54th GST Council Meeting: Key Highlights and Decisions

The 54th GST Council meeting, held at Sushma Swaraj Bhawan in New Delhi, brought together Union Finance Minister Nirmala Sitharaman and key representatives from various states to deliberate on significant tax-related issues. The gathering included finance ministers from multiple states, senior officials, and key policymakers, with discussions focusing on impactful measures.

The 54th GST Council meeting brought significant changes and recommendations aimed at streamlining tax rates, providing relief to individuals, and improving trade facilitation. Below are the key highlights and decisions from the meeting:

Changes and Clarifications in GST Tax Rates

Goods

Namkeens and Extruded/Expanded Savoury Food Products
The GST rate on extruded or expanded savory food products (other than unfried or uncooked snack pellets) has been reduced from 18% to 12%, aligning it with namkeens, bhujia, mixtures, and similar edible products. Unfried or uncooked snack pellets will continue to attract a 5% GST. This rate change applies prospectively.
Cancer Drugs
The GST on cancer drugs such as Trastuzumab Deruxtecan, Osimertinib, and Durvalumab has been reduced from 12% to 5%, making these treatments more affordable.
Metal Scrap
A Reverse Charge Mechanism (RCM) has been introduced for the supply of metal scrap by unregistered persons to registered entities. Suppliers must register once they cross the threshold limit, and recipients will be responsible for tax payment. Additionally, a 2% TDS is applicable on B2B metal scrap transactions by registered persons.
RMPU Air Conditioning for Railways
It was clarified that Roof Mounted Package Unit (RMPU) air conditioning machines used in railways will attract a GST rate of 28% under HSN 8415.
Car and Motorcycle Seats
The GST rate on car seats has been increased from 18% to 28% to maintain parity with motorcycle seats, which already attract a 28% tax.

Services

Life and Health Insurance
A Group of Ministers (GoM) has been constituted to address the issues related to GST on life and health insurance. Their report is expected by the end of October 2024.
Passenger Transport by Helicopters
The Council decided to notify a 5% GST rate on seat-sharing passenger transport via helicopters. Charter services, however, will continue to attract 18% GST.
Flying Training Courses
The Council clarified that DGCA-approved flying training courses conducted by Flying Training Organizations (FTOs) are exempt from GST.
Research and Development Services
Research and development services provided by government entities, universities, and research institutions funded by government or private grants will be exempt from GST.
Preferential Location Charges (PLC)
The Council clarified that Preferential Location Charges (PLC) for residential, commercial, or industrial properties are part of a composite supply bundled with construction services, attracting the same GST rate as the main service.
Affiliation Services
Affiliation services provided by educational boards like CBSE are taxable, but those offered by state or central boards to government schools will be exempt going forward. The past tax treatment for such services between July 2017 and June 2021 will be regularized.
Import of Services by Branch Offices
Services imported by branch offices of foreign airline companies from related parties abroad will be exempt from GST, provided no consideration is involved.
Renting of Commercial Property
Renting of commercial property by unregistered persons to registered entities will now fall under the Reverse Charge Mechanism (RCM) to prevent revenue leakage.
Ancillary Services by GTA
When ancillary services (loading, unloading, packing, etc.) are provided alongside goods transportation by road, they will be treated as part of a composite supply and taxed accordingly.

Measures for Trade Facilitation

Waiver of Interest and Penalty for Tax Demands (FY 2017-20)
A new rule (Rule 164) will be introduced in the CGST Rules, 2017, to facilitate the waiver of interest or penalty related to tax demands for FYs 2017-18, 2018-19, and 2019-20. The deadline for payment to avail this benefit is March 31, 2025.
Implementation of Section 16 Subsections (5) and (6)
The Council recommended the early notification of provisions related to the rectification of wrong availment of input tax credit under Section 16(5) and (6), with a special procedure for taxable persons who have not filed appeals against past demands.
Amendments in Rules 89 and 96 for IGST Refunds
The Council clarified the refund procedure for exports where concessions or exemptions have been availed. Additionally, Rule 96(10) and related provisions will be omitted to simplify and expedite the refund process.
Clarifications on Various Issues
Circulars will be issued to clarify GST applicability on advertising services for foreign clients, input tax credit for demo vehicles, and the place of supply for cloud computing services provided by Indian companies to overseas clients.

Other Key Measures

B2C E-Invoicing
The Council recommended launching a pilot project for e-invoicing in the B2C segment, following its success in the B2B sector. This will enhance business efficiency and allow consumers to verify invoice reporting in GST returns.
Invoice Management System and New Ledgers
The Council discussed enhancements to the GST return system, including the introduction of ledgers for Reverse Charge Mechanism (RCM) and Input Tax Credit Reclaim, as well as an optional Invoice Management System (IMS) to reduce errors and improve ITC reconciliation.

The decisions made by the GST Council will be implemented through relevant notifications and amendments in law, which will carry the legal force of these recommendations. The next GST Council Meeting will be held in November.

To read our coverage on the previous Council Meet decisions, you may refer here:

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