Staying Current with GST and Indirect Tax Changes

India's indirect tax landscape evolves regularly through GST Council meetings, CBIC (Central Board of Indirect Taxes and Customs) circulars, and Ministry of Finance notifications. For businesses in Kerala — whether engaged in trade, manufacturing, hospitality, or services — staying informed is not just good practice; it directly affects your tax liability, compliance obligations, and cash flow.

This article summarises important developments and themes from recent GST Council sessions and CBIC communications that are particularly relevant to Kerala-based businesses.

GST Rate Rationalisation Updates

The GST Council has been working on a structured rationalisation of tax rates across slabs (5%, 12%, 18%, 28%). Key areas of focus include:

  • Reduction of the 12% slab items: The Council has been examining moving several goods and services either to 5% or 18%, effectively reducing the number of items in the 12% bracket. Businesses should verify whether the GST rate on their key goods or services has been revised.
  • Textiles and footwear: Rate changes in this sector continue to be reviewed; businesses dealing in these categories should check the latest notifications.
  • Restaurant and hospitality sector: Given Kerala's significant tourism and hospitality industry, any changes to the GST rate on restaurant services (currently 5% without ITC for most) or hotel accommodation tariffs are directly impactful.

ITC (Input Tax Credit) Rule Changes

Amendments to ITC eligibility and reversal rules remain a consistent area of regulatory activity. Businesses should be aware of:

  • Rule 86B: Restrictions on using electronic credit ledger for more than 99% of tax liability remain in force for large taxpayers with high cash turnover. Ensure your compliance history is clean to avoid scrutiny.
  • GSTR-2B reconciliation requirement: The expectation that ITC claims in GSTR-3B should align with GSTR-2B auto-populated figures has been strengthened. Discrepancies are being flagged more frequently by the system.
  • ITC on construction/immovable property: The Council has reiterated restrictions; businesses undertaking building construction for lease or commercial purposes should consult their advisors on eligibility.

E-Invoicing and B2C E-Invoice Pilot

E-invoicing under GST has been progressively extended to smaller businesses. As of current notifications, businesses with annual aggregate turnover above ₹5 crore are required to generate e-invoices for B2B transactions. The government has also been piloting a voluntary B2C e-invoicing system. Kochi-based businesses approaching the threshold should prepare their accounting systems for compliance.

Customs: Updates on Import Duty and Trade Facilitation

On the customs front, CBIC has continued to expand the Faceless Assessment system at ports including Kochi. This means:

  • Assessment of Bills of Entry is increasingly handled by officers from centralised processing centres, not necessarily the port of entry.
  • Communication with the assessing officer is done electronically through ICEGATE.
  • Importers and CHAs should ensure documentation is complete and accurate before filing, as physical interaction for clarification is limited.

Amnesty Schemes and Dispute Resolution

From time to time, the government announces amnesty schemes for settling pending demands under legacy laws (central excise, service tax) or under GST. Businesses with unresolved demands or disputes should watch for such schemes, as they typically offer reduced penalties and interest. Check the CBIC website and official GST portal for current notifications.

Kerala-Specific Notifications: KGST and State-Level Updates

While GST is a dual structure (Centre + State), the Kerala GST (KGST) Authority issues state-specific orders, particularly regarding:

  • Kerala Flood Cess (a 1% cess on intra-state B2C supplies) — check current applicability status.
  • State-specific enforcement drives and audit campaigns.
  • Notifications relevant to Kerala's plantation and marine product sectors.

Where to Stay Updated

To track official notifications and circulars:

  1. GST Council website: gstcouncil.gov.in
  2. CBIC official portal: cbic.gov.in
    3. GST portal notifications: gst.gov.in (under "Latest Updates")
  3. Kerala Commercial Taxes Department: keralataxes.gov.in

Keeping up with policy changes can be challenging. Subscribing to alerts from professional bodies like ICAI (Institute of Chartered Accountants of India) and engaging with local tax professionals in Kochi are practical ways to ensure your business is never caught off guard by regulatory changes.