The 55th GST Council meeting, chaired by Union Minister for Finance & Corporate Affairs Smt. Nirmala Sitharaman, took place in Jaisalmer, Rajasthan. This significant meeting was attended by Union Minister of State for Finance Shri Pankaj Chaudhary, several Chief Ministers, Deputy Chief Ministers, Finance Ministers of various States and Union Territories (with legislatures), and senior officials from the Ministry of Finance and respective State/UT administrations.
The Council deliberated on multiple aspects, including revisions to GST tax rates, trade facilitation measures, compliance streamlining, and tax policy clarifications. Below are the key recommendations categorized for better understanding:
A. Revisions in GST Rates
Goods:
- Fortified Rice Kernel (FRK):
- GST rate reduced to 5%, classifiable under HSN 1904.
- Gene Therapy:
- Exempted from GST.
- LRSAM System Components:
- IGST exemption extended to systems, sub-systems, equipment, parts, sub-parts, tools, test equipment, and software for manufacturing/assembling the LRSAM system as per Notification 19/2019-Customs.
- Merchant Export Supplies:
- Compensation Cess reduced to 0.1%, aligning with GST rates on such supplies.
- International Atomic Energy Agency (IAEA):
- IGST exemption on imports of equipment and consumable samples by IAEA inspection teams, subject to specific conditions.
- Food Inputs for Government Welfare Programs:
- Concessional 5% GST rate extended for food inputs used in free food distribution programs for economically weaker sections, under existing conditions.
Services:
- Sponsorship Services:
- Supply of sponsorship services by body corporates brought under the Forward Charge Mechanism.
- Motor Vehicle Accident Fund Contributions:
- Exempted contributions from general insurance companies made from third-party motor vehicle premiums to the Motor Vehicle Accident Fund (constituted under Section 164B of the Motor Vehicles Act, 1988).
- Declared Tariff and Specified Premises:
- Declared tariff definition omitted and replaced with “actual value of supply.”
- GST rate on restaurant services linked to the financial year’s “value of supply” of accommodation units:
- 18% with ITC if the supply exceeded ₹7,500 per unit in the preceding financial year.
- 5% without ITC otherwise.
- Hotels can opt for an 18% GST rate with ITC by declaration before the financial year begins or upon registration.
- Changes effective from April 1, 2025, to ensure a smooth transition.
- Renting of Commercial Property:
- Taxpayers under the composition levy scheme excluded from reverse charge mechanism introduced by Notification No. 09/2024-CTR. Regularization for the period starting October 10, 2024, until the issuance of the notification.
B. Clarifications and Additional Changes
- GST on Old and Used Vehicles:
- GST rate increased to 18% (from 12%) for old and used vehicles, including EVs, with exceptions for larger petrol/diesel SUVs based on engine capacity and length.
- GST applicable only on the margin (difference between purchase and selling price).
- Classification of Products:
- ACC Blocks: Blocks with over 50% fly ash content classified under HSN 6815, attracting 12% GST.
- Agriculturist Supplies: Fresh green/dried pepper and raisins supplied by agriculturists not liable to GST.
- Pre-packaged Commodities: Definition revised to include retail sale goods up to 25 kg or 25 liters requiring declarations under the Legal Metrology Act.
- Popcorn and Confectionery: GST clarified based on preparation and packaging:
- 5% for non-prepackaged, salted/spiced popcorn.
- 12% for prepackaged salted/spiced popcorn.
- 18% for caramel or sugar-coated popcorn.
- Exemptions for Payment Aggregators:
- RBI-regulated payment aggregators eligible for exemptions under Sl. No. 34 of Notification No. 12/2017-CT(R). Payment gateways and fintech services excluded.
- Penal Charges by Banks/NBFCs:
- GST exemption clarified for penal charges levied for non-compliance with loan terms.
C. Trade Facilitation Measures
- Amendment in Schedule III of CGST Act:
- Goods warehoused in SEZs or FTWZs and supplied before clearance treated as neither supply of goods nor services.
- Voucher Taxability:
- Clarifications issued to address ambiguities:
- Principal-to-principal transactions of vouchers excluded from GST.
- Principal-to-agent transactions taxable based on commission/fees.
- Services like advertising and co-branding of vouchers taxable.
- Unredeemed vouchers (breakage) not considered supply.
- Clarifications issued to address ambiguities:
- Circulars for Clarity:
- Reversal of ITC by e-commerce operators for Section 9(5) supplies not required.
- ITC availability clarified for Ex-Works contracts where goods are delivered to the recipient at the supplier’s premises.
D. Streamlining GST Compliance
- Track and Trace Mechanism:
- Introduction of a Unique Identification Marking system for evasion-prone goods under Section 148A of CGST Act.
- Late Fee Waiver:
- Waiver on late fees for delayed filing of FORM GSTR-9C (FY 2017-18 to FY 2022-23), provided forms are submitted by March 31, 2025.
Conclusion
The recommendations from the 55th GST Council meeting aim to enhance tax policy clarity, provide relief to taxpayers, and promote ease of doing business. By addressing long-standing ambiguities and streamlining compliance processes, these measures mark significant steps toward an efficient GST regime in India.
