The 54th GST Council was held on 9th September, 2024 in New Delhi. It was chaired by the Union Finance and Corporate Affairs Minister and was attended by Union Minister of State for Finance Shri Pankaj Chaudhary, Chief Ministers of Goa and Meghalaya; Deputy Chief Ministers of Arunachal Pradesh, Bihar, Madhya Pradesh, and Telangana; besides Finance Ministers of States & UTs (with legislature) and senior officers of the Ministry of Finance & States/ UTs.
Here are some of the key decisions taken by the GST Council.
Note: 2% TDS would apply to the Business to Business (B2B) supplies of metal scrap by registered persons.
S.No | Goods/Service | HSN/SAC Code | Current Rate | Recommended Rate | Costlier/Cheaper |
1 | Cancer drugs such as Trastuzumab Deruxtecan, Osimertinib and Durvalumab | 9804 | 12% | 5% | Cheaper |
2 | Namkeens and Extruded/Expanded Savoury food products | 19059030 | 18% | 12% (prospective) | Cheaper |
3 | Car and Motor cycle seats | 9401 | 18% | 28% (prospective) | Costlier |
4 | Transport of passengers by helicopters | 9964 | 18% | 5% on seat-share basis; 18% on charter | Cheaper |
5 | Import of services by branch office of foreign airlines | Taxable | Exempted | Cheaper |
Download the complete press release issued by the Finance Ministry after the conclusion of the press conference on 09th September 2024.
As announced by the Finance Minister, 55th GST Council meeting will mostly be held in November.
After achieving a monthly gross GST revenue collection of Rs. 1.82 lakh crore in July, it's time to look forward to a GST rate rationalisation from a 4-tier to a 3-tier structure.
Further, the Council is aiming to take measures to facilitate trade and streamline GST compliances. We can also expect a decision to cease the compensation cess introduced for five years to help states tide over the initial revenue loss and stabilise the system as revenues grow.
Let's delve into the expectations from the upcoming GST Council Meeting.
After the 53rd Council meeting, the Finance Minister said that the Group of Ministers (GoM) will present the status of its work and aspects covered by the panel in the next GST Council Meeting. The GoM was set up in September 2021 under Bihar's Deputy Chief Minister, Sumant Chaudhary, to discuss rate rationalisation. Hence, we can expect some significant announcements regarding reducing tax slabs.
The Fitment Committee has proposed to bring payment aggregators under the purview of GST by levying taxes on transactions less than Rs. 2000. Though the final decision would be taken in the council meeting, the recommendation to include such low-value transactions is based on the significant volume of such transactions that gets incurred on a day to day basis which due to current provisions get escaped from GST. Hence, we can expect the council to levy 18% GST to increase the revenue.
Due to higher tax rates applicable on inputs than finished products, manufacturers from the domestic goods industry often complain about the accumulation of input tax credits and cascading costs. The Commerce and Industry Ministry has shared a list of products with the Finance Ministry, including paper, furniture, washing machines, solar glass, and air purifiers, to examine the inverted duty structure issues.
As the name suggests, GST Compensation Cess was levied to compensate the states for the loss of revenue arising due to the implementation of GST on July 1, 2017, for five years. GST, being a consumption-based tax, would have resulted in the loss of revenue for manufacturing-heavy states.
However, though the period for which it was initially levied expired in June 2022, the central government, in June last year, notified an extension of the compensation cess on luxury and demerit goods till March 2026. The Council can propose complete discontinuation or consider integrating with the highest GST tax bracket of 28%.
28% GST was levied on online games, horse racing and casinos in the 50th GST Council meeting, ending the confusion over "games of skill or chance". However, it paved the way for a debate within the industry as it created fear among the industry players about the sector's growth and innovation. There are fewer chances for the Council to address this amendment during this meeting, which was set for review six months after its enforcement in October 2023.
Initially, when health and life insurance premiums were brought under the purview of an 18% GST slab rate, it was widely protested because premiums in the pre-GST era were subject to a 15% service tax. After 7 years, however, one can witness a rate reduction on these premiums, providing much-needed relief to policyholders.
To make cancer treatment affordable, the GST Council, earlier in the 50th Council meeting, exempted one of the life-saving drugs, Dinutuximab (Qarziba), which costs Rs. 36 lakh. Now, it's expected that the fitment committee will most likely consider reducing the GST on the following essential cancer drugs: Trastuzumab, Deruxtecan, Osimertinib, and Durvalumab from 12% to 5%.
The supply of electricity and services provided by an electricity transmission or distribution utility (e.g. state electricity board) by way of transmission or distribution of electricity is exempted under GST by notifications. But ancillary services such as rental charges against metering equipment are taxable as clarified by CBIC in its circular no. 34/8/2018-GST. Without these ancillary services, utilities won’t be able to supply electricity. One can expect the GST Council’s clarification on treating it as a composite supply where the principal supply is electricity; it should be exempt from GST.
The metal recycling industry has 30-40% players from unorganised segments, making it one of the most fragmented industries. People find it difficult to understand the nitty-gritty of GST, leading to non-compliance and tax evasion. Currently, a GST of 18% under the forward charge mechanism is applicable. GST Council can consider reviewing and revising the rates as requested by the Material Recycling Association of India (MRAI).
Section 9 of the CGST Act states that GST on petrol crude, diesel, motor spirit, natural gas and aviation turbine fuel shall apply from a date the government will notify. Though the government has not notified any date for levying GST on petroleum products yet, there are speculations that the GST Council will discuss the applicable GST rate on Petrol and Diesel. The decision could put the rest on the ongoing notion of whether including these fuels under GST could increase the prices or not, which at the moment varies from state to state.
The GST provisions were evident in the taxation of goods and services and the valuation of transactions between foreign branch offices of Indian companies and vice versa. The issue arose when the department started issuing GST notices worth crores to taxpayers like IT giant Infosys and 10 foreign airlines, including British Airways, Lufthansa, and Emirates, particularly on unpaid taxes on the import of services by Indian branches from their head offices. Hence, we can anticipate clarification from the upcoming council meeting.
The 53rd GST Council meeting was held under the Chairpersonship of the Union Minister for Finance & Corporate Affairs Smt. Nirmala Sitharaman was held on June 22 2024, in New Delhi. The meeting was also attended by Union Minister of State for Finance Shri Pankaj Chaudhary; Chief Ministers of Goa and Meghalaya; Deputy Chief Ministers of Bihar, Haryana, Madhya Pradesh, and Odisha, besides Finance Ministers and senior officers of the Ministry of Finance of States & UTs (with legislature).