The 54th GST Council meeting took place in Delhi on September 9th, 2024, chaired by Union Finance & Corporate Affairs Minister Smt. Nirmala Sitharaman. The Council discussed various changes in GST rates on goods and services, as well as measures to facilitate trade. Below are the key takeaways from the meeting:
1. Changes in GST Rates on Goods and Services:
A. Rate for Goods:
- Extruded or expanded savory snacks (HS 1905 90 30) will see a reduced GST rate of 12% (down from 18%), aligning it with similar pre-packaged products. The 5% rate remains for un-fried or un-cooked snack pellets, with the new rate applying prospectively.
- Cancer drugs such as Trastuzumab Deruxtecan, Osimertinib, and Durvalumab will have a reduced GST rate of 5% (down from 12%), offering relief to patients.
- Roof Mounted Package Unit (RMPU) Air Conditioning Machines for Railways will now fall under HSN 8415, attracting a 28% GST rate.
- Car and motorcycle seats will now have a unified GST rate of 28% (up from 18%), aiming to align rates between both categories.
B. Rate for Services:
- The transport of passengers by helicopters on a shared basis will be subject to a 5% GST rate.
2. GST Exemptions on Services:
A. Research and development (R&D) grants from both private and public sectors to recognized educational institutions are now exempt from GST. This exemption applies to institutions recognized under State and Central laws or those exempt under Income Tax regulations.
B. Import of services by foreign airline companies from related persons or establishments outside India, when made without consideration, will be exempt from GST. This provides relief to foreign airlines that were previously issued notices by the Directorate General of Goods and Services Tax Intelligence (DGGI) for unpaid taxes.
C. Services incidental to electricity connections, such as application fees and rental charges for meters, will now be exempt from GST, provided they are part of the composite supply of transmission and distribution of electricity.
3. Reverse Charge Mechanism (RCM) on Goods and Services:
A. Metal scrap transactions will now be brought under RCM, where the recipient (registered person) will be responsible for GST payment on scrap purchased from unregistered suppliers.
B. Renting of commercial properties by unregistered persons to registered persons will also fall under RCM.
4. Clarifications on GST Applicability for Various Services:
- Flying training courses conducted by DGCA-approved Flying Training Organizations (FTOs) will continue to be exempt from GST.
- Preferential Location Charges (PLC) will be treated as a composite supply along with construction services and will be subject to the same tax treatment as construction services.
- Chartered helicopter services will attract an 18% GST rate.
- Affiliation services provided by educational boards such as CBSE will be taxable, but services provided by State/Central boards to government schools will be exempt.
5. Procedures for Newly Inserted Sections Through the Finance Act:
A. Waiver of interest penalties on demand notices under Section 128A of the CGST Act will take effect from November 1, 2024. This includes procedures and conditions for availing the waiver of interest or penalties on demand notices for fiscal years 2017-18 to 2019-20.
B. Implementation of Sections 16(5) and 16(6) of the CGST Act, including special procedures for rectification of orders where wrong availment of input tax credit (ITC) has occurred.
6. Refund-Related Issues:
- Clarification on IGST refunds where concessional/exemption benefits were availed. Exporters who later pay IGST on initially duty-free imports can claim refunds without violating Rule 96(10).
- The Council recommended the removal of Rule 96(10), Rule 89(4A), and Rule 89(4B) of the CGST Rules to simplify the export refund process.
7. Removal of Ambiguity and Legal Disputes:
Clarifications were provided regarding:
- The place of supply for advertising services provided to foreign entities by Indian companies.
- The availability of ITC on demo vehicles for dealers of vehicle manufacturers.
- The place of supply for data hosting services provided to foreign cloud computing companies.
8. Miscellaneous:
- E-Invoicing for B2C transactions will be introduced on a pilot basis.
- A new Invoice Management System (IMS) and RCM ledger will be implemented from October 1, 2024.
- Two new Groups of Ministers (GoMs) have been formed—one focusing on medical and health insurance, and the other on utilizing compensation cess post-March 2025.
These updates reflect the Council’s ongoing efforts to streamline GST procedures and address trade facilitation.
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