The 54th Goods and Services Tax (GST) Council meeting, chaired by Union Finance Minister Nirmala Sitharaman, convened at Sushma Swaraj Bhawan, New Delhi, on Monday.
The meeting brought several significant recommendations and decisions affecting GST rates, compliance measures, and the future of GST administration.
Key Recommendations:
1. Formation of New GoMs:
Health and Life Insurance: The GST Council recommended forming a Group of Ministers (GoM) to review GST rates on life and health insurance. This GoM will work alongside the existing GoM on Rate Rationalisation and is tasked with submitting a report by the end of October 2024.
Compensation Cess: A separate GoM will be established to explore the future of the compensation cess, which is set to expire in March 2026.
2. Exemptions and Reductions:
Research and Development Services: The GST Council proposed exempting the supply of research and development services by government entities, research associations, and educational institutions using government or private grants.
Cancer Drugs: GST rates on specific cancer drugs—Trastuzumab Deruxtecan, Osimertinib, and Durvalumab—will be reduced from 12% to 5%.
3. B2C E-Invoicing Pilot:
A pilot project for Business-to-Customer (B2C) e-invoicing will be rolled out, following successful B2B e-invoicing implementation. This aims to enhance business efficiency and transparency in the retail sector.
Changes in GST Tax Rates:
1. Goods:
Namkeens and Savoury Snacks: The GST rate for extruded or expanded savoury snacks will be reduced from 18% to 12%, aligning with rates for similar edible products.
Metal Scrap: Reverse Charge Mechanism (RCM) will be introduced for metal scrap supplies from unregistered to registered persons, with a 2% TDS applicable on B2B transactions.
Roof Mounted Package Units: GST on Roof Mounted Package Unit (RMPU) air conditioning machines for railways will be classified under HSN 8415 with a 28% rate.
Car Seats: The GST rate on car seats will be increased from 18% to 28%, aligning with the rate for motorcycle seats.
2. Services:
Transport by Helicopters: GST on passenger transport by helicopters will be set at 5% on a seat share basis. Charter services will continue to attract 18% GST.
Flying Training Courses: GST will be exempt for approved flying training courses conducted by DGCA-approved organizations.
Affiliation Services: Affiliation services provided by educational boards will be taxable, with exemptions applied prospectively to government schools.
Facilitation of Trade and Compliance Measures:
1. Waiver of Interest or Penalty:
The GST Council recommended a procedure for waiving interest or penalty for tax demands related to FYs 2017-18, 2018-19, and 2019-20, with a deadline of March 31, 2025, for payments to avail benefits.
2. Rectification of Orders:
A special procedure will be introduced for rectifying orders where input tax credits were wrongly denied due to previous regulations but are now available.
3. Clarifications on GST Rules:
Clarifications will be issued on several issues, including advertising services provided to foreign entities, input tax credits on demo vehicles, and data hosting services.
Other Important Decisions:
Invoice Management System (IMS):
Enhancements to the GST return architecture will include the introduction of an RCM ledger, an Input Tax Credit Reclaim ledger, and an IMS. Taxpayers will be able to declare opening balances for these ledgers by October 31, 2024.
Exemptions and Regularizations:
Past GST liabilities related to film distribution, ancillary services in transportation, and electricity-related services will be regularized on an ‘as is where is’ basis.
The 54th GST Council meeting has set the stage for significant changes aimed at simplifying GST administration, enhancing compliance, and providing relief to various sectors.