New GST Rate Changes on : Services as per 54th GST Council Meeting

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The 54th GST Council meeting, held on 9th September 2024, brought forth several important recommendations and clarifications related to the GST rates on services. The meeting focused on addressing concerns from various sectors, reducing compliance burdens, and regularizing GST for past periods.

These rate changes will be applicable from a date which will be given through separate GST notification

Click here to Get Detailed Press Release of 54th GST council Meeting

Here’s a detailed breakdown of the key decisions and changes for services announced during this meeting:

1. Constitution of GoM for Life and Health Insurance

The GST Council recommended forming a Group of Ministers (GoM) to look into the GST issues concerning life and health insurance comprehensively.
The GoM will include representatives from states like Bihar, UP, West Bengal, Karnataka, Kerala, Rajasthan, Andhra Pradesh, and more.
The GoM is expected to submit its report by the end of October 2024, with a focus on potential GST rate adjustments or exemptions in these sectors.

2. Transport of Passengers by Helicopters

New GST Rate: 5% (on a seat-share basis).
A reduced GST rate of 5% will now apply to the transport of passengers by helicopter when services are provided on a seat-share basis. This will make such services more affordable and accessible, especially in remote regions.
The existing GST rate of 18% will continue to apply to charter services provided by helicopters.
For the past period, GST will be regularized on an “as is where is” basis.

3. Flying Training Courses

The Council clarified that flying training courses conducted by Directorate General of Civil Aviation (DGCA) approved Flying Training Organizations (FTOs) will be exempt from GST.
This decision is aimed at supporting the aviation sector by reducing costs for aspiring pilots and students.

4. Exemption for Research and Development (R&D) Services

New Exemption: Supply of R&D services provided by government entities, research associations, universities, or colleges will now be exempt from GST.
This applies when such services are funded through government or private grants and aims to foster innovation and research in critical areas.
GST demands for the past period will be regularized on an “as is where is” basis.

5. Preferential Location Charges (PLC) in Real Estate

The Council clarified that Preferential Location Charges (PLC), which are charges paid for better locations within a residential, commercial, or industrial complex, will form part of the composite supply of construction services.
As part of a composite supply, PLC will be taxed at the same rate as the main supply of construction services, bringing more clarity to the real estate sector.

6. Affiliation Services by Educational Boards

Taxability: Affiliation services provided by educational boards such as CBSE will be taxable under GST.
Exemption: Affiliation services provided by central or state educational boards to government schools will be exempt from GST, prospectively.
The GST on affiliation services provided between 1st July 2017 and 17th June 2021 will be regularized on an “as is where is” basis.
Universities providing affiliation services to their constituent colleges will be subject to GST at the rate of 18%, and these services are not covered under the educational institution exemptions as per Notification No. 12/2017-CT(R).

7. Exemption for Import of Services by Foreign Airlines’ Branch Offices

The Council recommended exempting the import of services by branch offices of foreign airline companies from related entities outside India when made without consideration.
This exemption is intended to avoid double taxation and streamline compliance for foreign airlines operating in India.
Past demands related to such imports of services will be regularized on an “as is where is” basis.

8. Reverse Charge Mechanism (RCM) on Renting of Commercial Property

The Council introduced a Reverse Charge Mechanism (RCM) for renting of commercial property when the property is rented by an unregistered person to a registered person.
This step is aimed at preventing revenue leakage and ensuring that the GST liability is properly accounted for in such transactions.

9. Clarification on Ancillary Services by Goods Transport Agencies (GTA)

The Council clarified that ancillary or intermediate services provided by Goods Transport Agencies (GTA), such as loading, unloading, packing, unpacking, transshipment, or temporary warehousing, will be considered part of a composite supply when issued under a single consignment note.
All such ancillary services provided in the course of goods transportation will be taxed as part of the main supply of transport services.
If these ancillary services are provided separately and invoiced independently, they will not be treated as a composite supply and will attract separate GST.