Highlights and Updates from the 55th GST Council Meeting

The 55th GST Council meeting, held on December 21, 2024, in Jaisalmer, Rajasthan, was chaired by the Union Finance Minister. Attendees included the Union Minister of State for Finance, several Chief and Deputy Chief Ministers, State Finance Ministers, and senior officers from the Ministry of Finance and State/UT governments.

Key Decisions from the 55th GST Council Meeting

Extensions and Exemptions:

  • Group of Ministers (GoM) Extensions: The GoMs on compensation cess, rate rationalization, and health insurance have been granted extensions to submit their reports.

  • GST Exemption for Payment Aggregators: Payment aggregators handling payments below ₹2,000 are now exempt from GST. This exemption does not extend to payment gateways or fintech services that facilitate fund settlements.

  • Penal Charges: Penal charges levied by banks and NBFCs on borrowers for non-compliance with loan terms will no longer attract GST.

  • Agricultural Products: Dried black pepper and raisins supplied directly by agriculturists are now exempt from GST.

GST Rate Adjustments:

  • Fortified Rice Kernels (HSN 1904): GST reduced from 18% to 5%.

  • Gene Therapy: Treatments for life-threatening diseases are now GST-exempt.

  • Caramelized Popcorn: Clarified to attract GST at 18%, aligning with products containing added sugar. Salted popcorn remains taxed at 5%.

  • Electric Vehicles (EVs):

    • No GST on the sale of used EVs between individuals.

    • 18% GST on the margin value for businesses selling refurbished EVs.

  • Merchant Exporters: Compensation cess on supplies to merchant exporters reduced to 0.1%.

  • LRSAM Sub-Systems and Software (HSN 9023): Exempted from GST.

  • Inspection Equipment for IAEA: Imports by the International Atomic Energy Agency are now exempt from IGST, subject to specified conditions.

Deferred Decisions:

  • Food Delivery Services: Deliberations on GST rates for food and associated delivery charges by quick commerce and food delivery apps were postponed.

  • Health and Life Insurance: Discussions on reducing GST rates for health and life insurance premiums are ongoing.

Legislative Amendments and Compliance Measures:

  • Invoice Management System (IMS): Proposed amendments to the CGST Act and Rules aim to streamline the generation of FORM GSTR-2B and ensure reconciliation between suppliers and recipients.

  • Credit Note Adjustments: New provisions for credit note-related input tax credit (ITC) reversals and output tax liability adjustments.

  • Late Fee Waivers:

    • Waiver of late fees for delayed filing of FORM GSTR-9C for FY 2017-18 to FY 2022-23, provided filings are completed by March 31, 2025.

    • Circular to clarify late fee applicability for delayed filing of annual returns.

  • Pre-Deposit for Appeals: Pre-deposit reduced to 10% for appeals involving only penalties, without any tax demand.

Expectations and Anticipated Changes:

  • Health Insurance Premiums:

    • Proposals include exempting GST on term life insurance and senior citizens’ health insurance premiums.

    • Reducing GST rates from 18% to 5% for health insurance premiums under specified conditions.

  • Inverted Duty Structure Reforms: Addressing tax rate disparities between raw materials and finished goods to ease ITC accumulation and improve liquidity.

  • Tobacco Products and High-End Goods: Possible introduction of special rates (including cess) for items like tobacco, cosmetics, luxury garments, and aerated beverages.

  • ATF and Petroleum Products: Ongoing discussions on including aviation turbine fuel (ATF) under GST to enable input tax credit claims by petroleum companies.

  • Compensation Cess: Examining the applicability and future roadmap of the cess, especially for utility vehicles and specific luxury goods.

 

Read More: A Guide to Belated Returns, Revised Returns, and ITR-U

Compliance Enhancements:

  • Risk-Based GST Registration: Strengthened measures, including Aadhaar-based authentication and categorization of taxpayers based on risk profiles, to curb fraudulent registrations.

The 55th GST Council meeting underscored its commitment to refining GST policies, addressing industry concerns, and promoting clarity and compliance. Future notifications and circulars will implement these decisions, further shaping the GST framework in India.

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