Key Highlights from the 54th GST Council Meeting: What You Need to Know!

 

Key Highlights from the 54th GST Council Meeting: What You Need to Know!

The 54th GST Council meeting brought important tax changes, from reducing taxes on some

 commodities to increasing on others. Track all changes in our blog!

                                    

 

Who Attended 54th GST Council

The 54th meeting of the GST Council was held on 9 September 2024 in New Delhi. Minister for Finance and Administrative Affairs chaired this meeting, with the Minister for Finance, Shri Pankaj Chaudhary, the Chief Ministers of Goa and Meghalaya, the Union Deputy Ministers, Arunachal Pradesh, Bihar, Madhya Pradesh, and Telangana, the Finance Ministers (and the Legislature), and senior officials of the Finance Ministries and the Union States and Territories.

 

Main Highlights of Council

1. Formation of a Group of Ministers (GoM) for Life and Health Insurance

GoM was established to examine GST issues related to welfare and health insurance, expected to share its report in October 2024. The purpose is to simplify taxes in these sectors and reduce the burden on insurance companies. 

2.            GST exemption on research and development services

The council has introduced GST on R&D services provided by the government and academic institutions, which helps to increase innovation and academic research rapidly.

3.            Reduction in goods and services tax (GST) on cancer drugs

On major cancer drugs such as Trastuzumab Deruxtecan and Osimertinib, GST was reduced from 12% to 5%, providing financial assistance to patients. 

4.            Launch of B2C E-Invoicing Pilot

A pilot for B2C e-invoicing adoption by business customers was announced. This will improve transparency and reduce the tax burden on trade transactions. It aims for success with e-payments in business-to-business transactions.

5.            Changes in Goods and Services Tax (GST) rates on goods

 

Namkeens and compressed food items: 

On certain snacks, GST has been reduced from 18% to 12%, ensuring the same taxation for similar products.

 

Retail tax: 

The Reverse Charge Mechanism (RCM) applies to copies sent to unregistered suppliers, and making registered by responsible for the tax.

6.            CLARIFICATION OF VARIOUS SERVICES 

Courses approved by DGCA-approved organisations are exempted from GST.

Leasing by unregistered persons to registered entities is subject to the RCM.

7.             Waiver of interest and penalties on past tax claims

New rules allow for the waiver of interest and penalties on past tax claims for 2017 -2020 will expire on 31 March 2025.

8.            The Council discussed improvements to the tax reporting system, including new registrations for RCM and return of input tax credits, to reduce tax reporting errors.

Since the 54th meeting of the Sales Tax Council held on September 9, 2024, the sales tax rates for some goods have changed, so some goods will be cheaper, while others will be more expensive. Here is a summary of the most important changes.

 

Goods That Will Now Cost Less

 

1. Cancer drugs: Sales tax for some cancer drugs such as Trastuzumab, Deruxtecan, Osimertinib and Durvalumab has been reduced from 12% to 5 % The purpose is to reduce the financial burden of cancer treatment. 

 

2. Namkeens and Snavory Snacks: The tax on sweet snacks has been reduced from 18% to 12%, as with other similar snack products whereas unfried and uncooked snacks remain at 5%.

 

3. HelicopterTravel: The excise tax on helicopter services for religious tours has been reduced from 18% to 5%. 

 

4. Flying Training Courses: Flight training courses conducted by DGCA-approved organisations are exempted from Excise Duty, thus making pilot training more affordable. 

 

5. Research and development services: Research and development services provided by academic institutions and some government departments are exempt from GST, thus promoting tax-free scientific research. 

 

Goods That Will Cost More

1. Car seats: The goods and services tax (GST) on car seats increased from 18% to 28%, at the same rate as motorcycle seats. 

 

2. Air Conditioning Rooftop Unit (RMPU): These units come under Goods and Services Tax (GST) at 28%,  due to the significant increase in the prices of these units.

 

3. Leasing of commercial property: When an unregistered owner leases a commercial property to a registered lessee, liable to pay Goods and Services Tax (GST) under Sec.

 

4. Reverse Taxation (RCM). These reforms reflect government efforts to balance revenue generation and financial support for essential goods and services.

 

Summary of 54th GST Council

 

Category	Key Recommendation/Decision
Life & Health Insurance	Establishment of a Group of Ministers (GoM) to examine GST issues on life and health insurance, with a report due by October 2024.
R&D Services	Exemption from GST for research and development services provided by government entities, universities, and research institutions.
Cancer Drugs	Reduction in GST rate from 12% to 5% for specific cancer medications such as Trastuzumab Deruxtecan, Osimertinib, and Durvalumab.
B2C E-Invoicing	Launch of a pilot project for B2C e-invoicing voluntarily in selected sectors and states.
Namkeens & Savoury Products	Decrease in GST rate from 18% to 12% on extruded or expanded savoury food products.
Metal Scrap	Implementation of Reverse Charge Mechanism (RCM) for transactions involving metal scrap supplied by unregistered suppliers.
Helicopter Services	Introduction of a 5% GST rate for passenger transport via helicopters (on a seat-share basis); charter services will remain at 18%.
Flying Training Courses	Exemption from GST for DGCA-approved flying training courses.
Electricity Services	Exemptions on various services related to electricity supply as part of composite supply.
Commercial Property Rent	Introduction of RCM for rental agreements involving commercial properties from unregistered to registered persons.
GST Penalty Waivers	Special procedures were established for waiving penalties and interest on tax demands from FYs 2017-18, 2018-19, and 2019-20.
New Ledgers and Invoice Management	Introduction of new ledgers for RCM, Input Tax Credit Reclaim, and an Invoice Management System for taxpayers.
Car and Motorcycle Seats	Increase in GST rate from 18% to 28% on car seats to match the rate applied to motorcycle seats, effective prospectively.
Roof Mounted Package Units (RMPU)	Clarification that RMPU air conditioning units used in railways will attract a GST rate of 28%.

 

Conclusion

The 54th GST Council meeting introduced several changes to benefit consumers and industries. With lower taxes on cancer drugs, snacks and other services, the essential sector will get relief. However, taxes on car seats and air conditioning units have increased. Stay informed and make the most of these updates to manage your finances better. Explore the changes and see how they impact you!