GST Council held its 55th meeting at Jaisalmer. In the meeting, GST Council has recommended changes related to GST tax rates, measures for facilitation of trade and measures for streamlining compliances in GST.

Key recommendation of the GST council are:

Changes in GST rates of goods and services

1. GST on food inputs of food preparations that are supplied for food preparations intended for free distribution to economically weaker sections under a government program subject to the existing conditions shall be levied @5%.
2. GST to be levied @5% on Fortified Rice Kernel (FRK), classifiable under 1904.

1. 1. Compensation Cess will be levied @0.1% on supplies to merchant exporters to be at par with GST rate on such supplies.
   2. Any supply of sponsorship services provided by the body corporates shall be under Forward Charge Mechanism.

Exemption from GST

1. No GST shall be applicable on Gene Therapy.
2. No IGST shall be applicable systems, sub-systems, equipment, parts, sub-parts, tools, test equipment, software meant assembly/manufacture of LRSAM system.
3. No IGST on imports of all equipment and consumable samples by Inspection Team of the International Atomic Energy Agency (IAEA) subject to specified conditions.
4. No GST shall be levied on contributions made by general insurance companies from the third-party motor vehicle premiums collected by them to the Motor Vehicle Accident Fund.

Measures for facilitation of Trade

1. Introduction of new clause under Schedule III of the CGST Act, 2017 providing that supply of goods warehoused in a Special Economic Zone (SEZ) or Free Trade Warehousing Zone (FTWZ) to any person before clearance of such goods for exports or to the Domestic Tariff Area, shall be treated neither as supply of goods nor as supply of services.
2. Clarification to be issued on the following:

1. 1. 1. No late fee shall be charged for delayed filing of FORM GSTR-9C, which is in excess of the amount of late fee payable till the date of filing of FORM GSTR-9 for the said financial years, provided the said FORM GSTR-9C is filed on or before 31^st March 2025.
      2. Requirement of reversal of Input Tax Credit by electronic commerce operators in respect of supplies made under section 9(5) of CGST Act, 2017.
      3. Availability of Input Tax Credit as per section 16(2)(b) of CGST Act, 2017 in respect of goods which have been delivered by the supplier at his (supplier’s) place of business.
      4. Transactions in vouchers shall be treated neither as a supply of goods nor as a supply of services.
      5. Distribution of vouchers on principal-to-principal basis shall not be subject to GST. However, where vouchers are distributed on principal-to-agent basis, the commission/fee or any other amount charged by the agent for such distribution is taxable under GST.
      6. Additional services such as advertisement, co-branding, marketing and promotion, customization and technology support, customer support etc. related to vouchers would be leviable to GST on the amount paid for these services.
      7. Unredeemed vouchers (breakage) would not be considered as supply under GST and no GST is payable on income booked in the accounts in respect of breakage.

Measures for streamlining compliances in GST

Supply of online services such as online money gaming, OIDAR services, etc. to unregistered recipients, the supplier is required to mandatorily record the name of the State of the unregistered recipient on the tax invoice and such name of State of recipient shall be deemed to be the address on record of the recipient.

Measures pertaining to Law & Procedures

1. Amendment in the provisions, providing for payment of pre-deposit at 10% instead of 25 % for filing appeals before Appellate Authority in cases involving only demand of penalty without involving the demand of tax.
2. New provision introduced, providing for payment of pre-deposit at 10% for filing appeals before Appellate Tribunal in cases involving only demand of penalty without involving the demand of tax.
3. Inter-state Reverse Charge Mechanism (RCM) to be included in Input Services Distributor (ISD).
4. Any payment required to be made by a person who is not registered under the Act, shall be made on the basis of a temporary identification number generated through the common portal.
5. Following amendments proposed for introduction of functionality of Invoice Management System (IMS):

1. 1. 1. To specifically provide for requirement of reversal of input tax credit as is attributable to a credit note, by the recipient, to enable the reduction of output tax liability of the supplier.
      2. Insertion of new rule 67B in CGST Rules, 2017, to prescribe the manner in which the output tax liability of the supplier shall be adjusted against the credit note issued by him.
      3. To provide that FORM GSTR-3B of a tax period shall be allowed to be filed only after FORM GSTR-2B of the said tax period is made available on the portal.

Other changes relating to goods and services

1. 1. NO GST on pepper whether fresh green or dried pepper and raisins when supplied by an agriculturist.
   2. Clarification issued on RBI regulated Payment Aggregators that are eligible for the exemption since they fall within the ambit of ‘acquiring bank’.  However, this exemption does not cover payment gateway (PG) and other fintech services which do not involve settlement of funds.
   3. No GST is payable on the ‘penal charges’ levied and collected by banks and NBFCs from borrowers for non-compliance with loan terms.

Source: Press Information of Bureau

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