GST Council 55th Meeting: Tax and Compliance Updates 2024

The 55th meeting of the GST Council, held in Jaisalmer, Rajasthan, under the chairpersonship of Union Finance Minister Nirmala Sitharaman, brought significant decisions impacting tax rates, trade facilitation, and compliance measures. These recommendations aim to streamline GST practices and provide relief across multiple sectors.

Changes in GST Rates

1. Reduction and Exemptions:
   • GST on Fortified Rice Kernel (FRK) reduced to 5%.
   • Full exemption for gene therapy and motor vehicle accident fund contributions by general insurance companies.
2. Clarifications and Adjustments:
   • No GST on vouchers, as they are not considered goods or services. Simplified rules for vouchers introduced.
   • Penal charges by banks and NBFCs for non-compliance with loan terms are clarified as non-taxable under GST.
3. Other Goods and Services:
   • Exemption for imports of inspection equipment by the International Atomic Energy Agency (IAEA).
   • A concessional 5% GST rate extended for food inputs supplied for government programs aiding economically weaker sections.

Measures to Facilitate Trade

1. Simplification of Vouchers Taxation:
   • Vouchers distributed on a principal-to-principal basis are exempt from GST.
   • GST applies only to additional services related to vouchers, such as marketing or customization.
2. Amendments in Schedule III of the CGST Act:
   • Goods warehoused in SEZs or FTWZs supplied to individuals before clearance are treated neither as goods nor services.
3. Input Tax Credit (ITC) Clarifications:
   • No reversal of ITC for e-commerce operators under Section 9(5).
   • ITC claims are valid for ex-works contracts if goods are delivered to a transporter or recipient.

Compliance Streamlining

1. Track and Trace Mechanism:
   • Introduction of unique identification marking for high-risk commodities.
2. Appeal Pre-Deposits for Penalty Cases:
   • Reduced pre-deposit to 10% for penalty-related appeals under Sections 107 and 112.
3. Simplified GSTR Filing:
   • FORM GSTR-3B filing only allowed after availability of FORM GSTR-2B to ensure accuracy.

Additional Decisions

• A dedicated licensing policy for short-term rentals to regulate and support emerging businesses.
• Waiver of late fees for delayed annual return filings (2017–2023) if submitted by 31 March 2025.
• Measures to improve IGST settlements and extend the GST compensation restructuring timeline to 30 June 2025.

Conclusion

The 55th GST Council meeting reflects a balanced approach to industry needs and compliance challenges. These measures emphasize inclusivity, simplification, and enhanced governance under the GST framework, benefitting stakeholders across sectors.