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The GST Council in its 55ht Meeting held on 21.12.2024 inter alia made the following recommendations relating to changes in GST tax rates, providing relief to individuals, measures for facilitation of trade, and measures for streamlining compliances in GST.

These changes shall be applicable once relevant notifications, and amendments in Act are issued.

A. Changes in GST Rates of Goods

Goods

1. GST rate on Fortified Rice Kernel (FRK) (Murmu, classifiable under HSN 1904, has been reduced to 5%.
2. GST has been exempted on gene therapy.
3. IGST exemption extended to systems, sub-systems, equipment, parts, sub-parts, tools, test equipment, and software meant for the assembly/manufacture of LRSAM system under Notification 19/2019-Customs.
4. Compensation Cess rate reduced to 0.1% on supplies to merchant exporters to align with the GST rate on such supplies.
5. IGST exemptions granted for the import of equipment and consumable samples by the Inspection Team of the International Atomic Energy Agency (IAEA), subject to specified conditions.
6. Concessional 5% GST rate extended on food inputs under HSN 19 or 21 for food preparations intended for free distribution to economically weaker sections under government programmes.

Services

1. Sponsorship services provided by body corporates brought under the Forward Charge Mechanism.
2. GST exempted on contributions made by general insurance companies from third-party motor vehicle premiums to the Motor Vehicle Accident Fund constituted under Section 164B of the Motor Vehicles Act, 1988.
3. Definition of ‘declared tariff’ omitted, and definition of ‘specified premises’ amended to link it with the actual value of supply of accommodation. This affects GST rates on restaurant services based on financial year values:
   • 18% with ITC if the value of supply exceeds ₹7,500 per unit.
   • 5% without ITC otherwise.
   • Hotels can opt for 18% GST with ITC by declaring their choice at the beginning of the financial year or upon registration.
4. Taxpayers registered under the Composition Levy Scheme excluded from the reverse charge mechanism for renting immovable property by unregistered persons to registered persons.

B. Other Changes Relating to Goods and Services

1. GST rate on old and used vehicles, including EVs, increased from 12% to 18% (applicable only on the margin of the supplier and not on the vehicle’s full value).
2. Autoclaved Aerated Concrete (ACC) blocks with more than 50% fly ash content clarified to fall under HSN 6815, attracting 12% GST.
3. Agriculturists supplying fresh green or dried pepper and raisins exempted from GST.
4. Definition of ‘pre-packaged and labelled’ revised to cover all commodities intended for retail sale in packages of up to 25 kg or 25 litres.
5. Classification and GST rates clarified for popcorn:
   • 5% GST for unlabelled, non-pre-packaged popcorn mixed with salt and spices.
   • 12% GST for pre-packaged and labelled popcorn.
   • 18% GST for caramel or sugar-coated popcorn, classified under HSN 1704 90 90.

C. Measures for Facilitation of Trade

1. Amendment in Schedule III of CGST Act, 2017: Supply of goods warehoused in SEZ or FTWZ, before clearance for exports or to Domestic Tariff Area, treated as neither supply of goods nor services.
2. Taxability of Vouchers:
   • Vouchers distributed on a principal-to-principal basis excluded from GST.
   • Additional services like advertisement, co-branding, marketing and promotion, customization and technology support, customer support etc  of vouchers are taxable.
   • GST not applicable on unredeemed vouchers (breakage).
3. Clarifications issued on:
   • ITC reversals for e-commerce operators: The GST Council clarified that e-commerce operators must reverse Input Tax Credit (ITC) on supplies made by unregistered sellers on their platforms, ensuring compliance with the anti-profiteering provisions.
   • ITC eligibility for goods delivered under Ex-Works contracts: The GST Council clarified that e-commerce operators must reverse Input Tax Credit (ITC) on supplies made by unregistered sellers on their platforms, ensuring compliance with the anti-profiteering provisions.
   • Late fee applicability for delayed FORM GSTR-9C filings from FY 2017-18 to FY 2022-23, with waivers provided for filings before 31st March 2025.

D. Measures for Streamlining Compliance in GST

1. Track and Trace Mechanism: Section 148A proposed to be inserted into CGST Act to enable Track and Trace for evasion-prone commodities using Unique Identification Marking.
2. Details for Online Services: Mandatory declaration of unregistered recipient’s state name on tax invoices for services like online money gaming and OIDAR.
3. Amendments in CGST Act:
   • Section 17(5)(d) revised to align with the intended definition of “plant and machinery.”
   • Lower pre-deposit rate (10%) for appeals involving only penalties.
   • New rule for Temporary Identification Numbers for unregistered persons making payments.

 

 

Dec 22, 2024 - Blog - Team SSB

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