Recommendations of the 55th GST Council
A detailed overview of the latest recommendations and their impact.
| Category | Recommendation | Example |
|---|---|---|
| Fortified Rice Kernel | GST rate reduced to 5%. | Fortified rice for school meal programs or health initiatives now taxed at 5%. |
| Gene Therapy | Exemption of GST on gene therapy. | Advanced gene therapies like CRISPR treatments for genetic disorders exempt from GST. |
| LRSAM Components | IGST exemption for components of LRSAM system under specific notifications. | Defense manufacturers importing missile parts will not pay IGST under Notification 19/2019-Customs. |
| Merchant Exporters | Compensation Cess on supplies to merchant exporters reduced to 0.1%. | Textile exporters pay only 0.1% compensation cess on their supplies. |
| IAEA Imports | Exemption of IGST on imports by International Atomic Energy Agency (IAEA) inspection teams. | Radiation detection tools imported by IAEA inspectors exempt from IGST. |
| Government Welfare Programs | 5% GST rate extended for food inputs supplied for free distribution under government programs. | Ingredients for mid-day meal schemes taxed at a concessional rate. |
| Sponsorship Services | Sponsorship services brought under Forward Charge Mechanism. | A corporate entity sponsoring a sports event pays GST directly instead of relying on reverse charge. |
| Motor Vehicle Accident Fund | Exemption of GST on third-party motor vehicle premiums to Motor Vehicle Accident Fund. | Insurance premiums contributing to cashless treatments for accident victims are GST-free. |
| Restaurant Services | GST rate on restaurant services in hotels tied to room rates, effective 01.04.2025. | Hotels with room tariffs below ₹7,500 pay 5% GST on restaurant services without ITC; others pay 18% with ITC. |
| Reverse Charge Mechanism | Exclusion of composition scheme taxpayers from reverse charge mechanism for renting commercial property. | A composition scheme taxpayer renting an office space won't face reverse charge GST obligations. |
| Old Vehicles | GST rate on old vehicles increased to 18%, applicable only to margin value. | A used diesel SUV of 1500cc sold at a margin is taxed at 18%. |
| ACC Blocks | Clarification on GST rate for ACC blocks with 50% fly ash (12% GST). | Environment-friendly construction blocks with over 50% fly ash content are taxed at 12%. |
| Agricultural Produce | Fresh/dried pepper and raisins sold by agriculturists are tax-free. | A farmer selling dried pepper at local markets does not collect GST. |
| Pre-packaged Goods | Definition of pre-packaged and labeled clarified. Retail sale commodities below 25kg/25L need GST declarations. | Pre-packed 10kg bags of flour attract GST per packaging requirements. |
| Popcorn Types | Tax clarification on popcorn types. | Salted popcorn attracts 5%, caramel popcorn classified as sugar confectionery attracts 18%. |
| Ground Clearance | Explanation in Notification No. 1/2017 clarified regarding ground clearance. | Applicability from 26.07.2023 specified. |
| Payment Aggregators | RBI regulated payment aggregators eligible for exemptions. | Exemptions for payment aggregators apply, but not for fintech services like payment gateways. |
| Penal Charges | No GST on penal charges by banks/NBFCs. | A late EMI penalty charged by a bank is not subject to GST. |
| Category | Recommendation | Example |
|---|---|---|
| SEZ/FTWZ Supplies | Amendment for SEZ/FTWZ supplies in CGST Act. SEZ supplies treated as neither goods nor services. | Goods stored in SEZs before clearance for export are exempt from GST implications. |
| Vouchers | Taxability of vouchers clarified based on distribution mechanism. | Agent-distributed vouchers are taxed, while direct transactions are not. |
| Late Fee Waiver | Late fee waiver for FORM GSTR-9C filing delays until March 31, 2025. | A business delayed filing for 2020-21 can avoid additional late fees by filing before March 31, 2025. |
| Circular Clarifications | Circulars to clarify various compliance issues, including ITC reversal and ex-works delivery. | Clarifies that goods delivered at the supplier's premises under an ex-works contract are considered "received" for ITC claims. |
| Track and Trace Mechanism | Implementation of a unique identification mechanism for specified commodities. | Products like tobacco or alcohol may require unique codes for tracking to avoid evasion. |
| Invoice Details | Accurate recipient details in invoices made mandatory. | Online service providers like gaming platforms must record recipient state for GST purposes. |
| Plant and Machinery | Amendment in definitions of "plant and machinery" to ensure consistency. | Changes retrospectively effective from 01.07.2017 for clarity. |
| Pre-deposit Reduction | Pre-deposit rate reduced from 25% to 10% for penalty-only appeals. | Appeals involving penalties alone require lower pre-deposits. |
| Temporary IDs | Temporary identification for unregistered taxpayers introduced. | A foreign service provider paying taxes on specific transactions can receive a temporary GST ID. |
| Invoice Management System (IMS) | Functionality improvements in IMS for better automation and tracking. | Adjustments for credit notes will be automated within IMS for smoother compliance. |
| GST Compensation Restructuring | Extension for Group of Ministers on restructuring GST compensation until 30 June 2025. | Provides states more time to address structural GST changes. |
Frequently Asked Questions
What is the impact of reduced GST on fortified rice kernels?
The reduction in GST rate to 5% on fortified rice kernels will make health initiatives and school meal programs more affordable.
Are gene therapies now completely tax-free?
Yes, all gene therapy treatments are exempt from GST, making advanced medical treatments more accessible.
How does the GST rate change affect exporters?
Merchants exporting goods now pay only 0.1% compensation cess, reducing their overall tax burden and promoting exports.
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