
GST Council Approves Major Overhaul, Keeps Tax Rates Unchanged
India’s GST Council agreed to change how some tax rules work, but it did not make big changes to tax rates.
Businesses may be able to get refunds more quickly and for more kinds of expenses.
Some refunds will be sent automatically after a computer-based risk check.
The Council also wants fewer checks on goods moving between states.
Some businesses could register for GST in three working days.
The rules for when services count as exports will also be clearer.
The Council recommended stronger limits on arrests based only on suspicion of tax evasion.
It will study whether buyers should keep tax credits when their suppliers fail to pay tax.
Jharkhand asked for changes to how coal and mineral-producing states are treated.
The GST Council approved broad procedural reforms while keeping tax rates largely unchanged.
Refunds will cover input services as well as input goods in inverted-duty cases, with faster processing and automatic release of 90% of eligible claims after risk checks.
The Council recommended limiting arrests based only on suspicion, raising the prosecution threshold for evasion to ₹5 crore, and reducing the general penalty to ₹10,000.
Automatic GST registration is proposed to take three working days for eligible applicants, while some export rules and goods-movement checks will be simplified.
An officers’ committee will examine input tax credit protection for buyers whose suppliers default; Jharkhand also urged changes to coal taxation and mineral-related revenue arrangements.
- Who
- The GST Council, chaired by Union Finance Minister Nirmala Sitharaman; Jharkhand Finance Minister Radha Krishna Kishore also raised proposals.
- What
- The Council approved a major procedural overhaul of GST while keeping rates largely unchanged.
- Where
- New Delhi, India.
- When
- The decisions were announced on Thursday; the article does not specify the date.
- Why
- The measures are intended to ease business liquidity and compliance, speed refunds and registration, and improve trade facilitation.
Positions supporting the changes
Concerns and proposals raised
Input tax credit when suppliers default
Positions supporting the changes
The Centre supports protecting honest buyers from losing credit because a supplier or another party in the chain defaulted.
Concerns and proposals raised
Some states requested further deliberation; the Council referred the issue to an officers’ committee rather than deciding it immediately.
Coal taxation and mineral-producing states
Positions supporting the changes
The GST framework applies the destination principle, under which GST on coal is passed on to consuming states.
Concerns and proposals raised
Jharkhand Finance Minister Radha Krishna Kishore proposed keeping coal outside GST so states could levy VAT, and suggested a framework to recognise resource-origin states’ costs.
Key facts
- Tax rates
- Largely unchanged.
- Refund acknowledgement
- Claims must be acknowledged within 10 days, or be deemed acknowledged.
- Automatic refunds
- For exporters and inverted-duty cases, 90% of claims will be released within three days after a risk check.
- Prosecution threshold
- Recommended increase from ₹1 crore to ₹5 crore for duty evasion.
- General penalty
- Recommended reduction from ₹25,000 to ₹10,000.
- Fast-track registration
- Proposed completion within three working days for eligible applicants; applies to those not seeking to pass on monthly input tax credit above ₹2.5 lakh.
- Input tax credit proposal
- An officers’ committee is expected to report within three months; implementation is planned from April next year if approved.
Quotes
Radha Krishna Kishore
Jharkhand finance minister.
“Jharkhand contributes substantially to national energy integration and economic development, while the depletion of resources and the long-term environmental and social burden remain within the state. Since GST on coal is passed on to consuming states under the destination principle, Jharkhand is deprived of the revenue needed to address these costs.”
livemint.com
“These are among the most significant trade facilitation reforms since GST was introduced. By extending refunds of accumulated input tax credit to input services and capital goods, and rationalising blocked credits, the Council is restoring GST's founding promise of seamless credit.”
livemint.com
Sources
Related news
GST Council to Prioritize Process Reforms Over Rate Changes
GST Council Weighs Enforcement and Compliance Reforms
GST Council Reforms Promise Faster Refunds and Lower Compliance
GST 2.0 to Focus on Faster Refunds and Simpler Compliance
GST Council to Consider Major Process and Compliance Reforms
GST Council Scraps Arrest Powers, Raises Prosecution Threshold
GST Process Reforms Aim to Unlock Business Working Capital
UPI Merchant Fee May Be Deferred as Traders Seek Rollback
