The 55th GST Council Meeting was held in Jaisalmer on 21 December 2024. The Council has recommended on number of issues including on rate of tax on various goods and services, measures for facilitation of trade and for streamlining compliances, and various other measures pertaining to law and procedures. Few of the important measures/changes as recommended by the Council and stated in the Ministry of Finance Press Release are highlighted below.
Rate of tax
- Accommodation service by hotels to be taxed @ 18% with ITC (with effect from 1 April 2025) if the ‘value of supply’ exceeded INR 7,500 for any unit of accommodation in the preceding financial year, and 5% without ITC otherwise – Definition of declared tariff to be omitted
- Autoclaved Aerated Concrete (ACC) blocks containing more than 50% fly ash content will fall under HS 6815 and attract 12% GST – Clarification
- Contributions by general insurance companies from the third-party motor vehicle premiums collected by them to the Motor Vehicle Accident Fund to be exempted
- Definition of ‘pre-packaged and labelled’ to be amended
- Food inputs supplied for food preparations intended for free distribution to economically weaker sections – GST rate to be 5%
- Fortified Rice Kernel (FRK), classifiable under Heading 1904 – GST rate to be reduced to 5%
- Gene therapy – GST to be exempted
- Motor vehicles – Sale of specified old motor vehicles including EVs to be taxed @ 18% (except in case of unregistered persons) on margin of supplier
- Motor vehicles (Utility vehicles) – Explanation in Sl. No. 52B in Notification No. 1/2017-Compensation Cess (Rate) regarding ground clearance, is applicable from 26 July 2023 – Clarification
- Payment Aggregators regulated by RBI are eligible for the exemption under Sl. No. 34 of Notification No. 12/2017-CT(R) – Exemption does not cover payment gateway and other fintech services which do not involve settlement of funds – Clarification
- ‘Penal charges’ collected by banks and NBFCs from borrowers for non-compliance with loan terms are not liable to GST – Clarification
- Pepper whether fresh green or dried pepper and raisins when supplied by an agriculturist is not liable to GST – Clarification
- Popcorn mixed with sugar making it sugar confectionary (e.g. caramel popcorn), attract 18% GST – Clarification
- Popcorn, ready to eat and mixed with salt and spices is liable to 5% GST if supplied as other than pre-packaged and labelled; 12% GST if supplied as pre-packaged and labelled – Clarification
- Renting of any commercial/ immovable property (other than residential dwelling) by unregistered person to registered person – Taxpayers registered under composition levy scheme to be excluded from Sl. No. 5AB introduced vide Notification No. 09/2024-CTR dated 8 October 2024
- Restaurant service in hotels can be opted to be taxed @ 18% with ITC with effect from 1 April 2025
- Sponsorship services provided by the body corporates to come under Forward Charge Mechanism
- Supplies to merchant exporters – Compensation cess to be reduced to 0.1%
Trade facilitation and compliance
- E-commerce – No proportional reversal of ITC required to be made by ECO in respect of supplies for which they are required to pay tax under CGST Section 9(5) – Clarification
- Form GSTR-9C – Late fee for delayed filing of GSTR-9C, which is in excess of late fee payable till filing of Form GSTR-9 for the period 2017-18 to 2022-23, to be waived, provided Form GSTR-9C is filed on or before 31 March 2025
- ITC in respect of ex-works supplies – Goods to be considered as received by the recipient under CGST Section 16(2)(b) – Clarification
- Online services (online money gaming, OIDAR services, etc.) to unregistered recipient – Supplier to mandatorily record State of recipient which will be deemed as recipient’s address on record for IGST Section 12(2)(b) read with proviso to CGST Rule 46(f) – Clarification
- Supply of goods warehoused in a SEZ or FTWZ before clearance for exports or to the DTA, not to be treated as supply of goods/services
- Track and Trace Mechanism based on a Unique Identification Marking will be implemented for specified evasion prone commodities
- Vouchers – Transactions in vouchers shall not be supply of goods/services; distribution of vouchers on principal-to-principal basis shall not be liable to GST; additional services related to vouchers liable to GST on amount paid for such services; and unredeemed vouchers (breakage) would not be considered as supply under GST.
Changes in law and procedures
- CGST Section 17(5)(d) to be amended to replace the phrase ‘plant or machinery’ with ‘plant and machinery’, retrospectively, with effect from 1 July 2017
- IMS – CGST Sections 38, 34(2) and 39(1) and Rules 60, 67B and 61 to be amended
- ISD mechanism – Explicit inclusion of inter-State RCM transactions from 1 April 2025
- Pre-deposit to be paid @ 10% in cases involving only penalty (without involving demand of tax)