54th GST Council Meeting Recommendations

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    The 54th GST Council Meeting has brought forward several significant changes and clarifications that aim to streamline compliance and provide relief to various sectors. These recommendations will only become applicable once the relevant Rules or Notifications are issued.

    The key recommendations are as follows:

    1. Changes in Reverse Charge Mechanism (RCM)

    – Supply of metal scrap by unregistered persons to registered persons: The supply of metal scrap by an unregistered person to a registered person will fall under RCM. However, the supplier is required to register for GST once the threshold limit is crossed. Even if the supplier is below the threshold, the recipient must pay GST under RCM.
    – Impact: Businesses dealing with metal scrap must ensure compliance with RCM rules, regardless of the supplier’s registration status.

    – TDS on metal scrap: A TDS of 2% will apply on the supply of metal scrap by registered persons in B2B transactions.

    – Renting of commercial property by unregistered persons: Renting of commercial properties by unregistered persons to registered persons will also come under the ambit of RCM.
    – Impact: Registered recipients must ensure they account for and pay GST on such transactions.

    2. Clarifications Issued

    – Preferential Location Charges (PLC): PLC paid along with the consideration for construction services of residential/commercial/industrial complexes (before the completion certificate is issued) will form part of a composite supply. Since PLC is naturally bundled with construction services, it will receive the same tax treatment as construction services.

    – Affiliation services by educational boards: Affiliation services provided by boards like CBSE are taxable.

    – Affiliation services by universities: Affiliation services provided by universities to their constituent colleges are subject to GST at 18%. These are not exempt under Notification No. 12/2017-CT(R) dated 28.06.2017.

    – Ancillary services by Goods Transport Agency (GTA): Ancillary services (e.g. loading/unloading, packing/unpacking, warehousing) provided by GTA, if part of the transportation of goods and accompanied by a consignment note, will be treated as a composite supply. If invoiced separately, such services will not be treated as part of a composite supply.

    3. Waiver of Interest and Penalty for FY 2017-18, 2018-19, 2019-20

    – Section 128A of the CGST Act, 2017: Inserted via the Finance (No. 2) Act, 2024, this section provides for the waiver of interest and penalty for demands raised under Section 73 of the CGST Act. Taxpayers must pay the due tax on or before 31.03.2025 to avail this benefit.

    – Rule 164 in CGST Rules, 2017: A new rule, along with relevant Forms, will provide the procedure and conditions for availing this benefit. A circular will also be issued to clarify the process for claiming the waiver.

    – Impact: This is a significant relief for taxpayers with outstanding demands from prior years.

     

    4. Circulars to be Issued

    • Sub-section (5) and (6) of Section 16 of CGST Act, 2017: A circular will clarify the procedure for implementation of these provisions.
    • Place of Supply for advertising services: Clarifications on the place of supply for advertising services provided by Indian companies to foreign entities.
    • Input Tax Credit (ITC) on demo vehicles: A circular will clarify the availability of ITC on demo vehicles provided by vehicle manufacturers to dealers.
    • Place of Supply for data hosting services: Clarification on the place of supply for data hosting services provided by Indian companies to cloud service providers located outside India.
    • Flying training courses: Approved flying training courses conducted by DGCA-approved Flying Training Organisations (FTOs) will be exempt from GST.
    • Roof Mounted Package Unit (RMPU): RMPU Air Conditioning Machines for railways will be classified under HSN 8415 and attract 28% GST.
    • Car seats classification: Car seats are classified under HSN 9401 and will attract 18% GST.
    • Helicopter charter services: Chartering helicopters will continue to attract 18% GST.

    5. Exemptions from GST

    • Research and Development services: Exemption granted for the supply of R&D services by government entities, research associations, universities, or institutions using government or private grants.
    • Affiliation services by educational boards: Affiliation services provided by State/Central educational boards and similar bodies to government schools are exempt from GST.
    • Import of services by foreign airlines: Services imported by foreign airline establishments from their related parties outside India, made without consideration, will be exempt from GST.
    • Electricity-related services: Services like application fees for electricity connection, rental charges for electricity meters, testing fees, and other incidental services provided by transmission and distribution utilities to consumers will be exempt when supplied as a composite service.

    6. Changes in GST Rates

    • Namkeens and Extruded/Expanded Savoury food products (HSN 1905 90 30): GST rate reduced from 18% to 12%.
    • Cancer drugs: GST on Trastuzumab Deruxtecan, Osimertinib, and Durvalumab reduced from 12% to 5%.
    • Car seats: GST on car seats (HSN 9401) increased from 18% to 28%.
    • Passenger transport by helicopters: Transport of passengers by helicopters on a seat-share basis will attract 5% GST.

     

    7. Exports and Imports

    • Clarification that if inputs were initially imported without paying integrated tax (IGST) and compensation cess under specific customs notifications (No. 78/2017-Customs or No. 79/2017-Customs, both dated 13.10.2017), but later the IGST and cess are paid with interest and the Bill of Entry is reassessed by Customs, then the refund of IGST paid on exports will not violate Rule 96(10) of the CGST Rules.
    • To ease the challenges faced by exporters due to restrictions on export refunds under Rule 96(10), Rule 89(4A), and Rule 89(4B) of the CGST Rules, 2017, the GST Council has recommended the prospective removal of these rules. This change aims to simplify and speed up the refund process for exporters availing concessional or exemption benefits on inputs.
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    Sep 10, 2024 - Blog - Team SSB

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