The 54th GST Council meeting was held in Delhi on September 09th, 2024 under the chairmanship of the Union Finance & Corporate Affairs Minister Smt. Nirmala Sitharaman. The GST Council has inter-alia made the following recommendations relating to changes in GST rates on Goods and Services and other measures for facilitation of trade. The key highlights of the meeting are as under:

1. Rate of Tax on goods and services 
2. Exemption from GST on services
3. Reverse charge mechanism on Goods and Services
4. Applicability of GST on services
5. Procedure/ Mechanism for newly inserted Sections through Finance Act, 2024
6. Refund related issues
7. Removal of ambiguity and legal disputes on various GST issues (Clarifications)
8. Miscellaneous

 

1. Change in Rate of Tax on Goods and Services

A. Rate for Goods:

• Extruded or expanded savoury snacks, classified under HS 1905 90 30 – 12% (Earlier 18%).  This change aligns the rate with that of similar pre-packaged and labelled products. The 5% rate will continue for un-fried or un-cooked snack pellets, manufactured through process of extrusion. The reduced rate will be applicable prospectively.
• Cancer drugs such as Trastuzumab Deruxtecan, Osimertinib, and Durvalumab providing relief to patients – 5% (Earlier rate 12%)
• Roof Mounted Package Unit (RMPU) Air Conditioning Machines for Railways would be classified under HSN 8415 – 28%
• Revised GST Rates for Car and Motorcycle Seats: The GST rate for car seats, classified under HS 9401 – 28% (Earlier 18%). This change aims to create parity between car seats and motorcycle seats, which already attract a 28% rate. The new rate will be applied prospectively.

B. Rate for Services:

• Transport of passengers by helicopters – GST will be at 5% on helicopter services on sharing basis.

2. Exemption from GST on Services:

A. Research and development grants from private or public sector to recognised educational institutions will not attract GST: R&D grant to three categories of research institution, college or university will be exempted from GST. These include recognition under State laws, Central Laws or one which has got exemption under Income Tax. The exemption will be available to both government as well as private institutions and there will be no threshold. Now, “past demands to be regularised on ‘as is where is’ basis.

B. Import of services by foreign airline companies: Import of services by an establishment of a foreign airlines company from a related person or any of its establishment outside India, when made without consideration. The move will provide a significant relief to foreign airlines that had received notices from the Directorate General of Goods and Services Tax Intelligence (DGGI).

Earlier DGGI had sent show cause notices to 10 foreign airlines operating in the country, for alleged non-payment of tax amounting to Rs 10,000 crore, as per officials.

C. Application fees/ Connection rental charges for electricity connection: Supply of services such as application fees for providing electricity connection, rental charges against electricity meter, testing fees for meters/ transformers/capacitors, labour charges from customers for shifting of meters/service lines, charges for duplicate bills etc. which are incidental, ancillary or integral to the supply of transmission and distribution of electricity by transmission and distribution utilities to their consumers, when  provided as a composite supply.

3. Reverse Charge Mechanism on Goods and Services:

A. Introduction of Reverse Charge Mechanism on Metal Scrap:A reverse charge mechanism will be applied to the supply of metal scrap from unregistered to registered persons. Suppliers must register once they surpass the threshold limit, while recipients will be responsible for paying tax under RCM. Additionally, a TDS of 2% will be imposed on the supply of metal scrap in B2B transactions.

B. Renting of Commercial property: Renting of commercials properties brought under reverse charge mechanism, provided by unregistered person to a registered person.

4. Applicability of GST on various Services:

A. Flying training courses – To clarify that the approved flying training courses conducted by DGCA approved Flying Training Organizations (FTOs) are exempt from the levy of GST.

B. Preferential Location Charges (PLC) – To clarify that Location charges or Preferential Location Charges (PLC) to be bundled with construction services as composite supply, where supply of construction services is the main service and PLC is naturally bundled with it and are eligible for same tax treatment as the main supply that is, construction service.

C. To also clarify that charter of helicopter will continue to attract 18% GST.

D. Affiliation services – To clarify that affiliation services provided

– by educational boards like CBSE are taxable
– by State/Central educational boards, educational councils and other similarly placed bodies to Government Schools prospectively – Exempt
– by universities to their constituent colleges – Taxable

E. Ancillary/intermediate services provided by GTA: Ancillary/intermediate services like loading/unloading, packing/unpacking, transshipment, temporary warehousing etc. will be treated as part of the composite supply, when provided by GTA in the course oftransportation of goods by road and GTA also issues consignment note. However, when invoiced separately, then these services will not be treated as composite supply of transport of goods.

5. Procedure/ Mechanism for newly inserted Sections through Finance Act –

A. Procedure for Conditional Waiver of interest penalties on demand notices (Section 128A): As recommended in the 53^rd Council Meeting and insertion of New Section 128A of the CGST Act vide Finance Act, 2024, for waiving of interest penalties on demand notices issued under Section 73 of the GST Act for fiscal years 2017-18, 2018-19, and 2019-20. It is recommended insertion of rule 164 in CGST Rules, 2017, along with certain Forms, providing for the procedure and conditions for availment of benefit of waiver of interest or penalty or both.

Also, Section 128A may be notified with effect from 01.11.2024. Further, to issue clarification on various issues related to availment of waiver of interest or penalty or both as per section 128A of CGST Act.

B. Mechanism for implementation of Section 16(5) and 16(6) of the CGST Act: To  clarify the procedure and various issues related to implementation of the said provisions of sub-section (5) and sub-section (6) of section 16 of CGST Act, 2017.

Also, to prescribe special procedure for rectification of orders, where any order under section 73 or section 74 or section 107 or section 108 of the CGST Act has been issued confirming demand for wrong availment of input tax credit on account of  contravention of provisions of sub-section (4) of section 16 of the CGST Act, but is now available as per the provisions of sub-section (5) or sub-section (6) of section 16 of the CGST Act, and where appeal against the said order has not been filed.

6. Refund related issues –

• Clarification on IGST Refunds Where Concessional/Exemption Benefits Were Availed:-

The clarification addresses a situation where an exporter initially imported inputs without payment of integrated tax (IGST) and compensation cess by availing benefits under Notification No. 78/2017-Customs, dated 13.10.2017, or Notification No. 79/2017-Customs, dated 13.10.2017; later pays IGST and compensation cess, along with applicable interest, on these imported inputs and gets the Bill of Entry reassessed by the jurisdictional Customs authorities, then the IGST refund on exports will not be considered as a violation of Rule 96(10) of the CGST Rules.

Implications:  This means that exporters who initially imported goods duty-free or tax-exempt but later paid IGST can still claim IGST refunds on exports without being in contravention of Rule 96(10).

• Simplification of Export Refund Process

The GST Council recommended for Prospective omission of Rule 96(10), Rule 89(4A), and Rule 89(4B) from the CGST Rules, 2017.

Current Scenario: Rule 96(10), Rule 89(4A), and Rule 89(4B) of the CGST Rules imposed restrictions on claiming refunds for exports where inputs had been imported under concessional/exemption notifications.

Implications: This amendment will make it easier and faster for exporters to claim refunds on ports, even when they have availed of the concessional or exemption notifications on imported inputs.

7. Removal of ambiguity and legal disputes on various GST issues:

• To clarify on Place of Supply of advertising services provided by Indian advertising companies to foreign entities.
• To clarify regarding availability of Input Tax Credit on demo vehicles by the dealers of the vehicle manufacturers.
• To clarify Place of Supply of data hosting services provided by service providers located in India to cloud computing service providers located outside India.

8. Miscellaneous:

• E-Invoicing has been recommended for B2C transactions on a pilot project basis.
• New system for GST invoice management from October 1.  Introduction of a Reverse Charge Mechanism (RCM) ledger, an Input Tax Credit Reclaim ledger and an Invoice Management System (IMS). Taxpayers would be given the opportunity to declare their opening balance for these ledgers by 31^stOctober 2024
• Two new Group of Ministers (GoMs) have been formed – one on medical and health insurance, and one to decide utilisation of compensation cess post March 2025.
• New members added to GoM on rate rationalization for the limited purpose of medical insurance, will be required to submit a report in October to be discussed in the November meet of the committee.

The complete Press Release of 54th GST Council Meeting can be accessed at https://taxo.online/wp-content/uploads/2024/09/Press-Release-54th-GST-Meet.pdf