The 54th GST council meeting took place under the chairpersonship of Union Minister for Finance & Corporate affairs Smt. Nirmala Sitharaman in New Delhi on 9th September 2024. This council meeting has brought forth multiple significant recommendations and rate changes to facilitate trade and streamline GST compliance.
This article shall discuss all the pointers addressed during the council meeting.
Key Changes in GST Rates
Certain adjustments were made to the GST rates which are as follows:
- Namkeens and Extruded/Expanded Savoury Food Products: The council announced reduction of GST rates on all snack items classified under HS 1905 90 30 prospectively from 18% to 12%. This reduction is in line with the already existing tax rate on similar ready-to-consume edible products like namkeens and bhujia. Moreover, the GST rate of 5% shall continue to apply to un-fried or uncooked snack products.
- Cancer Drugs: The GST rate on specific cancer drugs, including Osimertinib, Trastuzumab Deruxtecan, and Durvalumab, is now 5% from 12%. This reduction aims at more affordable treatments for such severe cases.
- Metal Scrap: A Reverse Charge Mechanism (RCM) now applies to the supply of metal scrap from unregistered entity to a registered entity. This also states that the unregistered suppliers must seek registration as soon as they cross the threshold limit. Also, the recipient will still need to pay tax under RCM even if the supplier remains under threshold. Moreover, a TDS of 2% will be applicable on metal scrap supplies in case of B2B transactions.
- Railway RMPU Air Conditioning Machines: Roof Mounted Package Unit (RMPU) air conditioning machines for railways as classified under HSN 8415 will now attract a GST rate of 28%.
- Car Seats: At present, car seats classified under 9401 attract a GST rate of 18%. However, this classification will now attract an increased GST rate of 28%. This aligns with an already existing GST applicability of 28% on motorcycle seats. This shall come in effect prospectively.
- Transport of Passengers: The council has notified a 5% GST on transport of passengers by helicopters on a seat share basis. The GST for past period should further be regularised on “as is where is” basis. However, the charter of helicopter must continue to attract a GST of 18%.
- Import of Service by Foreign Airlines: The council has also exempted the import of services by an established foreign airlines company from any individual or branch office included under the establishment. The past period would be regularised on “as is where is” basis.
- Renting of Commercial Property: With the meeting, the council applied RCM to the transactions involving renting of commercial properties from an unregistered person to a registered person. This aims to prevent revenue leakage.
- Incidental/ Ancillary/ or Integral Services for Transmission and Distribution of Electricity: The council has exempted application fees for providing a new electricity connection, labor charges for shifting service lines or meters, and more such services which are incidental or ancillary or integral part of supplying and distributing electricity to consumers. The past period will be regularised as per “as is where is” basis.
- Research and Development Services: The GST council has exempted supply of research and development services by government entities, research institutions, universities, and more such organisations as specified under clauses (ii) or (iii) of sub-section (1) of section 35 of the Income Tax Act, 1961, which use government or private grants.
Press Release for 54th GST Council Meeting: Press Release:Press Information Bureau (pib.gov.in)
Changes Made for Compliance and Procedural Enhancements
The GST council also took some steps for compliance and procedural enhancements:
- Rule 164 for Waiver of Interest and Penalty: The council has recommended introduction of rule 164 to the CGST rules, 2017, introducing a procedure for people to avail benefit of waivers of interest or penalty or both under section 73 of CGST Act, pertaining to FYs 2017-18, 2018-19 and 2019-20, as per section 128A of CGST Act. The registered taxpayers would also notify on or before the date they make a payment that attracts such benefit.
- Rectification of Wrong Demand of Input Tax Credit: The council discussed certain new guidelines to rectify orders related to the wrong claim of input tax credit. A detailed circular discussing proper implementation of provisions of sub-section (5) and sub-section (6) of section 16 of CGST Act, 2017 will come out soon. This circular will ensure proper compliance with the latest provisions, eliminating the scope for errors and disputes.
- Omitting of Rules for Export Refunds: The council has decided to prospectively omit rule 96(10), rule 89(4A) & rule 89(4B) from CGST Rules, 2017 to facilitate easier refund procedure for exports.
- E-invoicing Pilot: The council has announced the introduction of a pilot for B2C invoicing soon. This pilot will first be available on a voluntary basis for select sectors and states.
- IMS and New Ledgers: Council meeting also announced how multiple enhancements to the existing GST Network are under process and will roll out soon. These include Invoice Management System (IMS), Input Tax Credit Reclaim ledger, and Reverse Charge Mechanism (RCM) ledger.
Formation of Two New GoMs
The council has recommended forming two new Group of Ministers (GoMs) for following purposes:
1. Medical and Health Insurance: This GoM is an extension of the already existing GoM formed for rate rationalisation. It is under the leadership of Deputy CM of Bihar with multiple members from different states. This GoM has to submit a report by the end of October 2024. So, the GST on life and health insurance remains 18% and will undergo further discussion in November.
2. Compensation Cess: After the introduction of GST in 2017, compensation cess was a mechanism to help businesses with the losses they would incur with this implementation While it was introduced only for five years and was supposed to discontinue in 2022, it was later extended for luxury and demerit goods. Now, a new GoM will be studying the figures of compensation cess. They will either discontinue it completely or do it with the highest tax rate applicable.
Conclusion
After the 53rd GST Council meeting, it was a much-expected comprehensive 54th GST Council meeting on 9th September, 2024. There are already speculations about varied things for the November meeting. A certain highlight of the same would be the discussion on compensation cess and life and health insurance. Stay tuned for more such GST updates.
