55th GST Council Meeting Important decisions : Get Press Release

Press Release of 55th GST council meeting

Recommendations of the 55th GST Council Meeting

The 55th GST Council meeting, chaired by Union Minister for Finance & Corporate Affairs Smt. Nirmala Sitharaman, was held on December 21, 2024, in Jaisalmer, Rajasthan. The meeting was attended by Union Minister of State for Finance Shri Pankaj Chaudhary, Chief Ministers, Deputy Chief Ministers, Finance Ministers of States and Union Territories, and senior officers of the Ministry of Finance.

The Council made significant recommendations to revise GST rates, streamline compliance, and provide trade facilitation measures. Below is a detailed summary of the recommendations:

A. Changes in GST Rates on Goods

1. Fortified Rice Kernel (FRK):
   • GST rate reduced to 5% (HSN 1904).
2. Gene Therapy:
   • Exempted from GST.
3. IGST Exemption for LRSAM System:
   • Extended IGST exemption to systems, sub-systems, equipment, parts, tools, and software for the assembly or manufacture of the Long-Range Surface-to-Air Missile (LRSAM) system under Notification 19/2019-Customs.
4. Supplies to Merchant Exporters:
   • Compensation Cess rate reduced to 0.1%, aligning with the GST rate on such supplies.
5. IAEA Inspection Equipment:
   • IGST exemption granted on the import of equipment and consumables by the International Atomic Energy Agency (IAEA) inspection team under specific conditions.
6. Food Inputs for Free Distribution Programs:
   • Extended concessional 5% GST rate on food inputs under HSN 19 or 21 for preparations distributed free to economically weaker sections under government programs.

B. Changes in GST Rates on Services

1. Sponsorship Services:
   • Body corporates providing sponsorship services brought under the Forward Charge Mechanism.
2. Motor Vehicle Accident Fund:
   • Contributions made by general insurance companies from third-party motor vehicle premiums exempted from GST.
3. Hospitality Services:
   • Definition of “declared tariff” omitted, and “specified premises” linked to the actual value of supply for unit accommodations in hotels.
   • GST on restaurant services in hotels to be 18% with ITC if the value of supply exceeds ₹7,500 for any unit of accommodation in the preceding financial year; otherwise, 5% without ITC.
   • Hotels may opt for an 18% GST rate with ITC by declaring their choice before the financial year starts. Changes effective from April 1, 2025.
4. Reverse Charge Mechanism (RCM):
   • Taxpayers under the composition levy scheme excluded from the applicability of RCM for renting commercial/immovable property.
   • Regularized for the period from October 10, 2024, to the issuance of the proposed notification.
5. Old and Used Vehicles:
   • GST rate increased from 12% to 18% for the sale of all old and used vehicles, including EVs. Applicable only to the margin of the supplier and not applicable to unregistered persons.
6. Pepper, Raisins, and ACC Blocks:
   • Fresh green or dried pepper and raisins supplied by agriculturists exempted from GST.
   • ACC blocks with more than 50% fly ash content classified under HS 6815 and attract 12% GST.
7. Popcorn Clarifications:
   • Popcorn with salt and spices classifiable under HS 2106 90 99 attracts 5% GST if supplied as non-pre-packaged and 12% if pre-packaged. Caramel popcorn falls under HS 1704 90 90 and attracts 18% GST.
8. RBI Regulated Payment Aggregators:
   • Eligible for exemption under entry Sl. No. 34 of Notification No. 12/2017-CT(R) dated 28.06.2017. Fintech services like payment gateways excluded.

C. Measures for Trade Facilitation

1. Schedule III Amendment:
   • Supply of goods warehoused in SEZ or FTWZ to any person before clearance for exports or the domestic tariff area (DTA) shall neither be treated as a supply of goods nor services.
2. Clarifications on Vouchers:
   • Transactions in vouchers treated as neither a supply of goods nor services.
   • Distribution on a principal-to-agent basis taxable, but principal-to-principal basis exempted.
   • Unredeemed vouchers not considered supply under GST.
3. Input Tax Credit (ITC) on Ex-Works Contracts:
   • ITC available if goods are received by the recipient or transporter at the supplier’s location and property transfers to the recipient.
4. GSTR-9C Late Fee Clarification:
   • Late fees under Section 47(2) applicable for delayed furnishing of annual return from 2017-18 to 2022-23.
5. Circulars for Ambiguities:
   • No proportional reversal of ITC by electronic commerce operators for supplies taxed under Section 9(5).

D. Measures to Streamline Compliance

1. Appeals on Penalty Orders:
   • Pre-deposit for filing appeals involving only penalty amounts reduced.
2. Penal Charges by Banks and NBFCs:
   • Penal charges for non-compliance with loan terms by banks and NBFCs not subject to GST.
3. Pre-Packaged and Labelled Goods Definition:
   • Amended to include commodities intended for retail sale under 25 kg or 25 liters.

Conclusion

The 55th GST Council meeting delivered substantial recommendations addressing tax rate revisions, trade facilitation, and compliance streamlining. These measures aim to ease the tax burden on industries and individuals while clarifying ambiguities to reduce disputes. The implementation of these changes will bring uniformity and efficiency in GST administration.

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