Summary of the Key Insights of 54th GST Council Meeting
The Key Insights of 54th GST Council Meeting are relating to the changes in GST tax rates, provide relief to individuals, measures for facilitation of trade and measures for streamlining compliance in GST.The 54th GST Council met under the chairpersonship of Union Minister for Finance & Corporate affairs Smt. Nirmala Sitharaman in New delhi on 09-09-2024.
KeyPoints of 54th GST Council Meeting
- Recommendations on GST Rates on certain goods.
- Recommendations for Changes in GST Rate on certain services
- Other Proposed Changes related to services
- Proposed Measures for Trade Facilitation
- Other Measures pertaining to Law & Procedures
- Recommendations on GST Rates on certain goods.
| Sr No | Description of goods | Current GST Rate | Proposed new GST Rate | Explanations |
| 1 | Extruded or Expanded Products which are savoury or salted (other than un-fried or un-cooked snack pellets) | 18% | 12% | These products fall under the category of 19059030 and are now taxed at the same rate as snacks like namkeens, bhujia, Mixture, Chabena which are Pre-package labeled and ready to eat. These types of snacks fall under Heading 210690. The new rate will not apply any past transactions, only future sales after the change is implemented. |
| 2 | Unfried or Un-cooked Snack pellets made by extrusion | 5% | 5% | Continue to taxed at the Rate of 5% |
| 3 | Cancer drugs namely, Trastuzumab Deruxtecan, Osimertinib and Durvalumab | 12% | 5% | GST Rate reduced from12% to 5% |
| 4 | Metal Scrap by Un-registered person to registered person | – | RCM to be introduced TDS of 2% will be applicable on B-to-B Transactions by registered person | When unregistered supplier supplies metal scrap to Registered person, the liability to pay GST shifts on Registered person is under RCM. Supplier will register for GST on crossing of threshold limit. |
| 5 | Roof Mounted Package Unit Air Conditioning Machine for Railways | – | 28% | The air conditioning machine for Railways will be classified under 8415 and will attracts GST @28% |
| 6 | Car and Motor cycle seats | 18% | 28% | GST Rate on car seats will be increased to maintain GST rate parity between different type of vehicle seats. Now the Motorcycle seat and car seat both are taxed at same GST rate of 28% |
2. Recommendations for Changes in GST Rate on certain services
| Sr No | Description of Services | Current GST Rate | Proposed new GST Rate | Explanations |
| 1 | Transport of Passengers by Helicopter | – | 5% | Transport of Passenger by helicopter on seat-sharing basis will be 5%. Past transactions related to this will be regularized as they are without any changes. If someone rents (charters) an entire helicopter, GST will remain 18% as it has been.
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| 2 | Renting of Commercial Property | – | RCM to be introduced | To prevent revenue leakage RCM to be introduced on Renting of Commercial property by unregistered person to registered person. |
| 2 | Flying Training Course | – | Exempt | A New circular will clarify that the Flying training course offered by DGCA approved by Flying training Organization are exempt. |
| 3 | Supply of Research and development services | – | Exempt | The GST Council has recommended exempting the supply of research and development by Government entity or research association, university, college or other institution covered under section 35(1) (ii) or (iii) of Income Tax Act,1961. This exemption applies only when these services are funded by the government or Private grants. For past transactions it will be regularized as is where is basis. |
| 4 | Affiliation Service Provided by State or Central educational Board, educational councils and similar bodies to government schools | – | Exempt | Affiliation service provided by CBSE are subject to GST. GST issues related to 01-07-2017 to 17-06-2021 will be regularized as is where is basis. |
| 5 | Import of service by foreign airlines Company from related person or any establishment outside India without any payment or consideration | – | Exempt | No additional penalties or charges for any past transaction as it is as is where is basis. |
3. Other Proposed Changes related to services
Other Proposed Changes related to services are as follows:
- The Group of Ministers thoroughly examines the GST Related issues concerning Life Insurance and Health Insurance. Reviews will be submitted by end of October-2024
- Preferential Location charges mean extra fees paid for selecting special location, when buying residential, commercial, or industrial property, are considered part of the overall construction. It is naturally bundled with the construction service, and it is paid before the completion certificate is issued. The GST rate, which applies to construction services, will also apply to PLC. In simple, both will tax together as one service
- Ancillary Services are provided by the GTA: When GTA provides extra services like loading /unloading, packing/unpacking, transshipment, temporary warehousing etc. During the transportation of goods by road and issue consignment notes, these services are considered as part of Composite Supply. These services will be treated as composite supply. If such services are not provided in the course of transportation of goods and invoiced separately, then these services will not be treated as Composite supply of Transport of goods.
- GST Liability for film distributor or sub distributors who acted as principal basis Prior to 01-10-2021 will be regularized on as is where is basis.
- The Council has decided to exempt certain services that are directly related to providing electricity. These services include application fees for electricity connections, rental charges for electricity meters, testing fees for meter or transformers, labor charges for shifting meter or service lines and charges for duplicate Bills. If the above all the services are provided as part of electricity, then they are exempt. Past transactions are regularized as is where is basis.
4. Proposed Measures for Trade Facilitation
Government has proposed certain Measures for Trade Facilitation:
1. Procedure and conditions for waiver of interest or penalty or both, in respect of tax demands under section 73 of CGST Act, 2017 for FYs 2017-18, 2018-19 and 2019-20 as per section 128A of CGST Act, 2017:
The GST Council has proposed process (in the form of Rule 164 and specific forms) for taxpayers to follow if they want to waive off interest or penalties or both related to tax demands for the FY 2017-18 ,2018-19, 2019-20. This waiver is allowed under section 128A of CGST Act,2017.
- The council has recommended inserting Rule 164 in CGST Rules, 2017.
- To avail the benefit of waiver, the tax must be paid by 31-03-2025. The registered taxpayer can take advantage only on payment of tax before specified date.
- Circular will be issued to remove the confusion and questions that taxpayer might have about how to get this waiver.
- The council proposed the applicability of section 128A from 01-11-2024.
2. GST Council has recommended to be added section 16(5) & (6) of CGST Act,2017.
- Section 16(5) pertains to claim the ITC on Invoice and debit note for the FY 2017-18, 2018-19, 2019-20 & 2020-21 up to 30-11-2021.
- Section 16(6) pertains to claim of ITC of the invoices or debit notes issued between cancellation and revocation of cancellation of registration in prescribed manner.
- The above both sections will apply from 01-07-2017 even though they are being introduced now through Finance Act (No.2) ,2024. The council is asking for these changes to be made official as soon as possible.
- The GST Council has suggested creating special process for correcting orders for specific group of taxpayers. These are taxpayers who receive an order u/s 73,74,107 or 108 of CGST Act because they wrongly claimed Input Tax Credit in violation of section 16(4) of the CGST Act,2017.
- However, under section 16(5) and 16(6), this ITC may now be allowed. If those taxpayers did not file an appeal against earlier orders, they can follow this special process to fix those orders. The council wants to issue circular to clarify how this process will work and address any question about applying these new subsections of section 16.
3. GST Council is recommending two things related to Exports and tax refunds:
- Clarification on Imports and Refunds:
Where the inputs were initially imported without payment of IGST and compensation cess by availing benefits under certain notifications (Notification No 78/2017 & 79/2017), but later pays the IGST and compensation cess along with interest and get the customs authorities to reassess the Bill of Entry (Import document), then the IGST refund they got on exports will not be seen as violation of Rule 96(10) of CGST Rules,2017.
- Simplifying Refund process for Exporter:
Exporters are facing challenges with current refund rules (Rule 96(10), rule 89(4A), rule 89(4B)) if they used specific concessional /exemptions notifications on imported inputs. To solve this the council suggests removing this rule going forward which will make it easier and faster for importer to get refund on export.
4. GST Circulars will be issued on the following issues:
- Clarification on the Place of Supply of advertising services provided by Indian advertising companies to foreign entities.
- Clarification regarding availability of Input Tax Credit on demo vehicles by the dealers of the vehicle manufacturers.
- Clarification on Place of Supply of data hosting services provided by service providers located in India to cloud computing service providers located outside India.
5. The Council also recommended amendments in some other provisions of CGST Rules, 2017.
5. Other Measures pertaining to Law & Procedures
1. B2C E-invoicing:
- The GST Council has recommended Pilot project for B2C E-invoicing like E-invoice system used for B2B Transactions Voluntarily.
- This system will allow retail customers to check if their invoices are being correctly reported in GST returns, ensuring transparency.
2. Invoice Management System and new ledgers:
GST Council has discussed the improvement being made to the existing GST Return system which includes:
- RCM Ledger
- Input Tax Credit Reclaim ledger
- Invoice Management System
Taxpayers will need to declare their Opening Balance for these ledgers by 31-10-2024.
- The Invoice Management System is an Optional facility for Taxpayers to reduce errors in claiming ITC and improve reconciliation. By use this tool, it will be expected that the notices issued on account of ITC Mismatch in return will be reduced.
