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The GST Council inter-alia made several recommendations relating to changes in GST tax rates.
FM Nirmala Sitharaman addresses media after the GST Council meeting on December 21, 2024
GST Council Meeting Recommendations: The GST Council has made several key recommendations aimed at simplifying and reducing the tax burden in specific areas.
The 55th GST Council met under the Chairpersonship of Union Minister for Finance & Corporate Affairs Nirmala Sitharaman in Jaisalmer, Rajasthan on December 21.
55th GST Council Meeting Highlights
What’s Getting Cheaper and Costlier Post-GST Council Meeting?
Reduction in GST on Fortified Rice Kernel (FRK)
Firstly, the Council has recommended a reduction in the GST rate on the Fortified Rice Kernel (FRK), which is classified under HS Code 1904, to 5%. This move aims to make FRK more affordable and accessible.
GST Exemption on Gene Therapy
In addition, the Council has recommended a full exemption of GST on gene therapy, recognising its potential in medical treatment and the need to make it more accessible to those in need.
Exemption on Contributions to Motor Vehicle Accident Fund
The Council has also proposed that contributions made by general insurance companies from third-party motor vehicle premiums to the Motor Vehicle Accident Fund should be exempt from GST. This exemption would help streamline the collection and use of these contributions.
GST on Transactions Involving Vouchers
Furthermore, the GST Council clarified that no GST should apply to transactions involving vouchers, as they do not constitute a supply of goods or services. To further simplify matters, provisions related to vouchers are also being revised.
Penal Charges by Banks and NBFCs
Additionally, the Council has clarified that penal charges levied by banks and Non-Banking Financial Companies (NBFCs) from borrowers for non-compliance with loan terms are not subject to GST.
Reduction in Pre-Deposit for Appeals
Lastly, the GST Council has recommended a reduction in the pre-deposit required when filing an appeal before the Appellate Authority in cases where the order in question involves only penalty amounts. This change is intended to make the appeals process more accessible and less financially burdensome for taxpayers.
Complete Details Of 55th GST Council Meeting Recommendations
The GST Council inter-alia made the following recommendations relating to changes in GST tax rates, provide relief to individuals, measures for facilitation of trade and measures for streamlining compliances in GST.
Cheaper and Dearer in GST Council Meeting
Changes in GST rates of goods
Fortified Rice Kernel (FRK)
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- To reduce the GST rate on the Fortified Rice Kernel (FRK), classifiable under 1904, to 5%.
- Exemption for Gene TherapyTo exempt GST on gene therapy.
- Exemption for LRSAM System Equipment: To extend IGST exemption to systems, sub-systems, equipment, parts, sub-parts, tools, test equipment, and software meant for assembly/manufacture of LRSAM system under Notification 19/2019-Customs.
- Reduction of Compensation Cess: To reduce the rate of Compensation Cess to 0.1% on supplies to merchant exporters at par with the GST rate on such supplies.
- Exemption for IAEA Equipment: To exempt IGST on imports of all equipment and consumable samples by the Inspection Team of the International Atomic Energy Agency (IAEA) subject to specified conditions.
- Concessional GST Rate on Food Inputs for Government ProgramsTo extend the concessional 5% GST rate on food inputs of food preparations under HSN 19 or 21 that are supplied for food preparations intended for free distribution to economically weaker sections under a government program subject to the existing conditions.
Services
- Sponsorship Services Under Forward Charge MechanismTo bring a supply of the sponsorship services provided by body corporates under the Forward Charge Mechanism.
- Exemption for Contributions to Motor Vehicle Accident FundTo exempt GST on the contributions made by general insurance companies from the third-party motor vehicle premiums collected by them to the Motor Vehicle Accident Fund.
- Changes in Tax Rate for Hotel ServicesTo omit the definition of declared tariff and amend the definition of specified premises to link it with the actual value of supply of any unit of accommodation provided by the hotel.
- Composition Levy Scheme ExemptionTo exclude taxpayers registered under composition levy scheme from the entry at Sr. No. 5AB regarding renting of commercial/immovable property by unregistered persons to registered persons.
Other Changes Relating to Goods and Services
Increase in GST Rate on Old and Used Vehicles
To increase the GST rate from 12% to 18% on the sale of all old and used vehicles, including EVs, other than specified vehicles.
Clarification on GST for Autoclaved Aerated Concrete (ACC) Blocks
To clarify that ACC blocks containing more than 50% fly ash content will fall under HS 6815 and attract 12% GST.
GST Exemption for Pepper and Raisins from Agriculturists
To clarify that pepper (fresh green or dried) and raisins when supplied by an agriculturist are not liable to GST.
Definition of Pre-Packaged and Labelled Goods
To amend the definition of ‘pre-packaged and labelled’ to cover commodities for retail sale containing not more than 25 kg or 25 litres.
GST on Ready-to-Eat Popcorn
To clarify that ready-to-eat popcorn mixed with salt and spices attracts 5% GST if supplied as non-pre-packaged, and 12% GST if supplied as pre-packaged.
Regularisation of Past Issues
It has been decided to regularise past issues on an “as is where is” basis.
GST on Penal Charges by Banks and NBFCs
To clarify no GST is payable on the penal charges levied and collected by banks and NBFCs from borrowers for non-compliance with loan terms.
