Detailed Insights from the 55th GST Council Meeting

55th GST Council Meeting

Date: December 21, 2024
Location: Jaisalmer, Rajasthan
Chairperson: Union Minister for Finance & Corporate Affairs, Smt. Nirmala Sitharaman

The 55th GST Council meeting held in Jaisalmer, Rajasthan, brought forth significant decisions aimed at streamlining taxation policies, providing relief to taxpayers, and clarifying ambiguities in GST laws. Below is an exhaustive breakdown of the key recommendations and decisions:

1. Changes in GST Rates for Goods

Fortified Rice Kernel (FRK)

• Previous Rate: Higher than 5%
• Revised Rate: 5%
• HS Code: 1904
• Objective: Enhance affordability and promote fortified food for nutritional improvement.

Gene Therapy

• New Status: Fully exempt from GST.
• Impact: Encourages advanced healthcare innovations by reducing cost burdens on patients.

Integrated Goods and Services Tax (IGST) Exemptions

1. LRSAM Systems: IGST exemption extended for systems and equipment used in the manufacture of Long Range Surface-to-Air Missile (LRSAM).55th GST Council Meeting
2. International Atomic Energy Agency (IAEA) Equipment: Exemption on imports of equipment and consumable samples by IAEA inspection teams, subject to conditions.

Compensation Cess for Merchant Exporters

• New Rate: 0.1%
• Applicability: Aligns with GST rates for supplies to merchant exporters.

Food Inputs for Free Distribution

• Concessional Rate: 5%
• Conditions: Applicable to food preparations supplied for free distribution under government programs for economically weaker sections.55th GST Council Meeting

2. Changes in GST Rates for Services

Sponsorship Services by Body Corporates

• Shifted to Forward Charge Mechanism.

Third-Party Motor Vehicle Premium Contributions

• GST exemption granted for contributions by general insurance companies to the Motor Vehicle Accident Fund.
• Purpose: Ensure financial aid for victims of road accidents.

GST on Restaurant Services in Hotels

• New Mechanism:
  • 18% with ITC if unit accommodation value exceeds Rs. 7,500.
  • 5% without ITC otherwise.
  • Hotels can opt for 18% GST by declaration before the start of the financial year.
• Effective Date: April 1, 2025.

Reverse Charge Mechanism

• Exclusion of composition levy taxpayers from applicability on commercial property rentals.

3. Other Key Clarifications and Amendments

Vouchers

• Revised Taxability:
  1. Vouchers are neither supply of goods nor services.
  2. Principal-to-principal distribution of vouchers: GST exempt.
  3. Principal-to-agent distribution: Commission taxable.
  4. No GST on unredeemed vouchers (“breakage”).

Penal Charges by Banks/NBFCs

• New Clarity: No GST payable on penalties levied for non-compliance with loan terms.

Old and Used Vehicles

• Revised Rate: 18% (from 12%) for old petrol and diesel vehicles meeting specified criteria.
• Taxable Value: Only on the margin of sale, not on the total vehicle value.

Food Classification and Tax Rates

1. Pepper and Raisins: Exempt when supplied by agriculturists.
2. Popcorn:
   • Salt and Spices Mix: 5% (non-pre-packaged), 12% (pre-packaged).
   • Caramelized (sugar-based): 18%.

Exemption for Payment Aggregators

• RBI-regulated payment aggregators fall under GST exemption for acquiring banks.

4. Measures for Trade Facilitation

Schedule III Amendments

• Transactions involving goods in SEZs or Free Trade Warehousing Zones (FTWZ) before clearance are treated as neither goods nor services.

Input Tax Credit (ITC) Clarity

1. E-Commerce Operators: No proportional reversal of ITC required for supplies taxed under Section 9(5).55th GST Council Meeting
2. Ex-Works Contracts: 55th GST Council Meeting Goods delivered at supplier’s premises are considered “received” for ITC eligibility under Section 16(2)(b).

Late Fee Waiver for GSTR-9C

• Waiver applicable for delayed filings from 2017-18 to 2022-23, ensuring retrospective relief.

5. Streamlining Compliance

Appeals Pre-Deposit

• Reduced pre-deposit requirement for penalty-only appeals, making compliance less burdensome for taxpayers.

Simplification of Definitions

1. Pre-packaged and Labeled: Expanded to include all retail commodities under 25kg or 25L.
2. Specified Premises: Linked to the actual value of supply for restaurant services.

Circulars for Clarity

• Ambiguities resolved through detailed circulars to avoid legal disputes.

https://www.gst.gov.in/

Conclusion

The 55th GST Council meeting demonstrates the government’s commitment to addressing taxpayer concerns, promoting trade, and fostering a transparent tax system. By revising rates, granting exemptions, and clarifying ambiguous provisions, the Council aims to create a fair and efficient GST framework. 55th GST Council Meeting These recommendations are expected to simplify compliance, reduce costs for businesses and individuals, and support economic growth.

Stay updated for notifications on the effective dates of these recommendations and ensure compliance to avoid penalties.

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