The 54th GST Council Meeting, held on September 9th, introduced crucial updates that could significantly impact businesses under the GST regime. Our Partner in Indirect Tax, Amitabh Khemka, has carefully analyzed these key recommendations, offering valuable insights into how they may affect your business operations.

Changes/Clarifications – Tax Rate

GST rates on goods

  • Extruded / expanded products, savoury or salted (other than un-fried or un-cooked snack pellets, manufactured through process of extrusion), falling under HS 1905 90 30- to be reduced from 18% to 12% prospectively.
  • Cancer drugs namely, Trastuzumab Deruxtecan, Osimertinib and Durvalumab – to be reduced from 12% to 5%.
  • Roof Mounted Package Unit Air Conditioning Machines for Railways would be classified under HSN 8415 and attract 28%.
  • Car seats are classifiable under 9401 – to be increased from 18% to 28%, prospectively.
  • Reverse charge mechanism to be introduced on supply of metal scrap by unregistered person to registered person. Further, a tax will be required to be deducted at source, where the supply of metal scrap is by registered person to another registered person.

Changes/Clarifications – Tax Rate

GST rates on services

  • Group of Ministers (GoM) to be constituted to holistically look into the issues pertaining to GST on the life insurance and health insurance and submit the report by end of October 2024.
  • Transport of passengers by helicopters on seat share basis – to attract 5% and regularise for past period on ‘as is where is’ basis. Charter of helicopter will continue to attract 18%.
  • Approved flying training courses conducted by DGCA approved Flying Training Organizations are exempt.
  • Research and development services by a Government Entity; or a research association, university, college or other institution, notified under clauses (ii) or (iii) of section 35(1) of the Income Tax Act, 1961 using Government or private grants to be exempted and regularise for past period on ‘as is where is’ basis.
  • Location charges or Preferential Location Charges paid along with the consideration for the construction services of residential/commercial/industrial complex before issuance of completion certificate forms part of composite supply where supply of construction services is the main service.
  • Affiliation services provided by State / Central educational boards, educational councils and other similarly placed bodies to Government Schools to be exempted prospectively and regularise for the past period between July 1, 2017 to June 17, 2021 on ‘as is where is’ basis.

Measures for facilitation of trade

  • To issue clarification –
    • Place of Supply of advertising services provided by Indian advertising companies to foreign entities.
    • Availability of Input Tax Credit on demo vehicles by the dealers of the vehicle manufacturers.
    • Place of Supply of data hosting services provided by service providers located in India to cloud computing service providers located outside India.
  • Roll-out of a pilot for B2C e-Invoicing on voluntary basis in selected sectors and States.
  • Enhancements being made to the existing GST return architecture –
    • Introduction of a Reverse Charge Mechanism ledger
    • Introduction of an Input Tax Credit Reclaim ledger
    • Introduction of an Invoice Management System – this system will allow the taxpayers to accept, reject, or to keep the invoices pending for the purpose of availment of Input Tax Credit. This will be an optional facility for taxpayers to reduce errors in claiming input tax credit and improve reconciliation. This is expected to reduce notices issued on account of Input Tax Credit mismatch in the returns.

Introduction of an Invoice Management System – this system will allow the taxpayers to accept, reject, or to keep the invoices pending for the purpose of availment of Input Tax Credit. This will be an optional facility for taxpayers to reduce errors in claiming input tax credit and improve reconciliation. This is expected to reduce notices issued on account of Input Tax Credit mismatch in the returns.

These recommendation would be given effect through the relevant circulars / notifications/law amendments which alone shall have the force of law.

From the press briefing

  • GoM on rate rationalisation presented the status report.
  • GOM on real estate presented the status report.
  • Status of GST collection on on-line gaming and casinos presented along with revenue collections. Section 11A is not to be considered for on-line gaming issue. The matter being sub-judice would have to be decided by the Courts.
  • GOM constituted for status of Cess after March 2026 and for position of Compensation Cess after the back-to- back loans are repaid (by January 2026).
  • Committee of Secretaries constituted to consider the negative balance of IGST and recovery of excess IGST given to States

Our Indirect Tax Partner

Amitabh Khemka
Amitabh.k@cbva.in
+91 98212 98432

“There is no relief recommended under section 11A of the CGST Act to on-line gaming issue. In fact, the Revenue Secretary mentioned that section 11A is not meant for normal cases and it is to be used for rarest of rare cases. The issue would be resolved in the Courts only.

Implementation of B2C e-Invoicing would facilitate refund of GST paid by foreign tourists when they leave India.

It may appear, prima facie, that compensation cess may continue in some different name and characterisation.”