The 54th Goods and Services Tax (GST) Council meeting chaired by Union Minister Nirmala Sitharaman, Ministry of Finance (MoF) was held on 9th September, 2024 at Sushma Swaraj Bhawan in New Delhi, Delhi.
- Among several recommendations by the GST Council, the most notable was the reduction of the GST rate on cancer drugs Trastuzumab Deruxtecan, Osimertinib and Durvalumab from 12% to 5%.
Key People: Union Minister of State (MoS) Pankaj Chaudhary, MoF; Pramod Sawant, Chief Minister (CM) of Goa; Conrad Sangma, CM of Meghalaya; Deputy CMs of Arunachal Pradesh (AR), Bihar, Madhya Pradesh (MP), and Telangana; besides Finance Ministers (FMs) of States & Union Territories (UTs) (with legislature) and other senior officials of the MoF and States/ UTs were also present at the meeting.
Key Changes in GST Rates on Goods:
i.Namkeens and Extruded/ Expanded Savoury food Products
- The GST Council has decided to reduce the GST rate of extruded or expanded products, savoury or salted food products falling under HS 1905 9030 from 18% to 12% at par with namkeens, bhujia, chabena (pre-packaged and labelled) and similar edible preparations in ready for consumption form which are classifiable under HS 2106 90.
- While, un-fried or un-cooked snack pellets, manufactured through extrusion will continue to attract a GST rate of 5%.
ii.Metal Scrap:
- The GST Council has decided to introduce Reverse Charge Mechanism (RCM) on supply of metal scrap by unregistered person to registered person provided that the supplier will take registration as and whenever it crosses the maximum limit.
- Also, the recipient who is liable to pay under RCM shall pay tax even if supplier is under threshold.
- A Tax Deducted at Source(TDS) of 2% will be applicable on supply of metal scrap by registered person in Business- to-Business (B2B) supply.
iii.RMPU Air Conditioning Machines for Railways:
The GST Council has clarified that Roof Mounted Package Unit (RMPU) Air Conditioning Machines for Railways will be classified under HSN 8415 and will attract a GST rate of 28%.
iv.Increase in GST Rate on Car and Motor Cycle Seats:
The GST Council has decided to increase the GST rate for car seats which are classifiable under 9401 from current GST rate of 18% to 28%.
List of Goods with Revised GST Rates:
| S.NO. | Name of Items | Previous GST Rate | New GST Rate |
|---|---|---|---|
| 1. | Cancer Drugs Trastuzumab Deruxtecan, Osimertinib and Durvalumab | 12% | 5% |
| 2. | Savoury Snacks | 18% | 12% |
| 3. | Metal Scraps | 18% | 12% |
| 4. | Car Seats | 18% | 28% |
Key Recommendations related to GST on Services:
i.The GST Council has clarified that flying training courses conducted by the Directorate General of Civil Aviation (DGCA) and approved Flying Training Organisations (FTOs) are exempt from the levy of GST.
ii.The GST Council has clarified that affiliation services provided by boards like Central Board of Secondary Education (CBSE) are taxable. But, affiliation services provided by state/central education boards to government schools will be exempted prospectively.
- The Council has also clarified that the affiliation services provided by universities to their constituent colleges will continue to attract the GST rate of 18%.
iii.The GST Council has decided to exempt the import of services by an establishment of a foreign airline company from tax and regularize the past period on an ‘as is where is basis’.
iv.The GST Council has recommended levying a GST rate of 5% on helicopter travel on seat-sharing basis and to regularize the GST for past period on ‘as is where is’ basis.
v.The GST Council has also recommended to exempt the supply of research and development services from GST. This includes research and development services by a government entity, research association, university under clauses (ii) or (iii) of sub-section (1) of Section 35 of the Income Tax Act, 1961, using government or private grants.
vi.The GST Council has decided to bring renting of commercial property by unregistered person to a registered person under Reverse Charge Mechanism (RCM) to curb any revenue leakage.
vii.The council has clarified that ancillary /intermediate services provided by Goods Transport Agencies (GTAs) during the transportation form part of the composite supply when issued with a consignment note.
Other Key Measures:
i.Introduction of B2C E-invoicing:
The GST Council recommended to introduce a pilot project for Business-to-Consumer (B2C) e-invoicing, after the successful implementation of e-invoicing of B2B transactions. It will be rolled out on voluntary basis in selected sectors and states.
- The Council has outlined key benefits of e-invoicing in retail like: enhanced business efficiency, environmentally friendly, cost efficiency to the business, among others.
ii.Introduction of IMS and two New Ledgers:
The GST Council has introduced various new enhancements to the existing GST return architecture like: Reverse Charge Mechanism (RCM) Ledger, Input Tax Credit (ITC) Reclaim Ledger and Invoice Management System (IMS).
- RCM ledger will help the taxpayers to monitor their RCM liabilities more effectively and ITC Reclaim ledger will help in managing input tax credits. The Council has recommended taxpayers to declare their opening balance for these ledgers by 31st October, 2024.
- IMS will enable the taxpayers to accept, reject, or to keep invoices pending for input tax credit purposes, reducing errors and improving reconciliation processes.
GST Council Constituted GoM to Review Tax Rate on Health, Life Insurance
On 15th September 2024, the GST Council headed by Union Finance Minister Nirmala Sitharaman constituted a 13-member Group of Ministers (GoM) to suggest GST rate on various health and life insurance products. It has also directed GoM to submit its report by October 30, 2024.
- It has outlined Terms of Reference (ToR) for the GoM panel like: suggesting tax rate of health/ medical insurance including individual, group, family floater and other medical insurance for various categories like senior citizens, middle class, among others.
Note: At present, 18% GST is levied on various insurance products.
Composition of GoM:
i.Samrat Chaudhary, Deputy Chief Minister (CM), Bihar is the convener of the GoM.
ii.Other than convener, it will include representatives from various states such as: Uttar Pradesh (UP), Rajasthan, West Bengal (WB), Karnataka, Kerala, Andhra Pradesh (AP), Goa, Gujarat, Meghalaya, Punjab, Tamil Nadu (TN) and Telangana.
About Goods and Services Tax (GST) Council:
GST Council is a constitutional body introduced through 101st Amendment Act, 2016 in the constitution. It was constituted under Article 279-A of the constitution.
Chairperson- Nirmala Sitharaman, Union Finance Minister (Rajya Sabha member- Karnataka)
