55th GST Council Meeting Highlights: Key Tax Changes and Trade Facilitation Measures Explained

The 55th GST Council Meeting held on December 21, 2024, brought forth significant updates impacting goods, services, compliance, and trade facilitation. Here’s a comprehensive overview of the key decisions made during the meeting.

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A. Changes in GST Tax Rates

Goods

1. Fortified Rice Kernel (FRK): GST rate reduced to 5%.
2. Gene Therapy: Exempted from GST.
3. LRSAM System: IGST exemption extended to parts, sub-systems, and tools under Notification 19/2019-Customs.
4. Merchant Exporters: Compensation Cess reduced to 0.1%.
5. IAEA Imports: IGST exemption on equipment and consumables for inspection teams.
6. Food Preparations for Free Distribution: Concessional 5% GST rate extended under specific government programs.

Services

1. Sponsorship Services: Taxed under Forward Charge Mechanism.
2. Motor Vehicle Premiums: GST exempt for third-party accident funds.
3. Declared Tariff Omission: Accommodation taxation now based on actual supply value exceeding ₹7,500 per day.
4. Composition Taxpayers: Exempt from GST under RCM when renting commercial property from unregistered persons.

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B. Other Changes for Goods & Services

1. Used Vehicles: GST at 18% on margin amounts, irrespective of fuel type.
2. ACC Blocks with >50% Fly Ash: Reclassified under HS 6815, attracting 12% GST.
3. Agricultural Produce: Fresh/dried pepper and raisins from agriculturists exempt from GST.
4. Pre-Packaged Goods: Defined as retail items up to 25kg or 25 liters requiring mandatory labeling.
5. Popcorn Tax Clarification:
   • Salted & Spiced: 5%
   • Pre-Packaged & Labeled: 12%
   • Caramel: 18%

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C. Trade Facilitation Measures

1. SEZ/FTWZ Warehoused Goods: Direct supplies not considered taxable supplies.
2. Vouchers:
   • Principal-to-principal transactions not taxable.
   • Principal-to-agent commissions are taxable.
   • Unredeemed vouchers (breakage) exempt from GST.
3. Annual Returns: Waiver on late fees for GSTR-9C filings for FY 2017-18 to 2022-23 if filed by 31st March 2025.
4. Supplier Delivered Goods: ITC allowed on installations at supplier premises.

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D. Compliance Streamlining

1. Unique Identification for Goods: Mandatory for specified commodities.
2. OIDAR Services: Must record the recipient’s state for GST purposes.

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E. Law & Procedural Amendments

1. Retrospective Changes: Section 17(5)(d) updated to clarify “plant and machinery” definition from 01.07.2017.
2. Pre-Deposit for Appeals: Reduced to 10% for penalty-only cases.
3. Temporary Taxpayer Identification: Allowed for those not required to register.
4. GSTR-2B Generation: Enhanced accuracy with Invoice Management System (IMS).
5. Credit Note ITC Reversal: New validation mechanism introduced for suppliers and recipients.

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F. Other Measures

1. IGST Settlement: Measures proposed to resolve state concerns by March 2025.
2. Natural Disaster Levy: Group of Ministers to examine levy policies.
3. GST Tribunal (GSTAT): Operationalization framework under review.

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Conclusion

The 55th GST Council Meeting emphasized tax rate rationalizations, trade facilitation, and compliance simplifications. These updates aim to support businesses, streamline operations, and encourage economic growth. Stay updated to maximize the benefits from these GST changes.