48th GST Council Meeting and its major Decision

On the afternoon of December 17, the 48th GST Council meeting that was held virtually came to an end. The meeting was presided over by the Union Finance Minister, Smt. Nirmala Sitharaman, and was attended by the Union Minister of State for Finance, Shri Pankaj Choudhary, as well as the Finance Ministers of the states and Union Territories (with legislature). Senior officials from the states and UTs, as well as the Ministry of Finance, were present at the meeting.

Following the Council meeting, there was a news conference outlining the important decisions made during the meeting, including the decriminalisation of GST-related offences and steps to simplify GST compliance. Let's look at them now.

Decriminalization under GST

  1. Regarding the decriminalisation of GST offences, the Council advocated increasing the minimum tax threshold for filing a GST prosecution from Rs. 1 crore to Rs. 2 crore. This would apply to all situations, with the exception of those in which bills are issued without the provision of goods or services. The Council also suggested changing the range of the compounding amount from the existing 50% to 150% of the tax amount to 25% to 100%. A number of offences, including hindering an officer from performing their responsibilities, purposefully tampering with tangible evidence, and failing to provide information when requested, would also be decriminalised.

The Council also suggested making e-commerce easier for small businesses. This is based on the last Council meeting's in-principle approval, which permitted composition taxpayers and unregistered suppliers to make intra-state product supplies through an e-commerce operator. The changes to the GST Act and Rules to make this possible were agreed by the GST Council. The programme might start on October 1st, 2023.

  1. Refund to unregistered Entity:

If the contract or agreement for the supply of services, such as the construction of a flat or house or a long-term insurance policy, is cancelled and the time period for the issuance of a credit note by the concerned supplier has passed, there is no procedure for claiming a refund of the tax paid by the unregistered buyers. The Council suggested amending the CGST Rules, 2017 and issuing a circular to specify the process for unregistered buyers to submit a refund application in such circumstances.

Allow unregistered suppliers and composition taxpayers to make intra-state product sales through E-Commerce Operators (ECOs), subject to certain criteria, was given in principle permission by the GST Council at its 47th meeting. The revisions to the GST Act and GST Rules, as well as the issue of pertinent notifications, were approved by the Council in order to make this possible. Additionally, the Council has suggested that the plan be put into effect starting on October 1, 2023, taking into account the time needed to establish the necessary features on the portal and to provide the ECOs enough time to prepare.

  1. For micro enterprises facility of E-commerce

With effect from 01.02.2019, Paragraphs 7, 8(a), and 8(b) were added to Schedule III of the CGST Act, 2017 in order to exempt from GST certain transactions and activities, such as the supply of goods from one location outside the taxable territory to another location outside the taxable territory, sales over the high seas, and the supply of warehoused goods prior to their home clearance. The Council has suggested making the aforementioned paragraphs effective as of July 1, 2017, in order to eliminate any uncertainty or doubt regarding the taxability of such transactions or activities throughout the period from July 1, 2017, to January 31, 2019, in question. However, if any tax has already been paid in relation to such transactions or activities within the period of 01.07.2017 to 31.01.2019, no refund of tax paid shall be granted.

  1. According to the second proviso of section 16 of the CGST Act, the Council has recommended amending sub-rule (1) of rule 37 of the CGST Rules, 2017 retroactively with effect from 01.10.2022. This will only reverse input tax credits proportionate to the amount not paid to the supplier in relation to the value of the supply, including tax payable.
  2. The Council suggested adding Rule 37A to the CGST Rules, 2017 to specify the process for reversing an input tax credit by a registered person in the event that the supplier fails to pay tax by a specified date and the process for making the credit available again in the event that the supplier does pay tax. This would make it simpler to fulfil the requirement for obtaining an input tax credit under section 16(2)(c) of the CGST Act, 2017.
  3. To clarify the necessity of submitting a certified copy of the order appealed against and the issue of a final acknowledgment by the appellate body, sub-rule (3) of rules 108 and 109 of the CGST Rules, 2017 will be revised. This would speed up the processing of appeals and lessen the burden of compliance on the appellants.


Reversal of input tax credit

In accordance with the second proviso of Section 16 of the CGST Act, the GST Council has suggested amending Rule 37(1) of the CGST Rules, 2017, retroactively from October 1, 2022. With this change, the input tax credit (ITC) will only be reversed in proportion to the amount that was not paid to the provider in relation to the value of the supply, including the tax due.

The Council also suggested adding Rule 37A to the 2017 CGST Rules to specify the procedure for a taxpayer to reverse an ITC in the event that a supplier fails to pay the required tax amount by the deadline and the procedure for a supplier to reclaim an ITC in the event that the supplier pays the required tax amount later. This will make it simpler to comply with the CGST Act of 2017's Section 16(2)(c).

Change in Tax rates:

  1. The GST Council has, among other things, suggested the following changes to the GST rates:

Sr No.





Husk of pulses including chilka and concentrates including chuni/churi, khanda




Ethyl alcohol supplied to refineries for blending with motor spirit (petrol)




  1. Additionally, it was decided to include Mentha arvensis supply in the reverse charging system, just like Mentha Oil.

It was determined to make it clear that:

  • Rab (rab-salawat) can be classified under CTH 1702, which carries an 18% GST rate.
  • Fryums made by the extrusion technique are particularly covered by CTH 19059030 and are subject to GST at a rate of 18%.
  • A motor vehicle must meet all four criteria in order to be subject to the higher rate of compensating cess of 22%: it must be a generally recognised SUV, have an engine larger than 1500 cc, be longer than 4000 mm, and have a ground clearance of at least 170 mm.
  • Items falling under Schedule I of Notification No. 1/2017-CTR's reduced rate category of 5% will be subject to the lower rate of 5%, and the rate of 12% will only apply if the general rate is above of 12%
  1. On consideration of genuine doubts, the Council resolved to regularise the interim period beginning on the date of the Circular's issuance (3.08.2022) with regard to GST on "husk of pulses including chilka and concentrates including chuni/churi, khanda" on a "as is basis."
  2. If a registered person rents a residential property to them for their own personal use as their primary residence and on their own account, rather than for their business, then no GST is due.
  3. The Central Government has provided incentives to banks as part of a programme to promote RuPay Debit Cards and low value Transactions made through BHIM-UPI are in the nature of subsidies and are not taxable.

Streamlining GST compliance measures

The GST Council also suggested a number of initiatives to simplify GST legislation compliance. A suggestion was made to run a pilot in Gujarat for risk-based physical registration applicant verification and biometric Aadhaar authentication. With any luck, this action will contribute to reducing the threat posed by forged or fraudulently obtained registrations.

Capturing the PAN-linked mobile number and email address from the CBDT database and entering it in Form GST REG-01 would be another step in the fight against fraudulent registrations. To prevent dishonest fraudsters from misusing a person's PAN, an OTP-based verification will also be carried out at the time of registration on the mobile number and email address.

The government also intends to alter Sections 37, 39, 44, and 52 of the CGST Act, 2017, to limit the amount of time that returns or statements may be filed after the deadline for filing any return or statement to a maximum of three years. Additionally, the CGST Act of 2017's Sections 52 and 9(5) would be included to the Form GSTR-1 to provide for reporting information regarding supplies made through e-commerce operators covered by those provisions.

The CGST Rules, 2017, will also add a new Rule 88C and Form GST DRC-01B to inform taxpayers of discrepancies between liabilities recorded by the taxpayer in Form GSTR-1 and GSTR-3B for a specific tax period when the difference exceeds the predetermined thresholds. Taxpayers will then be able to pay the differential liability or justify it.

Further, when a taxpayer has not deposited the amount mentioned in the intimation or has not provided an explanation, a clause (d) would be added to Rule 59(6) of the CGST Rules, 2017, restricting the supply of Form GSTR-1 for a subsequent tax period. This action would compel taxpayers to make payments or provide an explanation for discrepancies in stated liabilities without the involvement of tax officers.