The 54th GST Council meeting, chaired by Union Minister of Finance & Corporate Affairs, Smt. Nirmala Sitharaman, took place on 9^th September 2024 in New Delhi.

The GST Council made the following significant recommendations related to changes in GST tax rates, trade facilitation measures, and compliance streamlining:

Goods

1. Namkeens and Extruded/Expanded Savoury Food Products

   • GST rate on extruded or expanded savoury products (other than unfried or uncooked snack pellets) reduced from 18% to 12%, aligning them with similar items like namkeens and bhujia, it is applicable prospectively.
   • GST on unfried or uncooked snack pellets remains at 5%.

2. Cancer Drugs

   • GST on cancer drugs Trastuzumab Deruxtecan, Osimertinib, and Durvalumab reduced from 12% to 5%.

3. Metal Scrap

   • A Reverse Charge Mechanism (RCM) will apply to the supply of metal scrap by an unregistered person to a registered person. The recipient must pay tax under RCM, regardless of whether the supplier’s turnover is below the threshold limit. The supplier must register once their turnover crosses the threshold.
   • A 2% TDS will apply to B2B supply of metal scrap by registered persons.

4. Roof Mounted Package Unit (RMPU) Air Conditioning Machines for Railways

   • GST rate clarified at 28% under HSN 8415.

5. Car and Motorcycle Seats

   • Car seats to be classified under HSN 9401 with a GST rate increase from 18% to 28%, aligning with motorcycle seats, it will be applicable prospectively.

Services

1. Life and Health Insurance

• • A Group of Ministers (GoM) formed to study GST issues on life and health insurance, with a report due to be submitted by October 2024.

2. Passenger Transport by Helicopters

• • GST on helicopter passenger transport on a seat-share basis set at 5%, with chartered services continuing to attract 18%. Additionally, GST for past transactions in this category will be regularized on an ‘as is where is’ basis.

3. Flying Training Courses

• • Approved flying training courses by DGCA-approved flying training organizations exempted from GST.

4. Research and Development Services

• • Exemption granted for research and development services supplied by a Government Entity or a recognized research association, university, college, or institution (as notified under Section 35(1)(ii) or (iii) of the Income Tax Act, 1961) that are funded by government or private grants. Past demands in this category will be regularized on an ‘as is where is’ basis.

5. Preferential Location Charges (PLC)

• • Clarification that PLC forms part of the composite supply of construction services and is taxable accordingly.

6. Affiliation Services

• • Affiliation services provided by educational boards like CBSE are taxable. However, affiliation services provided by State/Central educational boards, educational councils, and similar bodies to Government schools will be exempted prospectively.
  • Issues related to the period between July 1, 2017, and June 17, 2021, will be regularized on an “as is where is” basis.
  • A circular will clarify that affiliation services provided by universities to their constituent colleges are not exempt under the notification No. 12/2017-CT(R) dated June 28, 2017, and will attract GST at the rate of 18%.

7. Import of Service by Branch Office

• • Exemption granted for service imports by foreign airline branch offices without consideration. Past transactions in this category will be regularized on an ‘as is where is’ basis.

8. Renting of Commercial Property

• • Renting of commercial property by unregistered persons to registered persons brought under RCM.

9. GTA Services

• • The GST Council has clarified that when a GTA provides ancillary or intermediate services (such as loading, unloading, packing, unpacking, transshipment, or temporary warehousing) in the course of transporting goods by road, and issues a consignment note, these services will be considered part of a composite supply. However, if these services are provided separately from the transportation of goods and invoiced independently, they will not be treated as part of the composite supply of goods transport.

10. Regularization of GST for Film Distributors

• • GST liability for the period before October 1, 2021, will be regularized on an “as is where is” basis for film distributors or sub-distributors who acted on a principal basis to acquire and distribute films.

11. Exemption for Electricity-Related Services

• • The supply of services such as application fees for electricity connections, rental charges for electricity meters, testing fees for meters/transformers/capacitors, labor charges for shifting meters/service lines, and charges for duplicate bills, which are incidental or integral to the supply of electricity by transmission and distribution utilities, will be exempted from GST when provided as part of a composite supply. GST for the past period will be regularized on an “as is where is” basis.

Measures for facilitation of trade:

1. Waiver of Interest or Penalty: The GST Council proposed the insertion of Rule 164 in CGST Rules, 2017, outlining the procedure and conditions for waiving interest or penalties for tax demands under Section 73 of the CGST Act for FYs 2017-18, 2018-19, and 2019-20. The deadline for tax payment to avail of this benefit is set as March 31, 2025. A circular will be issued to clarify the waiver process.
2. Implementation of New Provisions in Section 16: The Council recommended notifying Sections 118 and 150 of the Finance (No. 2) Act, 2024, to insert subsections (5) and (6) in Section 16 of the CGST Act, 2017, with retrospective effect from July 1, 2017. A special procedure for rectification of orders related to wrong availment of input tax credit will be introduced, along with a circular for clarity.
3. Amendments for IGST Refunds on Exports: The Council recommended clarifying that if inputs initially imported without payment of integrated tax are later reassessed with applicable taxes and interest, the IGST refund on exports will not violate Rule 96(10) of CGST Rules. Additionally, Rule 96(10), Rule 89(4A), and Rule 89(4B) of CGST Rules, which restrict refunds, will be omitted prospectively to simplify and expedite the refund process.
4. Clarifications through Circulars: The Council will issue circulars to clarify:

• • Place of Supply for advertising services provided by Indian companies to foreign entities.
  • Availability of Input Tax Credit on demo vehicles by vehicle dealers.
  • Place of Supply for data hosting services provided by Indian providers to foreign cloud computing services.

Other Amendments: The Council recommended additional amendments to various provisions of the CGST Rules, 2017, to remove ambiguities and reduce legal disputes.

Other Measures

1. B2C E-invoicing

   • Pilot rollout for B2C e-invoicing recommended, recognizing benefits like business efficiency and environmental impact.

2. Invoice Management System (IMS)

   • Enhancements to GST return architecture include new ledgers and an IMS for better reconciliation and ITC claim accuracy.

These recommendations will be implemented through relevant circulars, notifications, or law amendments.

To know more about these updates or have any questions, please feel free to connect with N Krishna at [email protected] for further details.

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