Major Tax Relief: No GST on Hostels, ESOPs, and Platform Tickets

H Option 2: Major Tax Relief: No GST on Hostels, ESOPs, and Platform Tickets

H Option 2: Major Tax Relief: No GST on Hostels, ESOPs, and Platform Tickets

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Nirmala Sitharaman announces significant tax exemptions and measures to prevent fraud by bogus entities.

June 23, 2024

The GST Council on Saturday decided to exempt all hostel fees, platform tickets, railway waiting room charges, golf cart fees, and employee stock options from GST, while reworking the registration system to prevent fraud by bogus entities. This move is expected to benefit thousands of students and working individuals staying in paying guest accommodations.

Finance Minister Nirmala Sitharaman announced that hostels run by educational institutions were already exempt from GST. Now, all hostels will be exempted from the levy provided the monthly charges are under Rs 20,000 per person and the occupant stays at the facility for at least 90 days.

Additionally, there is relief for corporate guarantees and reinsurance, with certain clarifications issued. E-commerce players will also benefit as the tax collected at source on net taxable supplies will be halved to 0.5%. The council clarified a 12% tax on all types of milk cans, solar cookers, and paper cartons. Furthermore, compensation cess on the supply of aerated beverages and energy drinks to authorized customers by defense canteens has also been exempted.

The all-powerful body comprising the Union and state Finance Ministers also recommended amendments to the CGST Act for not levying tax on extra neutral alcohol (ENA) used for the manufacture of alcoholic liquor for human consumption. Earlier, the Centre had decided to forgo its power to levy tax on ENA.

An amnesty scheme for defaulters was introduced to make life easier for businesses. There will be thresholds for appealing to the GST Appellate Tribunal (Rs 20 lakh), high courts (Rs 1 crore), and the Supreme Court (Rs 2 crore). The government does not intend to file an appeal if the amount involved, other than policy issues, is under the threshold, according to revenue secretary Sanjay Malhotra.

Further, the pre-deposit amount for taxpayers to file appeals has also been reduced. Interest and penalty will be waived if a taxpayer who was served a notice under Section 73 of the CGST Act during FY18 to FY20 agrees to clear the demand by March. This section deals with cases where full tax has not been paid, was erroneously refunded, or where input tax credit was wrongly availed or utilized for any reason other than fraud.

The council also recommended a phased rollout of biometric-based Aadhaar authentication for GST payer registration, for which pilots had been conducted in Gujarat and Puducherry. This move aims to combat fraudulent input tax credit claims made through fake invoices and will require registration at GST Suvidha Kendras or facilitation centers.

“Dispute resolution requires a multi-faceted approach. We advocate for an amnesty scheme, a national authority for advance rulings, and full appointment of the Goods and Services Tax Appellate Tribunal. Industry engagement and audit efficiency can be improved through sectoral committees and standardized compliance manuals,” said a tax partner at a consulting firm.

Several items related to the review of tax rates were not addressed in Saturday’s meeting. However, numerous changes, including an amnesty scheme for defaulters, were approved to make life easier for businesses.