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Date: November 17, 2022
Subject: 48th GST Council Recommends Decriminalisation Measures, Rate Relief, and Major Compliance Reforms
Description:

The 48th meeting of the GST Council, chaired by Union Finance Minister Smt. Nirmala Sitharaman and held in virtual mode, approved a wide-ranging set of recommendations aimed at rationalising tax rates, reducing litigation, and simplifying compliance under GST. A key reform was the recommendation to decriminalise certain minor offences under Section 132 of the CGST Act by raising the threshold for prosecution from ₹1 crore to ₹2 crore, reducing compounding amounts, and removing criminal liability for specified procedural offences, reflecting a shift towards trust-based tax administration. On the rate front, the Council recommended exempting GST on husk of pulses and concentrates such as chuni and churi, reducing GST on ethyl alcohol supplied to refineries for blending with petrol from 18 percent to 5 percent, and clarifying tax treatment for items such as rab, fryums, SUVs for compensation cess, and mentha products, along with regularisation of past disputes where interpretational issues existed. Several important clarifications were issued, including exemption of GST on residential dwellings rented for personal use, non-taxability of government incentives paid to banks for RuPay and BHIM-UPI promotion, and valuation-related issues in insurance services. To facilitate trade and ease compliance, the Council approved measures such as enabling refunds to unregistered buyers in cancelled contracts, allowing unregistered suppliers and composition taxpayers to sell goods through e-commerce platforms from October 2023, retrospective clarification on high-sea sales and warehoused goods, and introduction of new rules to streamline input tax credit reversal and re-availment. Additional reforms included simplification of appeal procedures, provisions for withdrawal of appeals, pilot implementation of biometric Aadhaar authentication to curb fake registrations, system-based detection of tax mismatches, and amendments to reduce litigation in OIDAR and place-of-supply issues. Overall, the recommendations signal a strong focus on compliance simplification, reduction of criminal provisions, and improved certainty for taxpayers.

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