Recommendations from the 55th GST Council Meeting

Recommendations from the 55th GST Council Meeting

The GST Council, chaired by Finance Minister Nirmala Sitharaman, made significant recommendations aimed at streamlining GST operations, reducing tax rates, and facilitating trade compliance. These recommendations provided by the GST Council cover a wide range of updates and policy changes, aiming to revise tax rates, streamline compliance processes, and facilitate trade. These include reductions and exemptions on specific goods and services, clarification on GST treatment for various scenarios, and measures for compliance improvements. These measures aim to simplify GST, foster trade, and provide clarity to reduce disputes. Feel free to ask if you want more detail on any specific point. Here are some key points:

Changes in GST Rates:

Goods:

1. Namkeens and Savory Food Products: GST rate reduced from 18% to 12% for extruded/expanded savory snacks (excluding un-fried/un-cooked snack pellets).
2. Cancer Drugs: Trastuzumab Deruxtecan, Osimertinib, and Durvalumab rates reduced from 12% to 5%.
3. Metal Scrap: Reverse Charge Mechanism introduced for supplies by unregistered persons.
4. TDS of 2% on B2B supplies by registered persons.
5. Roof Mounted Air Conditioning for Railways: Classified under HSN 8415, attracting 28% GST.
6. Car and Motorcycle Seats: Uniform GST rate of 28% applied prospectively to car seats for parity with motorcycle seats. Used Cars and Electric Vehicles (EVs) : GST increased for used cars, including small petrol, diesel, and electric vehicles, from 12% to 18%.
7. Fortified Rice Kernels : GST reduced from 18% to 5%.
8. Autoclaved Aerated Concrete (ACC) Blocks : For ACC blocks containing more than 50% fly ash: GST reduced from 18% to 12%.
9. Apparel Proposals (from the GoM) : Garments priced up to ₹1,500: 5% GST, Garments priced above ₹10,000: 28% GST.
10. Packaged Drinking Water ; A proposal to reduce GST to 5% is under consideration.
11. Bicycles priced under ₹10,000: Proposed to attract 5% GST
12. Popcorn Taxation : Unpackaged salted or spiced popcorn: 5% GST, Pre-packaged popcorn: 12% GST, Caramel-coated popcorn: 18% GST

Services:

• Life and Health Insurance: A Group of Ministers (GoM) will study GST implications and submit a report by October 2024.
• Passenger Transport by Helicopters: GST set at 5% for seat-share basis; charter services to remain at 18%.
• Flying Training Courses: Exempted from GST for DGCA-approved training.
• Research Services: Exempt for government entities, research associations, and institutions funded by grants.
• Preferential Location Charges (PLC): Treated as part of composite supply for construction services.
• Educational Board Affiliation: Exemption provided to state/central boards prospectively; others to attract 18% GST.

Exemptions and Clarifications:

• Vouchers Transactions: GST exempted for voucher transactions as they are not considered a supply of goods or services. Provisions related to vouchers have been simplified.
• Motor Vehicle Accident Fund Contributions: Exemption granted on contributions made by general insurance companies from third-party motor vehicle premiums to the Motor Vehicle Accident Fund.
• Agricultural Supplies: Fresh green or dried pepper and raisins supplied by agriculturists are exempt from GST. Autoclaved Aerated Concrete (ACC) blocks with over 50% fly ash content attract 12% GST.
• LRSAM System: IGST exemption extended for assembly/manufacture-related systems, sub-systems, and equipment.
• IAEA Inspection Imports: Exempted IGST on specific equipment and consumables imported by the International Atomic Energy Agency (IAEA) inspection teams.
• Clarifications on Pre-Packaged and Labelled Goods: Amendments approved to the definition of “pre-packaged and labelled” items for retail sale to address confusion and ensure clarity for all goods.

Measures for Trade Facilitation: Other Changes:

• Old and Used Vehicles: GST on margin, increased to 18% for specified vehicle categories. For those interested in understanding who is impacted and required to pay GST on the sale of old cars, CNBC provides a simplified explanation.

• ACC Blocks: 12% GST if fly ash content >50%.
• Agricultural Products: Clarified no GST on pepper and raisins by agriculturists.
• Pre-Packaged Goods Definition: Amended for GST applicability.
• Popcorn GST: 5% or 12% based on packaging; 18% for caramel varieties.
• RBI Payment Aggregators: Clarified as GST exempt.
• Bank/NBFC Penalties: Not subject to GST.

Measures for Trade Facilitation:

• Amendments in Schedule III: Supplies in SEZ/FTWZ treated as non-taxable.
• Voucher Taxability: Clarified as neither supply of goods nor services; exemptions for principal-to-principal transactions.
• Clarifications on ITC and Annual Returns: Address ambiguities on ITC claims and late fee waivers for annual returns up to 2022-23.
• Compensation Cess: Formation of a GoM to study its future.
• Electricity Supply Services: Exempted if incidental to transmission/distribution services by utilities.
• Reverse Charge for Renting: Renting of commercial properties by unregistered persons to registered entities brought under RCM.

• Film Distribution: GST liability for distributors/sub-distributors before October 2021 to be regularized.

Streamlining Compliance:

• Track and Trace Mechanism: Enabling provision for monitoring commodities using unique markings.
• Online Service Supply: requirement for correct state details for unregistered recipients.

Pilot Initiatives

• B2C e-Invoicing: Rollout of pilot projects to test feasibility.

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