[Opinion] Uncovering Industry updates of 48th GST Council Meeting

Harshita Agrawal – [2023] 146 taxmann.com 151 (Article)

Introduction

The author of this article has thoroughly covered the industry modifications that the GST Council suggested at its 48th Council Meeting on December 17, 2022. The Central Board of Indirect Taxes and Customs has taken the suggestions into consideration (CBIC). The CBIC published Notification Nos. 26 and 27 on December 26, Notification Nos. 12 to 15 on December 30, and Circular Nos. 183/2022-GST, 184/2022-GST, 185/2022-GST, 186/2022-GST, 187/2022-GST, and 188/2022-GST on December 27, respectively.

Recommendation for GST amendments in insurance industry

Circular to be issued to clarify that No Claim Bonus offered by the insurance companies to the insured is an admissible deduction for valuation of insurance services.

GST is levied only on the actual insurance premium amount, after deducting the no-claim bonus, that policyholders pay to the insurer in exchange for insurance services.

A No Claim Bonus, also known as an NCB, is a reward given by an insurance company to an insured for not filing any claims during the policy year. The NCB is a discount that ranges from 20% to 50% and is given to the insured when they renew their policy. During renewal, the NCB discount is applied to the premium amount. This discount is transferable and can be used if the policyholder purchases a new vehicle.

Recommendation for GST amendments for micro enterprises

Facilitate e-commerce for micro enterprises: GST Council in its 47th meeting had granted in-principal approval for allowing unregistered suppliers and composition taxpayers to make intra-state supply of goods through E-Commerce Operators (ECOs), subject to certain conditions. The Council approved the amendments in the GST Act and GST Rules, along with issuance of relevant notifications, to enable the same. Further, considering the time required for development of the requisite functionality on the portal as well as for providing sufficient time for preparedness by the ECOs, Council has recommended that the scheme may be implemented w.e.f. 01.10.2023.

GST Recommendation for amendments in respect of ITC availability

The Council has recommended to amend sub-rule (1) of rule 37 of CGST Rules, 2017 retrospectively with effect from 01.10.2022 to provide for reversal of input tax credit, in terms of second proviso to section 16 of CGST Act, only proportionate to the amount not paid to the supplier vis a vis the value of the supply, including tax payable.

The Council recommended to insert Rule 37A in CGST Rules, 2017 to prescribe the mechanism for reversal of input tax credit by a registered person in the event of non-payment of tax by the supplier by a specified date and mechanism for re-availment of such credit, if the supplier pays tax subsequently. This would ease the process for complying with the condition for availment of input tax credit under section 16(2)(c) of CGST Act, 2017.

On the basis of above recommendations, CBIC has issued following Circulars, Circular No. 183/15/2022-GST, Circular No. 184/16/2022-GST and Circular No. 185/17/2022.

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