GST Council Implements “Track and Trace Mechanism”
The GST Council has recently made updates to enhance tax compliance and clarity in the tax framework, aim to reduce tax evasion, and simplify tax processes for businesses and consumers.
Track and Trace Mechanism
The Council approved a new “Track and Trace Mechanism” for goods susceptible to tax evasion and will employ unique identification marks on products and packaging. It will enable tracing throughout the supply chain, thus improving accountability.
Tax Rate Adjustments
Several tax rate changes were announced. The GST on fortified rice kernels (FRK) has been reduced from 18% to 5%. Additionally, gene therapy will now be exempt from GST. These adjustments aim to make essential goods more affordable.
Exemptions for Imports and Supplies
The Council introduced exemptions for imports of equipment and samples for the International Atomic Energy Agency (IAEA) under specific conditions. Furthermore, the compensation cess has been lowered to 0.1% for supplies to merchant exporters, easing their tax burden.
Contributions to the Motor Vehicle Accident Fund by general insurance companies are now exempt from GST. This fund is crucial for providing compensation and cashless treatment to road accident victims, enhancing public welfare.
Vouchers and Goods Definition
Transactions involving vouchers will no longer attract GST, as they do not qualify as goods or services. The definition of “pre-packaged and labeled” goods has been clarified, now covering retail items up to 25 kg or 25 litres.
Clarifications on Penal Charges
There will be no GST on penal charges collected by banks or financial institutions for loan non-compliance. This change aims to alleviate the tax burden on financial services. The Council is working to simplify GST rules for specific cases. The pre-deposit requirement for appealing penalty-related orders has been reduced. Circulars will be issued to address legal ambiguities and disputes, promoting greater clarity.
GKToday Notes:
- Track and Trace Mechanism: This system uses unique identification marks to monitor goods in the supply chain. It aims to enhance accountability and reduce tax evasion .
- Fortified Rice Kernels (FRK): FRK is a nutritional supplement designed to combat malnutrition. The GST on FRK was reduced from 18% to 5%, making it more accessible to consumers.
- International Atomic Energy Agency (IAEA): The IAEA promotes peaceful nuclear energy use. GST exemptions for its imports support international cooperation in nuclear safety and technology development.
- Motor Vehicle Accident Fund: This fund provides compensation for road accident victims. Exempting contributions from GST enhances funding for cashless treatment and victim support services.
Month: Current Affairs - December, 2024
Category: Economy & Banking Current Affairs