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The 54th meeting of the Goods and Services Tax (GST) Council, chaired by Union Finance Minister Nirmala Sitharaman, concluded on Monday with a series of transformative recommendations set to reshape India’s GST framework.
The meeting, held at Sushma Swaraj Bhawan in New Delhi, was attended by various state leaders, including Chief Ministers, Finance Ministers, and senior officials.
Key Highlights and Recommendations
Formation of New Groups of Ministers (GoMs):
Life and Health Insurance GoM: A new GoM has been constituted to address GST issues related to life and health insurance. This group, comprising members from 13 states, is tasked with delivering a report by the end of October 2024.
Compensation Cess GoM: Another GoM will investigate the future of the compensation cess, indicating a proactive approach towards addressing fiscal challenges and sustainability.
Abhishek Jain, Indirect Tax Head and Partner at KPMG said, “The recommendation by the Group of Ministers (GoM) on the GST rate for health and life insurance, expected by the end of October, will be one to watch closely. Specific sectors, such as the automobile industry, will be particularly attentive to the decision on the compensation cess and its implications.”
B2C E-Invoicing Pilot: A voluntary pilot for Business-to-Consumer (B2C) e-invoicing will be introduced to enhance efficiency and transparency in retail transactions.
Another notable development is the proposed Business-to-Consumer (B2C) e-invoicing, which, although voluntary, will be significant. It will be crucial to observe how businesses prepare for this change.Abhishek Jain, Indirect Tax Head and Partner at KPMG
Invoice Management System (IMS): The GST return architecture will be upgraded with new ledgers for Reverse Charge Mechanism (RCM) and Input Tax Credit (ITC) Reclaim, aiming to streamline ITC claims and reduce errors.
Clarifications and Amendments:
Affiliation Services: GST will be applicable to affiliation services provided by educational boards like the Central Board of Secondary Education (CBSE), with exemptions for state and central boards to government schools.
Commercial Property Renting: Renting of commercial properties by unregistered persons will be subject to Reverse Charge Mechanism (RCM) to prevent revenue leakage.
Tax Rate Adjustments:
Cancer Drugs: GST on crucial cancer medications, including Trastuzumab Deruxtecan, Osimertinib, and Durvalumab, will be reduced from 12 per cent to 5 per cent, providing significant financial relief to patients.
Namkeens and Savoury Snacks: The GST rate for extruded or expanded savoury snacks will decrease from 18 per cent to 12 per cent, aligning it with similar edible products.
Metal Scrap: A Reverse Charge Mechanism (RCM) will be introduced for metal scrap transactions involving unregistered suppliers, while a Tax Deducted at Source (TDS) of 2 per cent will apply to Business-to-Business (B2B) metal scrap supplies.
Car and Motorcycle Seats: GST on car seats will be increased from 18 per cent to 28 per cent, in line with rates for motorcycle seats to ensure uniformity.
Service Sector Reforms:
Research and Development Services: Exemption from GST will now apply to Research and Development (R&D) services provided by government entities and specific institutions using grants.
Helicopter Transport: GST on passenger transport by helicopters will be set at 5 per cent on a seat-share basis, with past periods regularized on an ‘as is where is’ basis.
Flying Training Courses: Approved flying training courses will be exempt from GST, supporting the aviation sector’s growth.
Key Highlights from the Press Briefing
At the press briefing, Union Finance Minister Nirmala Sitharaman highlighted several key developments:
Online Gaming Revenue: Revenue from online gaming has surged by 412 per cent to Rs 6,909 crore in six months, reflecting the sector’s rapid growth.
Casinos Revenue: Revenue from casinos has increased by 30 per cent, indicating robust performance in this sector.
Compensation Cess: The current total collection from compensation cess stands at Rs 8,66,706 crore.
Looking Ahead
The GST Council has indicated that discussions on certain issues, such as tax on electric vehicle (EV) charging stations and exemptions for payment aggregators, are deferred and will be revisited in future meetings. Stakeholders are advised to stay updated with forthcoming circulars and notifications for detailed guidelines and procedural updates.
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