Highlights of 55th GST Council Meeting & Recommendations

SERVICES

1. Sponsorship services by body corporate to be brought under forward charge mechanism.

2. GST exemption is proposed on contributions made by general insurance companies from third-party motor vehicle premiums to the Motor Vehicle Accident Fund, established under Section 164B of the Motor Vehicles Act, 1988, to provide compensation or cashless treatment to road accident victims, including hit-and-run cases.

3. GST Regulations For Hotel/Restaurant Services –

  • Amend the definition of “declared tariff” and “specified premises” to link them with the actual value of supply of any unit of accommodation provided by the hotel.
  • Make the GST rate on restaurant services in hotels dependent on the value of supply of units of accommodation in the preceding financial year i.e.

            i. 18% with ITC if the value of supply exceeded Rs. 7,500 for any unit of                      accommodation

            ii. 5% without ITC otherwise

  • Provide an option for hotels to pay tax on restaurant services at 18% with ITC by giving a declaration at the beginning of the financial year or upon obtaining registration
  • Effective date shall be 01.04.2025.

4. Modification To Levy Of GST Under Reverse Charge Mechanism Related To Renting Of Commercial/Immovable Property

  • Exclude taxpayers registered under the composition levy scheme from the reverse charge mechanism introduced at Sr. No. 5AB vide Notification No. 09/2024-CTR Dt. 08.10.2024
  • Regularize the period from the effective date of Notification No. 09/2024-CTR i.e. 10.10.2024 until the date of issuance of the proposed notification on an “as is where is” basis.

Goods

5. GST on Fortified Rice Kernel classifiable under 1904 reduced to 5%.

6. Gene Therapy exempted from GST

7. IGST exemption extended to systems, sub-systems, equipment, parts, sub-parts, tools, test equipment, software meant for assembly/manufacture of LRSAM system under Notification 19/2019-Customs.

8. Compensation Cess on supplies to merchant exporters reduced to 0.1%

9. Imports of all equipment and consumable samples by Inspection Team of the International Atomic Energy Agency (IAEA) to be exempted subject to certain conditions.

10. Concessional rate of 5% GST extended 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.

Other Changes To Goods & Services

11. Proposed Changes To GST Rate On The Sale Of Old And Used Vehicles:

Category  Details
GST Rate Increase
 GST on the sale of all old and used vehicles, including EVs, increased from 12% to 18%.
 18% GST Already Applicable
 Old and used petrol vehicles: Engine ≥ 1200 cc and Length ≥ 4000 mm.
Old and used diesel vehicles: Engine ≥ 1500 cc and Length ≥ 4000 mm.
SUVs (Sport Utility Vehicles).
Tax Basis GST applies only to the supplier’s margin (selling price minus purchase price or depreciated value, if depreciation is claimed).
Exemption GST is not applicable to unregistered persons.

 

12. Autoclaved Aerated Concrete (ACC) blocks containing more than 50% fly ash contentwill fall under HS 6815 and attract 12% GST.

13. Pepper whether fresh green or dried pepper and raisins supplied by an agriculturist is not liable to GST.

14. “Pre-Packaged And Labeled” Definition To Be Amended:

  • Amendment to the definition of “pre-packaged and labelled” to ensure that it covers all commodities intended for retail sale and containing not more than 25 kg or 25 litres.
  • The commodity must fall under the definition of “pre-packaged commodity” as outlined in the Legal Metrology Act, 2009
  • Labels affixed to these commodities must bear the declarations required under the provisions of the Legal Metrology Act and its rules.

15. GST Classification And Rates To Different Types Of Ready To Eat Popcorns:

  • Ready-to-Eat Popcorn with Salt and Spices - (Other than Pre-Packaged and Labelled) - 5%
  • Ready-to-Eat Popcorn with Salt and Spices - (Pre-Packaged and Labelled) - 12%
  • Caramel Popcorn (Considered a sugar confectionary) - 18%

16. Explanation in Sl. No. 52B in notification No. 1/2017- Compensation Cess (Rate) dated 28.6.2017 regarding ground clearance is applicable with effect from 26.07.2023.


17. RBI Regulated Payment Aggregators

  • Eligible for the exemption under entry at Sl. No. 34 of Notification No. 12/2017-CT(R) dated 28.06.2017.
  • They fall within the ambit of ‘acquiring bank’ as defined in the said entry.
  • The exemption does not cover payment gateway (PG) services and other fintech services that do not involve the settlement of funds. 

18. No GST is payable on the ‘penal charges’ levied and collected by banks and NBFCs from borrowers for non-compliance with loan terms

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