The GST Council, in its recent meeting, introduced several changes and clarifications to the Goods and Services Tax (GST) regime. These modifications aim to streamline processes, reduce compliance burdens, and provide relief to various sectors.
Changes in GST Tax Rates
Goods
- Namkeens and Extruded/Expanded Savoury Food Products: The GST rate on extruded or expanded savory food products (excluding unfried or uncooked snack pellets) has been reduced from 18% to 12%.
- Cancer Drugs: The GST rate on certain cancer drugs, including Trastuzumab Deruxtecan, Osimertinib, and Durvalumab, has been reduced from 12% to 5%.
- Metal Scrap: A Reverse Charge Mechanism (RCM) has been introduced for the supply of metal scrap by unregistered persons to registered persons. Additionally, a TDS of 2% will be applicable on the supply of metal scrap by registered persons in B2B supplies.
- Roof Mounted Package Unit (RMPU) Air Conditioning Machines: RMPU Air Conditioning Machines for Railways will now be classified under HSN 8415, attracting a GST rate of 28%.
- Car and Motorcycle Seats: The GST rate on car seats has been increased from 18% to 28%.
Services
- Life and Health Insurance: A Group of Ministers (GoM) has been constituted to examine the GST implications of life and health insurance. The GoM will submit its recommendations by the end of October 2024.
- Transport of Passengers by Helicopters: The GST rate on the transport of passengers by helicopters on a seat-share basis has been set at 5%. Charter of helicopters will continue to attract an 18% GST.
- Flying Training Courses: Approved flying training courses conducted by DGCA-approved Flying Training Organizations (FTOs) are now exempt from GST.
- Supply of Research and Development Services: The GST Council has recommended exempting the supply of research and development services by government entities or notified research institutions.
- Preferential Location Charges (PLC): PLC paid for construction services before the issuance of a completion certificate will now be considered part of the composite supply and eligible for the same tax treatment as the main construction service.
- Affiliation Services: Affiliation services provided by educational boards like CBSE will be taxable. However, affiliation services provided by State/Central educational boards, educational councils, and similar bodies to government schools will be exempt prospectively.
- Import of Services by Branch Offices: The import of services by an establishment of a foreign airline company from a related person or its establishment outside India, without consideration, will be exempt.
- Renting of Commercial Property: The renting of commercial property by unregistered persons to registered persons will be brought under the RCM.
- Ancillary/Intermediate Services Provided by GTA: When ancillary/intermediate services are provided by a GTA in the course of transportation of goods by road and the GTA issues a consignment note, the service will constitute a composite supply.
Measures for Facilitation of Trade
- Procedure for Waiver of Interest or Penalty: The GST Council has recommended inserting Rule 164 in CGST Rules, 2017, providing for the procedure and conditions for availing the benefit of waiver of interest or penalty for tax demands under section 73 of CGST Act for FYs 2017-18, 2018-19, and 2019-20.
- Mechanism for Implementation of Sub-sections (5) and (6) in Section 16 of CGST Act: The Council has recommended notifying section 118 and 150 of the Finance (No. 2) Act, 2024, which provides for insertion of sub-sections (5) and (6) in section 16 of CGST Act retrospectively with effect from 01.07.2017.
- Amendments in Rule 89 and Rule 96 of CGST Rules: The Council has recommended amendments to clarify IGST refunds on exports where the benefit of concessional/exemption notifications specified under rule 96(10) of CGST Rules, 2017 has been availed on the inputs.
- Issuance of Clarifications: The Council has recommended issuing circulars to provide clarity and remove ambiguities in certain issues, such as the place of supply of advertising services, availability of input tax credit on demo vehicles, and the place of supply of data hosting services.
Other Measures
- B2C E-invoicing: The GST Council has recommended the rollout of a pilot for B2C e-invoicing.
- Invoice Management System and New Ledgers: The Council has recommended introducing a Reverse Charge Mechanism (RCM) ledger, an Input Tax Credit Reclaim ledger, and an Invoice Management System (IMS). Taxpayers will be able to declare their opening balance for these ledgers by 31 October 2024.
These changes and clarifications are expected to have a significant impact on businesses and taxpayers across various sectors. It is advisable for businesses to stay updated on these developments and seek professional advice to ensure compliance with the revised GST regulations.
Disclaimer: We request readers to seek professional advice before arriving at an decision/conclusion after reading. We are not responsible for any loss arising to anyone after referring and relying on this article. Above views are based on our understanding of the provisions
The author can be reached at office.bhavikco@gmail.com
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