The 53rd GST Council met under the Chairpersonship of Union Minister for Finance & Corporate Affairs Smt. Nirmala Sitharaman in New Delhi today i.e. June 22, 2024. The GST Council inter alia made the following recommendations relating to changes in GST tax rates, measures for facilitation of trade, and measures for streamlining compliances in GST.
· Clarification regarding the valuation of the supply of import of services by a related person where the recipient is eligible for full input tax credit:
The Council recommended clarifying that in cases where the foreign affiliate is providing certain services to the related domestic entity, for which full input tax credit is available to the said related domestic entity, the value of such supply of services declared in the invoice by the said related domestic entity may be deemed as open market value in terms of the second proviso to Rule 28(1) of CGST Rules. Further, in cases where full input tax credit is available to the recipient if the invoice is not issued by the related domestic entity with respect to any service provided by the foreign affiliate to it, the value of such services may be deemed to be declared as Nil and may be deemed as open market value in terms of second proviso to Rule 28(1) of CGST Rules.
· Clarification regarding the availability of Input Tax Credit on ducts and manholes used in the network of Optical Fiber Cables (OFCs):
The Council recommended clarifying that input tax credit is not restricted in respect of ducts and manholes used in the network of OFCs, under clause (c) or under clause (d) of sub-section (5) of section 17 of the CGST Act.
· Clarification on the place of supply applicable for custodial services provided by banks
The GST Council recommended clarifying that the place of supply of Custodial services supplied by Indian Banks to Foreign Portfolio Investors is determinable as per Section 13(2) of the IGST Act, 2017.
· Clarification on the valuation of corporate guarantee provided between related persons after insertion of Rule 28(2) of CGST Rules, 2017
Amendment of Rule 28(2) of CGST Rules, 2017, retrospectively with effect from October 26, 2023, and issuance of a circular to clarify various issues regarding the valuation of services of providing corporate guarantees between related parties. It is inter alia being clarified that valuation under Rule 28(2) of CGST Rules, 2017 would not be applicable in case of export of such services and also where the recipient is eligible for full input tax credit.
· Clarification regarding the applicability of provisions of Section 16 (4) of CGST Act, 2017, in respect of invoices issued by the recipient under the Reverse Charge Mechanism (RCM):
The Council recommended clarifying that in cases of supplies received from unregistered suppliers, where tax has to be paid by the recipient under RCM, and invoice is to be issued by the recipient only, the relevant financial year for calculation of time limit for availment of input tax credit under the provisions of section 16(4) of CGST Act, 2017 is the financial year in which the invoice has been issued by the recipient.
· Clarification on the following issues to provide clarity to trade and tax officers and to reduce litigation:
I. Clarification on the taxability of reimbursement of securities/shares as ESOP/ESPP/RSU provided by a company to its employees
II. Clarification on the requirement of reversal of input tax credit in respect of the amount of premium in Life Insurance services, which is not included in the taxable value as per Rule 32(4) of CGST Rules.
III. Clarification on the taxability of wreck and salvage values in motor insurance claims.
IV. Clarification in respect of Warranty/ Extended Warranty provided by Manufacturers to the end customers
V. Clarification regarding the availability of input tax credit on repair expenses incurred by the insurance companies in case of reimbursement mode of settlement of motor vehicle insurance claims.
VI. Clarification on taxability of loans granted between related person or between group companies.
VII. Clarification on time of supply on Annuity Payments under HAM Projects. Clarification regarding time of supply in respect of allotment of Spectrum to Telecom companies in cases where payment of licence fee and Spectrum usage charges is to be made in instalments.
VIII. Clarification relating to place of supply of goods supplied to unregistered persons, where delivery address is different from the billing address
IX. Clarification on mechanism for providing evidence by the suppliers for compliance of the conditions of Section 15(3)(b)(ii) of CGST Act, 2017 in respect of post-sale discounts, to the effect that input tax credit has been reversed by the recipient on the said amount.
X. Clarifications on various issues pertaining to special procedure for the manufacturers of the specified commodities, like pan masala, tobacco etc.
The Press Release can be accessed at: https://a2z-bucket.s3.ap-south-1.amazonaws.com/PIB2027982.pdf