MM TAX CLUB

This advisory is to inform taxpayers about recent developments concerning the application process for GST registration. It is advised to keep the following key points in mind during the registration process.

Key Updates:

1. Amendment to Rule 8 of CGST Rules, 2017:

   • Applicants can now be identified on the common portal based on data analysis and risk parameters.

   • The process involves Biometric-based Aadhaar Authentication, taking a photograph of the applicant, and verifying the original copies of documents uploaded with the application.

2. Rollout of New Functionality:

   • The GSTN has developed this functionality, which was rolled out in Maharashtra and Lakshadweep on 8th February, 2025.

3. Document Verification and Appointment Booking Process:

   • After submitting Form GST REG-01, the applicant will receive an email with either of the following links:

     • (a) A link for OTP-based Aadhaar Authentication, OR

     • (b) A link for booking an appointment at a GST Suvidha Kendra (GSK) for Biometric-based Aadhaar Authentication and document verification.

4. Process for OTP-Based Aadhaar Authentication:

   • If the applicant receives the link mentioned in point 3(a), they can proceed as per the existing process.

5. Process for Biometric-Based Aadhaar Authentication:

   • If the applicant receives the link mentioned in point 3(b), they must book an appointment using the provided link.

   • The feature for booking appointments at designated GSKs is available for Maharashtra and Lakshadweep applicants.

6. Appointment Confirmation and Visit to GSK:

   • After booking, the applicant will receive a confirmation email.

   • The applicant must visit the designated GSK on the scheduled date and time.

7. Documents Required at GSK:

   • A copy (hard/soft) of the appointment confirmation email.

   • Jurisdiction details as mentioned in the intimation email.

   • Original Aadhaar Card and PAN Card.

   • Original documents uploaded with the application (as communicated in the intimation email).

8. Biometric Authentication and Document Verification Process:

   • The biometric authentication and document verification will be conducted at the GSK for all individuals required in GST application Form REG-01.

9. Timeframe for Biometric Authentication:

   • The applicant must book an appointment within the maximum permissible period as indicated in the intimation email.

   • The Application Reference Number (ARN) will be generated only after the successful completion of Biometric-based Aadhaar Authentication and document verification.

10. GSK Operational Days and Hours:

• GSKs will operate based on the guidelines provided by the respective state/UT administration.

This advisory aims to facilitate a smooth and efficient GST registration process by ensuring compliance with the latest procedural updates. For any further clarifications, applicants are advised to refer to official GSTN notifications or contact their respective jurisdictional GST officers.

The Reserve Bank of India (RBI) has announced a key monetary policy change following its 53rd Monetary Policy Committee (MPC) meeting held from February 5 to 7, 2025. Under the leadership of Governor Shri Sanjay Malhotra, the MPC decided to reduce the policy repo rate by 25 basis points, bringing it down to 6.25%. This move is aimed at maintaining price stability while supporting economic growth.

Key Monetary Policy Decisions

The primary outcomes of the latest MPC meeting include:

• Repo Rate Reduction: The policy repo rate under the liquidity adjustment facility (LAF) has been reduced to 6.25% from the previous rate of 6.50%.

• Adjustments to Other Key Rates:

  • The Standing Deposit Facility (SDF) rate is now at 6.00%.

  • The Marginal Standing Facility (MSF) rate and Bank Rate stand adjusted to 6.50%.

• Neutral Policy Stance Maintained: The RBI remains focused on keeping inflation aligned with the target while ensuring steady economic growth.

Growth and Inflation Outlook

Economic Growth

India’s economic outlook for FY 2024-25 remains positive despite global challenges. According to the First Advance Estimates (FAE), real GDP is expected to grow at 6.4% year-on-year, driven by a recovery in private consumption and strength in the services and agricultural sectors. However, industrial growth remains subdued, acting as a constraint on overall expansion.

For FY 2025-26, growth is expected to improve further, supported by robust household consumption (aided by tax relief measures in the Union Budget), higher capacity utilization, and continued public sector capital expenditure. The RBI has projected real GDP growth at 6.7%, with quarter-wise estimates as follows:

• Q1: 6.7%

• Q2: 7.0%

• Q3: 6.5%

• Q4: 6.5%

Inflation Trends

Inflation has been showing signs of moderation, with headline inflation easing from 6.2% in October 2024 to lower levels in November-December 2024, thanks to declining food prices. Core inflation remains stable, while fuel prices continue to be in a deflationary phase.

Looking ahead, food inflation is expected to remain in check due to good kharif production, favorable rabi crop conditions, and a seasonal decline in vegetable prices. However, global financial uncertainties and commodity price volatility pose potential risks. The RBI’s inflation projection for FY 2024-25 is 4.8%, while for FY 2025-26, it is expected to be 4.2%, with the following quarterly estimates:

• Q1: 4.5%

• Q2: 4.0%

• Q3: 3.8%

• Q4: 4.2%

Policy Rationale and Future Outlook

The decision to cut the repo rate was influenced by the dual objectives of fostering economic growth and ensuring inflation remains within the target range. The committee acknowledged that while inflation has been moderating, global financial uncertainties and geopolitical risks continue to pose challenges. By maintaining a neutral stance, the MPC retains the flexibility to adjust policy in response to evolving macroeconomic conditions.

The minutes of the MPC meeting will be published on February 21, 2025, and the next meeting is scheduled for April 7 to 9, 2025.

The recent policy changes reflect RBI’s commitment to maintaining financial stability while fostering sustainable economic growth. With a proactive approach, the central bank aims to strike a balance between controlling inflation and stimulating investment-led expansion in the coming fiscal year.

The Reserve Bank of India (RBI) has announced a key monetary policy change following its 53rd Monetary Policy Committee (MPC) meeting held from February 5 to 7, 2025. Under the leadership of Governor Shri Sanjay Malhotra, the MPC decided to reduce the policy repo rate by 25 basis points, bringing it down to 6.25%. This move is aimed at maintaining price stability while supporting economic growth.

Key Monetary Policy Decisions

The primary outcomes of the latest MPC meeting include:

• Repo Rate Reduction: The policy repo rate under the liquidity adjustment facility (LAF) has been reduced to 6.25% from the previous rate of 6.50%.

• Adjustments to Other Key Rates:

  • The Standing Deposit Facility (SDF) rate is now at 6.00%.

  • The Marginal Standing Facility (MSF) rate and Bank Rate stand adjusted to 6.50%.

• Neutral Policy Stance Maintained: The RBI remains focused on keeping inflation aligned with the target while ensuring steady economic growth.

Growth and Inflation Outlook

Economic Growth

India’s economic outlook for FY 2024-25 remains positive despite global challenges. According to the First Advance Estimates (FAE), real GDP is expected to grow at 6.4% year-on-year, driven by a recovery in private consumption and strength in the services and agricultural sectors. However, industrial growth remains subdued, acting as a constraint on overall expansion.

For FY 2025-26, growth is expected to improve further, supported by robust household consumption (aided by tax relief measures in the Union Budget), higher capacity utilization, and continued public sector capital expenditure. The RBI has projected real GDP growth at 6.7%, with quarter-wise estimates as follows:

• Q1: 6.7%

• Q2: 7.0%

• Q3: 6.5%

• Q4: 6.5%

Inflation Trends

Inflation has been showing signs of moderation, with headline inflation easing from 6.2% in October 2024 to lower levels in November-December 2024, thanks to declining food prices. Core inflation remains stable, while fuel prices continue to be in a deflationary phase.

Looking ahead, food inflation is expected to remain in check due to good kharif production, favorable rabi crop conditions, and a seasonal decline in vegetable prices. However, global financial uncertainties and commodity price volatility pose potential risks. The RBI’s inflation projection for FY 2024-25 is 4.8%, while for FY 2025-26, it is expected to be 4.2%, with the following quarterly estimates:

• Q1: 4.5%

• Q2: 4.0%

• Q3: 3.8%

• Q4: 4.2%

Policy Rationale and Future Outlook

The decision to cut the repo rate was influenced by the dual objectives of fostering economic growth and ensuring inflation remains within the target range. The committee acknowledged that while inflation has been moderating, global financial uncertainties and geopolitical risks continue to pose challenges. By maintaining a neutral stance, the MPC retains the flexibility to adjust policy in response to evolving macroeconomic conditions.

The minutes of the MPC meeting will be published on February 21, 2025, and the next meeting is scheduled for April 7 to 9, 2025.

The recent policy changes reflect RBI’s commitment to maintaining financial stability while fostering sustainable economic growth. With a proactive approach, the central bank aims to strike a balance between controlling inflation and stimulating investment-led expansion in the coming fiscal year.

Clarification on E-Way Bill Requirement for Goods under Chapter 71

The movement of goods classified under Chapter 71 of the Harmonized System of Nomenclature (HSN) has been a topic of concern for various stakeholders in the industry. To provide clarity, this advisory outlines the regulatory requirements regarding E-Way Bill (EWB) generation for such goods.

Regulatory Framework

Rule 138(14) of the Central Goods and Services Tax (CGST) Rules, 2017, along with its Annexure S.Nos. 4 and 5, specifies that goods falling under Chapter 71, which include:

• Natural or cultured pearls

• Precious or semi-precious stones

• Precious metals and metals clad with precious metal

• Jewellery, goldsmiths’ and silversmiths’ articles

are exempt from the mandatory requirement of generating an E-Way Bill, except for goods classified under HSN 7117 (Imitation Jewellery).

EWB Facility on NIC Portal

Despite the exemption, an option to generate an EWB for goods under Chapter 71 (excluding HSN 7117) was made available on the National Informatics Centre (NIC) EWB portal under the category "EWB for Gold." This was introduced in response to Kerala’s state-specific mandate for intra-state movement of such goods.

Recent Developments

It has been observed that many industry participants voluntarily generated EWBs for goods under Chapter 71 due to the availability of this option. However, it is now clarified that:

• The facility for generating EWBs for goods under Chapter 71 (except HSN 7117) has been withdrawn.

• Taxpayers and transporters should note that EWB generation is not required for the movement of goods under this category.

• An exception applies to the intra-state movement of such goods within Kerala, where EWB generation is mandated as per Notification No. 10/24-State Tax dated 27/12/2024.

Compliance Advisory

Industry stakeholders are advised to ensure compliance with the applicable provisions and refrain from generating EWBs for goods under Chapter 71 (except HSN 7117), except in cases where it is mandated by state-specific regulations, such as in Kerala.

For further clarifications, stakeholders may:

• Contact the GST Helpdesk.

• Approach their respective jurisdictional tax authorities.

Ensuring adherence to these guidelines will facilitate smooth business operations and compliance with GST regulations.

The Union Budget 2025-26, presented by Union Minister of Finance and Corporate Affairs, Smt. Nirmala Sitharaman, outlines a vision for "Sabka Vikas," aimed at balanced growth across all regions. The budget recognizes Agriculture, MSMEs, Investment, and Exports as the four engines of India's economic development, with significant reforms in taxation, urban development, financial sectors, and regulatory frameworks.

Key Highlights

Taxation Relief for Middle-Class and Salaried Individuals

• No income tax for individuals earning up to ₹12 lakh per annum under the new tax regime.

• Salaried individuals earning up to ₹12.75 lakh per annum to pay NIL tax due to a standard deduction of ₹75,000.

• Updated income tax returns filing period extended from two to four years.

• TDS on rent increased from ₹2.4 lakh to ₹6 lakh.

• Delay in TCS payment decriminalized.

Strengthening Economic Growth: The Four Engines

1st Engine: Agriculture

• 'Prime Minister Dhan-Dhaanya Krishi Yojana' to cover 100 low agricultural productivity districts, benefiting 1.7 crore farmers.

• Launch of "Mission for Aatmanirbharta in Pulses" focusing on Tur, Urad, and Masoor.

• Kisan Credit Card (KCC) loan limit increased from ₹3 lakh to ₹5 lakh under the modified interest subvention scheme.

• Investment in post-harvest storage, irrigation, and crop diversification.

2nd Engine: MSMEs

• Credit guarantee cover for MSMEs increased from ₹5 crore to ₹10 crore.

• National Manufacturing Mission to promote "Make in India" initiatives.

• ₹2 crore term loans to be provided to 5 lakh first-time entrepreneurs from SC/ST communities and women.

• Government-backed scheme for India's toy manufacturing industry.

3rd Engine: Investment

• 50,000 Atal Tinkering Labs to be established in government schools over the next five years.

• ₹1 lakh crore Urban Challenge Fund for “Cities as Growth Hubs.”

• ₹20,000 crore allocated for private-sector-driven R&D and innovation initiatives.

• Nuclear Energy Mission launched for Small Modular Reactors with ₹20,000 crore allocation.

• ₹15,000 crore SWAMIH Fund to complete 1 lakh stressed housing units.

• Broadband connectivity to all government schools and rural health centers under BharatNet Project.

• Gig workers to receive identity cards, e-Shram registration, and healthcare under PM Jan Arogya Yojana.

4th Engine: Exports

• Export Promotion Mission launched to help MSMEs expand into global markets.

• FDI limit in insurance increased from 74% to 100%.

• Development of infrastructure and warehousing for air cargo, particularly for perishable goods.

• Boost to domestic electronics manufacturing for Industry 4.0 integration.

Taxation & Fiscal Policy

• Fiscal deficit target for FY25 at 4.8%, with a target to reduce it to 4.4% in FY26.

• Government to maintain fiscal discipline while boosting investments.

• New tax rate structure under the revised tax regime:

  Income Bracket (₹)	Tax Rate
  0 – 4 Lakh	NIL
  4 – 8 Lakh	5%
  8 – 12 Lakh	10%
  12 – 16 Lakh	15%
  16 – 20 Lakh	20%
  20 – 24 Lakh	25%
  Above 24 Lakh	30%

• ₹1 lakh crore revenue loss expected due to income tax cuts, benefiting middle-class taxpayers.

Customs and Manufacturing Boost

• Customs duty exemptions for 36 lifesaving drugs, including those for cancer and rare diseases.

• Exemptions on raw materials for shipbuilding and EV battery manufacturing for 10 years.

• BCD on Interactive Flat Panel Display (IFPD) increased to 20%, while it is reduced to 5% on open cells to support local manufacturing.

Financial Sector Reforms

• Introduction of "Jan Vishwas Bill 2.0" to decriminalize over 100 provisions in various laws.

• Light-touch regulatory framework to ease compliance for businesses.

• Mechanism under FSDC to evaluate financial regulations and enhance responsiveness.

• Introduction of "Investment Friendliness Index of States" in 2025 to encourage cooperative federalism.

Infrastructure & Urban Development

• Modified UDAN scheme to enhance regional air connectivity to 120 new destinations.

• Jal Jeevan Mission extended until 2028 with a focus on quality and rural water infrastructure.

• Expansion of National Geospatial Mission for urban planning and smart cities.

Education & AI Innovation

• Centre of Excellence in AI for Education with ₹500 crore outlay.

• Bharatiya Bhasha Pustak Scheme for digital textbooks in Indian languages.

• Expansion of AI-based education solutions and skilling initiatives for emerging tech jobs.

Conclusion

The Union Budget 2025-26 builds on India's commitment to economic stability, tax rationalization, inclusive growth, and sustainable development. With a strong focus on strengthening the four engines of growth, the government aims to empower the middle class, boost MSMEs, enhance investments, and expand export potential while maintaining fiscal prudence. The proposed reforms, tax reductions, and infrastructure investments are expected to accelerate India's journey towards becoming a $5 trillion economy.

This budget solidifies India's vision for a Viksit Bharat, ensuring a strong, inclusive, and self-reliant economy for the future.