Arjuna (Fictional Character): Krishna, the GST department seems to have issued several new notifications recently on 16th January 2025. Can you simplify some important key notifications and explain what taxpayers need to know?
Krishna (Fictional Character): Certainly, Arjuna! The recent GST notifications introduce various changes aimed at streamlining compliance and addressing specific sectors. Let's break down the key important notifications point by point.
1. Fortified Rice Kernel (FRK)
New Notification No. 01/2025 is issued which states that the Fortified Rice Kernel (FRK) is now taxable at a concessional GST rate of 5%. Earlier it was taxable at the rate 18%. This step aims to promote better nutrition and affordability for consumers.
The notification is effective from 16th January 2025.
2. Gene Therapy
New Notification No. 02/2025 is issued through which a new entry, S. No. 105A, has been added to the exemption schedule for Gene Therapy, making it GST-exempt. This reflects the government's commitment to promoting advanced medical treatments in the public interest.
The notification is effective from 16th January 2025.
3. GST on Old and Used Vehicles
New Notification No. 04/2025 issued which increases the GST rate on sale of old and used vehicles from 12% to 18%. The taxable value is determined based on the margin of the supplier. If Registered dealers claiming depreciation under the Income Tax Act, GST is calculated on the difference between the selling price and the depreciated value. In case of others GST is calculated on the difference between the selling price and the purchase price.
The notification is effective from 16th January 2025.
4. Specified Premises & Declared Tariff for Hotel Accommodation
New Notification No. 05/2025 is issued which redefines the concept of "specified premises" and omits the definition of "declared tariff" for hotel accommodation services.
The "Specified premises" for a financial year now refers to:
(a) Premises where the supplier provided hotel accommodation services in the previous financial year with the value of supply of any unit of accommodation exceeding ₹7,500 per unit per day or equivalent or
(b) Premises where a registered person files a declaration between 1st January and 31st March of the preceding financial year, declaring the premises as specified. [File Declaration in Annexure VII between 1st January and 31st March of the preceding FY]
(c) Premises where a new registrant files a declaration within 15 days of receiving the acknowledgment for their registration application, declaring the premises as specified. [File Annexure VIII within 15 days of registration acknowledgment]
Note: Those wishing to opt out of the specified category must file Annexure IX during the same January-March period of the preceding FY.
All the annexure formats are prescribed in the said notification.
The notification is effective from 1st April 2025.
5. Reverse Charge Mechanism (RCM)
New Notification No. 07/2025 is issued to amends RCM applicability for,
(a) Sponsorship Services
Sponsorship services provided by any person other than a body corporate will now attract RCM. Previously, sponsorship services provided by "any person" were subject to RCM. The amendment narrows the scope, excluding services provided by a body corporate from this provision. This means that such service provided by a body corporate will now attract GST under forward charge.
(b) Renting of Immovable Property
Service by way of renting of any immovable property other than residential dwelling provided by any unregistered person to any registered person (other than a person who has opted to pay tax under composition levy). So, RCM now applies only when the recipient is a registered person other than one opting for a composition levy.
Earlier, any registered person receiving such services was covered under RCM.
The notification is effective from 16th January 2025.
Arjuna (Fictional Character): That's great Krishna!! these updates seem important and in detail. What should taxpayers take away from all these changes?
Krishna (Fictional Character): Arjuna, the key lesson is to stay updated with the provisions and notifications. If you are dealing with vehicles, hotels, etc, make sure to know the new rates and file the required declarations on time. Ignoring these updates is like forgetting to fuel your car, you will be stuck halfway and for those handling RCM, understand who needs to pay the GST. It is like passing a ball, but if you drop it, the Tax authority catches you. In short, staying compliant keeps you safe from penalties, interests and ensures your business runs smoothly.
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