54th GST Council Meetings| Amendments and Clarification for Facilitation of Trade

The 54th GST Council meeting was held on 9th September 2024 under the chairpersonship of the union minister for Finance & Corporate Affairs and was also attended by the union minister of finance of some states.

During the meeting many of the issues faced by the industries were addressed such as clarification on the applicability of GST rate on some goods and services, recommended issuance of circulars on amnesty scheme for demand notice issued under section 73, implementation of section 16(5) and (6) of CGST Act, GST refund under Rule 96(10) of CGST Rules, etc. GST Council has also recommended the inclusion of the supply of metal scrap and renting of commercial property under the reverse charge mechanism in specified criteria.

GST council has also recommended the rollout of e-invoicing for B2C supplies and the introduction of additional features on the GST portal such as RCM ledger, ITC reclaimed ledger, etc.

1. Amendments or clarification on GST Tax Rates:

1.1 Change in GST Rate on Goods and Services

Product	Proposed Rate
cancer drugs namely, Trastuzumab Deruxtecan, osimertinib, and Durvalumab	12%
extruded or expanded products, savory or salted (HSN 19059030)(To bring the GST rate at par with other similar edible preparations)	5%
cancer drugs namely, Trastuzumab Deruxtecan, Osimertinib, and Durvalumab	28%
Car seats classifiable under HSN 9401(To bring parity with seats of motorcycles)	5%
Affiliation services provided by State/Central educational boards, educational councils, and other similarly placed bodies to Government Schools prospectively. (Affiliation services provided by educational boards like CBSE are taxable)	Exempt
Transport of passengers through helicopter on a seat-sharing basis	Exempt
Supply of research and development services by a Government Entity; or a research association, university, college, or other institution	Exempt

1.2 Clarification on GST Rates

GST Council has recommended issuing the following clarification:

Roof Mounted Package Unit (RMPU) Air Conditioning Machines for Railways would be classified under HSN 8415 attracting a GST rate of 28%.
The approved flying training courses conducted by DGCA-approved Flying Training Organizations (FTOs) are exempt from the levy of GST.
Location charges or Preferential Location Charges (PLC) paid along with the consideration for the construction services before issuance of completion certificate form part of the composite supply. Accordingly, such chargers are eligible for the same tax treatment as the main supply that is, construction service.
Affiliation services provided by universities to their constituent colleges are not covered within the ambit of exemptions provided to educational institutions and GST at the rate of 18% is applicable.
Ancillary services, such as loading\ unloading, packing\ unpacking, transshipment, etc., provided by GTA in the course of transportation of goods by road will be treated as part of the composite supply. However, If such services are not provided in the course of transportation of goods and invoiced separately, then these services shall not be treated as a composite supply of transport of goods.

1.3 Other Changes

Supply of metal scrap by an unregistered person to a registered person shall be covered under RCM provided that the supplier shall take registration as and when it crosses the threshold limit. However, the unregistered recipient shall pay the tax under RCM even if the supplier is under the threshold.
TDS of 2% will be applicable on the supply of metal scrap by a registered person in B2B supply.
GST under RCM shall be charged on Renting of commercial property by an unregistered person to a registered person to prevent revenue leakage.

2. Issues requiring clarification

GST Council has recommended that CBIC issue clarification concerning the following matter:

2.1 Procedure of claiming benefit of amnesty scheme issued for DRC-01 issued under Section 73 of CGST Act

The GST Council has recommended to:

Insert Rule 164 in CGST Rules, 2017 in pursuance of Section 128A of CGST Act along with certain Forms, providing for the procedure and conditions for availing the benefit of waiver of interest or penalty or both, relating to tax demands issued in Form GST DRC-01 under section 73 of CGST Act for FY FYs 2017-18, 2018-19 and 2019-20.
Notify 31.03.2025 as the due date for payment of tax to avail of the benefit of Section 128A of the CGST Act.
Issue circular to clarify various issues related to availing of waiver of interest or penalty under section 128A of CGST Act.
Notify Section 146 of Finance (No. 2) Act, 2024, which provides for the insertion of section 128A in CGST Act, 2017, with effect from 01.11.2024.

2.2 Provide mechanism for newly inserted Section 16(5) and (6) of CGST Act, 2017:

Finance (No. 2) Act, 2024 provided for insertion of Section 16(5) and (6) of CGST Act, 2017 retrospectively with effect from 01.07.2017.
Section 16(5) extended the time limit to claim the ITC about FY 2017-18 to FY 2020-21 till 30th November 2021.
Section 16(6) extended the time limit to claim the ITC in case where GST registration of a person is canceled and revoked subsequently.
In this matter, the GST Council has recommended:
- To issue a special procedure for rectification of orders issued under sections 73, 74, 107, or 108 of the CGST Act confirming demand for wrong availment of ITC on account of contravention of provisions of Section 16(4) of CGST Act but where such ITC is now available under section 16(5) or (6) of CGST Act, where an appeal against such order is not filed
- To issue a circular to clarify the procedure and various issues related to the implementation of Section 16(5) and (6) of the CGST Act, 2017.

2.3 Amendments in rule 89 and rule 96 of CGST Rules, 2017 and to provide clarification in respect of IGST refunds where the benefit of concessional/ exemption notifications is availed:

As per Rule 96(10) of CGST Rules, an exporter is not entitled to claim refund of IGST paid on export of goods or services where the exported has availed IGST exemption for import under advance authorization or as an EOU.
However, there are various cases where import is made without payment of IGST and Compensation cess by availing the benefit of Advance authorization or as an EOU but such IGST and cess is subsequently paid along with interest and the Bill of Entry in respect of the import is got reassessed through the jurisdictional Customs authorities.
CBIC has clarified that in this case, the IGST paid on exports, refunded to the said exporter shall not be considered to be in contravention of Rule 96(10) of CGST Rules.
Further, considering the difficulty being faced by the exporters due to restrictions imposed under rules 96(10), rule 89(4A) & rule 89(4B) of CGST Rules, 2017, where the benefit of concessional/ exemption notifications is availed on the inputs, the Council has recommended to prospectively omit rule 96(10), rule 89(4A) & rule 89(4B) from CGST Rules, 2017.
This will simplify and expedite the procedure for refunds in respect of such exports.

2.4 Other issues

The GST Council recommended the issuance of circulars in the following matters to provide clarity and to remove doubts and ambiguities:

Clarification on the Place of Supply of advertising services provided by Indian advertising companies to foreign entities.
Clarification regarding the availability of ITC on demo vehicles by the dealers of the vehicle manufacturers.
Clarification on Place of Supply of data hosting services provided by service providers located in India to cloud computing service providers located outside India.

3. Other measures:

3.1 B2C E-invoicing:

The GST Council has recommended the rollout of a pilot for B2C e-invoicing, following the successful implementation of e-invoicing in the B2B sector.
Such e-invoicing shall have benefits such as improved business efficiency, environmentally friendly, cost efficiency to the business, etc.
It would also provide an opportunity for retail customers to verify the reporting of the invoice in the GST return.
The pilot will be rolled out voluntarily in selected Sectors and States.

3.2 Invoice Management System and new ledgers:

GST council has recommended the following enhancement to the GST portal:
- Introduction of a Reverse Charge Mechanism (RCM) ledger,
- ITC Reclaim ledger
- an Invoice Management System (IMS).

Taxpayers would be allowed to declare their opening balance for these ledgers by 31st October 2024.
IMS will allow the taxpayers to accept, reject, or keep the invoices pending to avail of the Input Tax Credit. This will be an optional facility for taxpayers to reduce errors in claiming input tax credits and improve reconciliation.
This is expected to reduce notices issued due to ITC mismatch in the returns.

Conclusion:

GST Council has addressed many of the issues referred to by the industry. This is indeed a major relief for the taxpayers facing problems with tax demand because of ineligible ITC, rejected refund claims, amnesty schemes,s, etc. However, there are yet many issues on which clarification is required.