Viksit Bharat by 2047

The 54th GST Council Meeting, held on September 9, 2024, introduced key changes and clarifications to the GST framework. These recommendations aim to improve compliance, clarity, and efficiency across various sectors. Below is a detailed summary of the important decisions made during the meeting.

1. Reverse Charge Mechanism (RCM) on Metal Scrap

The GST Council recommended the implementation of RCM on the inward supply of metal scrap from unregistered persons to registered entities. In this case, the recipient of the metal scrap will be responsible for paying the GST, even if the supplier registers for GST at a later stage. This move aims to enhance tax collection efficiency and prevent evasion in the metal scrap industry.

2. Clarifications on IGST Refund (Rule 89 & Rule 96)

The Council clarified IGST refund processes, specifically relating to Rule 89 and Rule 96. These rules address situations where businesses claim IGST refunds after paying IGST on exports. Consequently, exporters will experience a smoother refund process, reducing ambiguity in compliance.

3. Waiver of Interest and Penalty

In a significant relief to taxpayers, the Council recommended a waiver of interest and penalties, applicable from November 1, 2024, to March 31, 2025. As a result, businesses can take advantage of this window to comply with GST regulations without incurring heavy fines.

4. E-Invoicing for B2C Transactions

The Council proposed introducing e-invoicing for B2C (Business to Consumer) transactions, initially on a pilot basis. This pilot program is expected to increase transparency in retail transactions and prevent fraudulent invoicing practices. If successful, the initiative could be rolled out nationwide.

5. Implementation of Invoice Management System (IMS)

The new Invoice Management System (IMS) will be implemented from October 1, 2024. This system will automate the invoicing process, making it easier for businesses to manage and report GST-compliant invoices. Consequently, it will enhance overall efficiency in tax administration.

6. Input Tax Credit (ITC) on Demo Vehicles

The Council announced that businesses purchasing demo vehicles directly from vehicle manufacturers will be able to claim ITC on such purchases. This decision will benefit automobile dealers by lowering the cost of maintaining demo fleets.

7. Clarification on Place of Supply

The Council provided further clarification on the place of supply rules, particularly for specific services under the reverse charge mechanism. For instance:

• Indian companies providing advertisement services to foreign companies.
• Data hosting services.
• Cloud computing services.

8. RCM on Renting of Immovable Property

The Council clarified that RCM will apply when a registered entity rents immovable property from an unregistered supplier. As a result, the registered entity will be responsible for paying GST, simplifying compliance in leasing transactions.

9. Ancillary Services by Goods Transport Agency (GTA)

The Council declared that ancillary services provided by a Goods Transport Agency (GTA), which issues a consignment note, will be considered composite services. Accordingly, the GST rate applicable to GTA services will also apply to the ancillary services, ensuring consistency in tax treatment.

10. Exemption on Affiliation Charges by Government Schools

Government schools will now be exempt from paying GST on affiliation charges, providing financial relief to these educational institutions.

11. Exemption on Import of Services by Foreign Airlines

The Council announced an exemption from GST on the import of services provided by foreign airline companies. This exemption is expected to reduce the overall cost of international air transport services for Indian businesses.

12. GST Exemption on Grants to Universities

Grants received by universities established by the Central or State Governments, or those exempted under the Income Tax Act, will be exempt from GST. This change aims to support government-funded educational institutions.

13. GST Rate Changes

Several changes to GST rates were recommended, affecting multiple industries:

• Cancer drugs: The GST rate was reduced from 12% to 5%, making these life-saving drugs more affordable.
• Namkeens: The GST rate was reduced from 18% to 12%, benefiting snack food manufacturers.
• Passenger transportation: Adjustments were made to the GST rate.
• Car and motorcycle seats: The rate increased from 18% to 28%.
• Film distributors: Revisions were made to the applicable GST rate.
• Helicopter services for religious pilgrimages: The rate decreased from 18% to 5%, reducing costs for travelers.
• Air conditioners for railways: Changes in the GST rate were addressed.

14. Next GST Council Meeting

The next GST Council meeting is expected to take place in November 2024, where further policy changes and updates will be discussed.

15. GoM on Rate Rationalisation

A Group of Ministers (GoM) was formed to explore rate rationalisation for certain transactions. The GoM is scheduled to meet soon, and its recommendations will be announced following the meeting.

16. Casino and Online Gaming Revenues

The Council discussed the significant growth in revenues from online gaming and recommended further taxation changes in this sector. These updates will likely be formalized in upcoming meetings.

17. Insurance Premium Reduction Consensus

The Council reached a broad consensus on reducing insurance premiums. However, the final modalities will be addressed in the next meeting, aimed at lowering costs for consumers.