The GST Council’s 55th meeting, chaired by Union Finance & Corporate Affairs Minister Smt. Nirmala Sitharaman, was held on December 21, 2024, in Jaisalmer, Rajasthan. The Council deliberated on various changes in GST tax rates for services to provide relief to individuals, facilitate trade, and streamline GST compliance.
Key Recommendations for Changes in GST Rates on Services
1. Sponsorship Services
- Forward Charge Mechanism: Sponsorship services provided by body corporates will now be brought under the Forward Charge Mechanism.
2. Contributions to Motor Vehicle Accident Fund
- Exemption from GST: Contributions made by general insurance companies from third-party motor vehicle premiums to the Motor Vehicle Accident Fund (constituted under Section 164B of the Motor Vehicles Act, 1988) will be exempt from GST.
- Purpose of the Fund: The fund provides compensation and cashless treatment to victims of road accidents, including hit-and-run cases.
3. Hotel Accommodation and Restaurant Services
- Amendments to Definitions:
- The definition of “declared tariff” will be omitted.
- The definition of “specified premises” will be amended to link it with the actual value of supply of any unit of accommodation provided by the hotel.
- Rate Applicability:
- 18% GST with ITC: Applicable if the value of supply exceeded ₹7,500 for any unit of accommodation in the preceding financial year.
- 5% GST without ITC: Applicable otherwise.
- Restaurant Services in Hotels:
- Hotels can opt to pay 18% GST with ITC on restaurant services by submitting a declaration at the start of the financial year or upon registration.
- These changes will take effect from April 1, 2025, to ensure a smooth transition.
4. Renting of Commercial/Immovable Property
- Exclusion for Composition Levy Taxpayers: Taxpayers registered under the composition levy scheme will be excluded from the reverse charge mechanism under entry at Sr. No. 5AB of Notification No. 09/2024-CTR dated October 8, 2024.
- Regularization Period: The period from October 10, 2024 (effective date of the notification), to the date of issuance of the proposed notification will be regularized on an “as is where is” basis.
Above changes are applicable from date notified in notification, wait for notification
For more information, access the official press release: PIB Press Release.
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