54th GST Council meeting summary

The 54th GST Council met under the Chairpersonship of Union Minister for Finance & Corporate Affairs Smt. Nirmala Sitharaman in New Delhi ondated 09.09.2024. The GST Council inter-alia made the following recommendations relating to changes in GST tax rates, provide relief to individuals, measures for facilitation of trade and measures for streamlining compliances in GST.

A. Changes/Clarifications in GST Tax Rates:

Goods:

1. Namkeens and Savory Products: GST rate for extruded/expanded savory products (except un-fried/un-cooked snack pellets) reduced from 18% to 12%, aligning with namkeens and similar products. Un-fried/un-cooked snack pellets remain taxed at 5%.
2. Cancer Drugs: GST on Trastuzumab Deruxtecan, Osimertinib, and Durvalumab reduced from 12% to 5%.
3. Metal Scrap: Reverse Charge Mechanism (RCM) introduced for supply by unregistered persons to registered persons. 2% TDS on B2B supply by registered persons.
4. RMPU Air Conditioning for Railways: GST rate clarified as 28% for roof-mounted air conditioning units (HSN 8415).
5. Car and Motorcycle Seats: GST rate for car seats increased from 18% to 28%, matching motorcycle seats.

Services:

1. Life and Health Insurance:Group of Ministers (GoM) to review GST on life and health insurance, report by October 2024.
2. Passenger Transport by Helicopter:GST of 5% on seat-share basis for helicopters, regularizing past transactions. Helicopter charters remain taxed at 18%.
3. Flying Training Courses:DGCA-approved flying training courses exempt from GST.
4. R&D Services:Exemption for research and development services by government or educational institutions funded by government/private grants.
5. Preferential Location Charges (PLC):PLC part of composite supply for construction services, taxed the same as construction services.
6. Affiliation Services:Affiliation services by boards like CBSE taxable, while services to government schools are exempt prospectively.
7. Import of Services by Branch Office:Exempt import of services by foreign airline branches from related parties, regularizing past periods.
8. Commercial Property Renting:Renting by unregistered to registered persons under RCM.

Also Read: Recommendations during 54th meeting of the GST Council held on 09.09.2024

Other Measures:

GST Liability Regularization: Regularizing GST liability for past transactions in sectors like film distribution, electricity services, etc.

B. Measures for facilitation of trade:

1. Waiver of Interest or Penalty (Section 128A of CGST Act, 2017):
   • A procedure has been recommended for waiving interest/penalty related to tax demands for FY 2017-18, 2018-19, and 2019-20 under section 73 of the CGST Act.
   • Rule 164 and relevant forms will be inserted for this purpose.
   • Payment of tax must be made by 31.03.2025 to avail the waiver.
   • Clarifications will be issued through a circular to address related issues.
   • Section 128A of the CGST Act will come into effect from 01.11.2024.
2. Implementation of Section 16(5) & 16(6) of CGST Act:
   • Sections 118 and 150 of Finance (No. 2) Act, 2024, inserting sub-sections (5) and (6) into section 16 of the CGST Act, will be notified retrospectively from 01.07.2017.
   • A special procedure under section 148 will be notified for rectification of orders regarding wrong availment of input tax credit.
   • Clarification on the procedure will also be issued.
3. Amendments to Rule 89 and Rule 96 (IGST Refunds on Exports):
   • Clarifications will be provided for IGST refunds where inputs were imported without payment of tax but were subsequently taxed.
   • Rule 96(10), Rule 89(4A), and Rule 89(4B) will be omitted to simplify export refund processes.
4. Issuance of Clarifications to Resolve Legal Disputes:
   • Clarifications will be provided on:
     • Place of supply for advertising services to foreign entities.
     • Availability of input tax credit on demo vehicles
     • Place of supply for data hosting services provided to foreign cloud service providers.
   • New procedures for waiver of interest/penalties under the CGST Act.
   • Mechanism for rectification and refunds related to input tax credit and exports clarified.

C. Other measures:

1. E-Invoicing for B2C: Pilot launch for B2C e-invoicing in selected sectors and states, following B2B success.
2. New Ledgers and Invoice Management System: Introduction of new ledgers and an optional Invoice Management System to improve input tax credit reconciliation.

Note: The recommendations of the GST Council have been presented in this release containing major item of decisions in simple language for information of the stakeholders. The same would be given effect through the relevant circulars/ notifications/ law amendments which alone shall have the force of law.