Updates from the 55th GST Council Meeting

Highlights of the 55th GST Council Meeting 🌟

The 55th GST Council meeting held on December 22, 2024, brought significant recommendations across various areas of taxation. These include GST rate modifications, compliance streamlining, and trade facilitation measures. Below, we break down the major updates for businesses and taxpayers.

. GST Rate Updates 📉

Goods

1. Fortified Rice Kernels (FRK): GST reduced to 5% for classification under HSN 1904.
2. Gene Therapy: Complete GST exemption for gene therapy treatments.
3. Defense Supplies: Continued IGST exemption for systems under LRSAM manufacture.
4. Export Facilitation: Compensation Cess reduced to 0.1% on supplies to merchant exporters.
5. IAEA Inspections: IGST exemption extended for equipment used by IAEA inspection teams.

Services

1. Sponsorship Services: Now under the Forward Charge Mechanism for body corporates.
2. Road Accident Relief Fund Contributions: GST exemption for contributions from insurance premiums to the Motor Vehicle Accident Fund.
3. Hotel Services: Simplified GST rules linked to actual supply value for accommodations exceeding ₹7,500/unit.

Trade Facilitation Measures 🚢

1. Amendment in SEZ Transactions: Supplies warehoused in SEZs or FTWZs before clearance for export/domestic use are neither goods nor services under GST.
2. Vouchers Taxation:
   • Vouchers distributed on a principal-to-principal basis are not taxable.
   • Tax applies only to services like advertising and co-branding of vouchers.

Compliance Simplifications ✅

1. Track and Trace Mechanism: A new provision empowers unique identification marks for goods prone to tax evasion.
2. Annual Returns Waiver: Late fee waivers for delayed filing of GSTR-9C from FY 2017-18 to 2022-23 if filed by March 31, 2025.
3. Invoice Management System: Legal updates ensure seamless reconciliation between credit notes and invoices.

Other Key Changes ⚖️

1. Tax on Old Vehicles: GST on old and used vehicles increased to 18%, applicable only to the margin between purchase and selling price.
2. Ready-to-Eat Popcorn:
   • Salty popcorn (pre-packaged): 12% GST
   • Caramel popcorn: 18% GST
3. Clarifications on ITC: Clarifies ITC eligibility for goods delivered at the supplier’s premises under Ex-Works contracts.

Relief for States and Legal Reforms 🏛️

1. Disaster Relief Tax: The Council will form a Group of Ministers to explore uniform levies for disaster relief.
2. Restructuring Compensation: The timeline for restructuring GST compensation is extended to June 2025.

Why These Changes Matter 🧐

These updates aim to reduce compliance burdens, provide clarity on tax liabilities, and foster ease of doing business. For individuals, reductions in tax rates for essential goods like fortified rice and exemptions for gene therapy signal progress towards affordability and inclusivity.

Expert Takeaway 📝

The 55th GST Council meeting reflects a balanced approach, addressing ambiguities in taxability, streamlining compliance mechanisms, and fostering trade facilitation. While these changes bring relief to businesses and individuals, they also emphasize the government’s commitment to refining GST practices.