No change in GST tax rates, yet 10 major changes introduced; find out who benefits..

No changes were made to tax rates during the 57th GST Council meeting; however, several key procedural reforms were advanced to make the GST system simpler, faster, and more automated. The Council emphasized changes to regulations concerning registration, returns, refunds, input tax credit, business closure, goods transportation, and e-commerce.

**Tax base expanded within one year of the two-rate system**
In the year following the implementation of the two-rate GST system, taxable supplies rose from ₹40.19 lakh crore per month to ₹50.58 lakh crore—an increase of 25.8 percent. Supplies reported to consumers also increased from ₹5.98 lakh crore to ₹7.58 lakh crore per month. Meanwhile, gross tax liability grew by 13.6 percent, reaching ₹6.64 lakh crore per month. The effective tax rate on domestic supplies declined from 14.55 percent to 13.13 percent.

**Low-risk businesses to receive registration within three days**
The system for granting registration within three working days will continue for low-risk applicants and businesses whose output tax liability on supplies to registered entities does not exceed ₹2.5 lakh per month. Currently, 61 percent of registrations are processed through this automated channel. Changes such as trade name, details of directors/partners, or addresses of additional places of business will also be automatically accepted during registration amendments.

**Refund process to be expedited**
The time limit for either approving a refund claim or issuing a notice regarding deficiencies will be reduced from 15 days to 10 days. If neither action is taken within 10 days, the claim will be deemed approved. Based on risk assessment, 90 percent of the refund amount will be approved by the system, and the order will be issued within three working days. The refund of excess amounts in the cash ledger will be fully automated.

**Committee to study Input Tax Credit for honest buyers**
A committee of officials will be constituted to address the issue of preventing honest buyers—who hold valid invoices, receive goods, and make full payments to suppliers—from being denied Input Tax Credit. The committee will submit its report within three months, and the matter will be placed on the agenda for the next Council meeting.

**Credit available on various expenses, including employee insurance**
Input Tax Credit will be available for health and life insurance policies taken for employees. Provisions for credit have also been made for matters related to telecom towers, pipelines laid outside factory premises, free samples, and expired stock that is required by law to be destroyed.

**Relief from double taxation on the same service**
Services that are resold within the same business chain will not be taxed twice. This benefit will apply to services such as hotel room bookings (up to ₹7,500) made through agents, restaurant and catering services, and passenger transportation.

**Proposal for annual returns for small businesses**
In-principle approval has been granted for an optional scheme for taxpayers with a turnover of up to ₹5 crore who supply goods or services exclusively to consumers. Under this scheme, returns can be filed annually, while tax payments can be made on a quarterly basis. Detailed modalities will be presented at the next Council meeting.

**Relief from en-route inspections across states during goods transport**
Vehicles transporting goods will now be stopped only based on specific intelligence, requiring prior authorization from an officer of the rank of Joint Commissioner or above. Inspections will be conducted only at the point of origin and the final destination; vehicles will not be stopped for inspection in transit states.

**Removal of arrest provisions under GST**
A proposal has been made to remove the power of arrest from GST laws. The threshold for prosecution will be raised from ₹1 crore to ₹5 crore. The provision for a mandatory minimum sentence will be removed, leaving the determination of the sentence to the court's discretion. The maximum amount for general penalties will also be reduced from ₹25,000 to ₹10,000.

**Boost to service exports**
A provision has been introduced to classify services such as testing, repair, certification, research, or processing performed in India on goods belonging to a foreign client as "export services," even if the goods do not leave the country. Indian companies providing services to foreign clients through their overseas branches will also be eligible for export benefits.

**Easier business operations for small e-commerce sellers**
The registration process will be simplified for small sellers selling goods in other states via e-commerce platforms. With the seller's consent, a warehouse located in another state—operated by the platform—can be designated as the seller's "principal place of business." This will enable small sellers to conduct business across the country more easily, putting them on a more level playing field with larger sellers on these platforms.

**No changes to GST rates in this meeting**
No changes were made to GST rates during the Council's 57th meeting. Rate reviews will now be conducted once a year during a specially designated meeting. The primary focus of this meeting was to resolve procedural anomalies and ambiguities that remained following the changes implemented last year.

Disclaimer: This content has been sourced and edited from TV9. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.