GST Council may announce amnesty scheme, rate rationalisation

Union Finance Minister Nirmala Sitharaman

The 54th meeting of the Goods and Services Tax (GST) Council on September 9 is expected to announce the implementation of the GST amnesty scheme, rate rationalisation of certain goods and services, simplification, and improving compliance.

In response to a post on X (formerly Twitter) regarding the timeline of retrospective implementation of relief under Section 16 (4) of the Central GST Act (CGST), the Central Board of Indirect Taxes and Customs (CBIC) had responded by clarifying that the new provisions relating to the time limit to avail input tax credit will not come into effect until after September 9, 2024, i.e., the 54th GST Council meeting.

“Many taxpayers have received notices wherein they have not availed the legitimate ITC (input tax credit) by the month-end and, therefore, it has come on the radar and these notices are amounting to thousands of crores (of rupees). In the last meeting, the time frame for availing ITC was extended. The details will be finalised in this council meeting. This announcement will bring relief to these taxpayers particularly,” a person close to the development said on condition of anonymity.

After the 53rd GST Council meeting on June 22, the finance ministry statement read: “The time limit to avail input tax credit w.r.t. any invoice or debit note under Section 16(4) of CGST Act, through any GSTR 3B return filed up to 30.11.2021 for FY 2017-18, 2018-19, 2019-20 and 2020-21, may be deemed to be 30.11.2021.”

This means that for invoices or debit notes from July 1, 2017 (the start date of GST implementation), businesses could avail of this extended deadline to claim ITC.

The CBIC’s clarification says that these provisions will be enforced after the council’s recommendations. This delay allows for adequate coordination between the central government and states, as states must also amend their State GST (SGST) acts to align with the new regulations.

At an event organised by the Revenue Bar Association in Chennai, Finance Minister Nirmala Sitharaman highlighted the importance of these meetings in driving GST reforms. She emphasised that the focus of the GST Council is on simplification and effective revenue generation rather than political considerations. Sitharaman underscored the council’s commitment to expanding the tax base and improving compliance without resorting to excessive revenue extraction.

Tax experts believe the council's priority would be simplification of compliances and clarification on contentious issues to instill confidence in the taxpayers.

Meanwhile the group of ministers led by Bihar deputy chief minister Samrat Chaudhary is working on rationalising the GST slabs of 5, 12, 18 and 28 percent into three tax rates. Sitharaman said the GST Council will discuss rationalisation of tax rates but a final decision on tweaking taxes and slabs will be taken later.

As per reports, she also said that compensation cess on luxury and 'sin' goods are also going to be discussed and can come up in the September 9 meeting or later.