Key Highlights from the 54th GST Council Meeting: Major Updates!

The 54th GST Council meeting, led by Union Minister of Finance and Corporate Affairs Smt. Nirmala Sitharaman, brought important changes. These updates aim to simplify GST rates, improve compliance, and streamline procedures. Let’s go over the most significant changes.

A. Changes in GST Tax Rates

Namkeens and Savory Products: The GST rate on extruded savory products will drop from 18% to 12%, matching the rates for namkeens and bhujia. However, snack pellets that are un-fried or un-cooked will still have a 5% GST rate.

Cancer Drugs: The GST rate on essential cancer drugs, like Trastuzumab Deruxtecan and Osimertinib, will reduce from 12% to 5%, offering some relief to patients.

Metal Scrap and Reverse Charge Mechanism (RCM): Metal scrap sold by unregistered sellers to registered buyers will now fall under the RCM. Moreover, B2B transactions involving metal scrap will have a 2% TDS.

Roof Mounted Package Unit (RMPU) Air Conditioning Machines: These machines, used in railways, will now attract a 28% GST rate under HSN 8415.

Car and Motorcycle Seats: The GST rate for car seats will rise from 18% to 28%, aligning it with the tax rate on motorcycle seats.

B. Changes in GST for Services

Life and Health Insurance: A Group of Ministers (GoM) will examine GST issues around life and health insurance. Their report is expected by October 2024.

Passenger Transport by Helicopters: The GST rate for passenger transport by helicopters will reduce to 5% on a seat-share basis. However, charter helicopter services will continue to attract an 18% GST rate.

Flying Training Courses: Flying Training Organizations (FTOs) offering DGCA-approved courses will now be exempt from GST.

Research and Development Services: R&D services provided by government entities or universities will also be exempt from GST.

Preferential Location Charges (PLC): PLC for properties purchased before the completion certificate is issued will be part of the composite supply. These charges will follow the same tax rate as the main construction service.

Educational Board Services: Services provided by state or central educational boards to government schools will be GST exempt starting from October 2024.

Import of Services by Foreign Airlines: The import of services by foreign airlines’ branch offices, without any consideration, will now be exempt from GST. This will apply retroactively.

Renting of Commercial Property: Rentals for commercial property from unregistered to registered persons will now fall under RCM to prevent revenue loss.

Ancillary Services by Goods Transport Agency (GTA): Services like loading, unloading, and warehousing, when provided alongside goods transport, will now be considered part of the composite supply if a consignment note is issued. If these services are billed separately, they will not be treated as part of the composite supply.

C. Trade Facilitation Measures

Waiver of Interest and Penalty for FY 2017-2020: A new Rule 164 allows taxpayers to pay their dues by 31st March 2025, without interest or penalties for demands from FYs 2017-18 to 2019-20.

Input Tax Credit (ITC) Rectifications: Sub-sections (5) and (6) of Section 16, which handle ITC claims, will be applied retrospectively from July 1, 2017. A special process will correct past incorrect ITC claims.

Simplified IGST Refunds on Exports: Rule changes to 89 and 96 of the CGST rules will simplify IGST refunds, especially for exporters benefiting from concessional notifications. Omitted rules will speed up refund processes.

Clarifications by Circulars: Circulars will soon provide clarity on:

• The place of supply for advertising services provided to foreign clients.
• ITC availability for demo vehicles used by vehicle dealers.
• The place of supply for data hosting services provided to foreign cloud providers.

D. Other Key Measures

B2C E-Invoicing Pilot: A pilot program for B2C e-invoicing will soon launch in selected states and sectors, aiming to enhance business efficiency and give customers a way to verify invoices.

New Invoice Management System and Ledgers: The Council will introduce an Invoice Management System (IMS) and new ledgers, such as RCM and ITC Reclaim ledgers. Taxpayers must declare opening balances for these ledgers by 31st October 2024.

GST Regularization for Film Distributors: Film distributors and sub-distributors who acted as principals in acquiring and distributing films before 1st October 2021 will have their GST liability regularized.

Exemptions for Electricity Supply Services: Services related to electricity supply, such as meter rentals and transformer testing fees, will now be exempt from GST.

Conclusion

The 54th GST Council meeting introduced key changes aimed at simplifying tax rates, improving trade processes, and resolving GST-related issues. Stakeholders should stay informed to ensure compliance with these changes as they take effect through circulars and notifications.

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