55th GST Council Meeting Highlights: News and Updates
- Nimisha Panda
- Nov 12
- 7 min read
On December 21, 2024, the 55th GST Council meeting took place in Jaisalmer, Rajasthan. The Union Minister of State for Finance, Shri Pankaj Chaudhary, the Chief Ministers of Haryana, Jammu and Kashmir, Meghalaya, and Odisha, the Deputy Chief Ministers of Arunachal Pradesh, Bihar, Madhya Pradesh, and Telangana, as well as the Finance Ministers of States and UTs (with legislature) and senior officers of the Ministry of Finance & States/UTs, were among the attendees. Certain goods and services became more affordable while others became expensive as a result of the GST amendments that were announced during the conference.
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55th GST Council Meeting Highlights
The Group of Ministers (GoM) on health insurance, rate rationalisation, and compensation cess was given an extension to deliver its report.
FM declares that penalties imposed on borrowers for violating loan terms by banks and non-banking financial corporations (NBFCs) are not subject to GST.
Payment aggregators that handle payments under Rs. 2,000 are free from GST. It should be emphasised that the aforementioned exception only applies to payment aggregators and does not extend to payment gateways and other fintech services that do not require payment settlement.
The GST Council addressed the question of taxing used electric cars (EVs) sold from one person to another and confirmed that no GST would be charged. Currently, new EVs are subject to a 5% levy. However, as with any other used car, the GST at 18% will be applied to the margin value (purchase price less sale price) if the company sells a used EV after refurbishments.
Raisins and dried black pepper provided by farmers won't be subject to GST.
It was made clear during the council meeting that caramelised popcorn is handled similarly to items with added sugar. Therefore, it would not be subject to the same GST as salted popcorn, which is a namkeen and is subject to 5% GST.
The Council has suggested lowering the Compensation Cess rate to 0.1% on goods supplied to merchant exporters, matching the GST rate on such goods.
Subject to certain requirements, all equipment and consumable sample imports made by the International Atomic Energy Agency's (IAEA) Inspection Team shall be free of IGST.
The GST Council has advanced its discussion of the GST rates that apply to food and the delivery fees for using any meal delivery app or quick commerce to transport that food.
The council exempted gene therapy from GST in recognition of its vital significance in treating life-threatening illnesses.
The council lowered the GST rate on fortified rice kernels from 18% to 5% in recognition of the significance of fortified rice in addressing nutritional deficits.
Goods and Services with Revised GST Rates as Per 55th GST Council Meeting
The following table represents the goods and services that have become more expensive or cheaper due to the implementation of the new GST rates as per the 55th GST Council meeting.
Goods/Services | HSN/SAC Code | Current Rate | Recommended Rate | Costlier/Cheaper/Clarified |
Fortified rice kernels | 1904 | 18% | 5% | Cheaper |
Gene therapy to treat life-threatening diseases | – | Taxable | Exempted | Cheaper |
Food items going into preparation for free distribution to weaker sections under a government program subject to the existing conditions.
| 19 or 21 | Taxed higher since not clarified | 5% | Cheaper |
ACC blocks (concrete) containing more than 50% fly ash content | 6815 | 5% | 12% | Costlier |
Fresh or dried black pepper/dried raisins when supplied by agriculturist | 0904 | 5% | No GST | Cheaper |
Approved skill training partners of NSDC | 9992 | 18% | Exempted | Cheaper |
Sale of used Electric Vehicles (EV) by and to individuals | – | Taxed higher since not clarified | 5% | Clarified |
Sale of used EV by businesses after refurbishment | – | 12% | 18% on their profit | Clarified |
Sub-systems of Long Range Surface to Air Missile (LRSAM) and similar software | 9023 | Taxable | Exempted | Cheaper |
Bank/NBFC penal charges for loan defaults | – | Taxed since not clarified | Exempted | Clarified |
Waivers and Clarifications by the 55th GST Council Meeting
1. Changes have been made to the CGST Act of 2017 and the CGST Rules of 2017 regarding the Invoice Management System's (IMS) functionality. The following are suggested by the GST Council:
To create a legal framework for the creation of FORM GSTR-2B based on the taxpayers' actions on the Invoice Management System (IMS) by amending section 38 of the CGST Act, 2017 and rule 60 of the CGST Rules, 2017.
To amend section 34(2) of the CGST Act, 2017 to expressly require the recipient to reverse any input tax credit attributable to a credit note in order to lower the supplier's output tax obligation.
To add a new rule 67B to the CGST Rules, 2017, which would specify how the supplier's output tax obligation would be calculated in relation to the credit note he supplied.
To change rule 61 of the CGST Rules, 2017, and section 39 (1) of the CGST Act, 2017, so that FORM GSTR-3B of a tax period can only be filed after FORM GSTR-2B of that tax period is made available on the site.
2. Late fees will now be applicable to GSTR-9 and GSTR-9C filing delays. The council will publish a circular outlining the late fee that applies under section 47(2) of the CGST Act, 2017 for failing to file the GSTR-9 annual return and GSTR-9C reconciliation statement on time.
3. The GST Council has suggested issuing a notification under section 128 of the CGST Act, 2017, to eliminate the late fee for completing Form GSTR-9C after the deadline. Reconciliation statements for the years 2017–18 through 2022–2023 will be eligible for the aforementioned benefit. If the FORM GSTR-9C is filed on or before March 31, 2025, the late fee that exceeds the amount of the late fee payable until the date of filing of FORM GSTR-9 for the aforementioned financial years will be forgiven.
4. The Council has suggested amending section 107(6) of the CGST Act, 2017, and adding a new proviso to section 112(8) of the CGST Act, 2017 that calls for the payment of a 10% pre-deposit for filing appeals before the Appellate Tribunal in cases where there are only a penalty demand and no tax demand.
55th GST Council Expected Recommendations
Changes in GST Rates
For more than 148 products, such as tobacco, cigarettes, and aerated drinks, GoM may suggest a 35% special pricing (including cess). In addition to reducing tobacco use, this action would increase government revenue. As we have already seen, industry giants like online gambling and casinos are requesting to lower the rate from 28% on occasion, it will agitate the sector. Additionally, it is anticipated that the GoM will suggest altering the GST rates on bicycles, high-end clothing, watches, shoes, handbags, bottled water, and cosmetics.
GST Registration According to Risk Profile
The government is doing everything it can to stop dishonest taxpayers from abusing the GST's provisions. To confirm the applicant's legitimacy, biometric-based Aadhaar authentication and document verification were necessary. Candidates who were deemed low-risk based on data analysis were permitted to authenticate utilising OTP-based Aadhaar Authentication instead of physically visiting a GST Suvidha Kendra (GSK). The categories of registration and transferring the ITC benefits according to the taxpayer's risk profile will likely be discussed at the next council meeting.
Insurance Levy Exemption
A major topic of contention for a long time has been the exemption or decrease of GST rates on health and life insurance plans. The Hon'ble Finance Minister requested that the newly established Group of Ministers (GoM) provide the report by the end of October 2024 during the most recent council meeting. It is generally anticipated that the GST rate for health insurance will be reduced.
Inclusion of Petro, Diesel, and ATF
According to Section 9 of the CGST Act, natural gas and other petroleum products are currently exempt from GST. In order to claim the Input Tax Credit, which they are now unable to do because they are not paying any GST, petroleum businesses are requesting that they be placed into the purview of GST. The potential inclusion of aircraft turbine fuel (ATF) under the GST statute may be discussed at the 55th GST Council meeting.
Inverted Duty Structure Reforms
Reforming the inverted duty structure, in which the tax rate on inputs is higher than the tax rate on finished goods, is one of the main goals. This results in a build-up of unused input tax credits (ITC) and problems with the firm's cash flow. In order to streamline the refund process and enhance cash flows, the Council is likely to rationalise GST rates such that raw materials have lower GST levies than completed goods.
Compensation on Cess
Compensation Cess, an additional tax imposed on particular goods and services, was introduced as a result of the implementation of GST. The government announced in June 2023 that the compensating cess on luxury and demerit items would be extended until March 2026, notwithstanding the initial decision to implement the cess for five years beginning on July 1, 2017. The formation of a Group of Ministers (GoM) to examine the data and determine how to proceed with the cess was settled upon at the most recent meeting. The applicability of the 22% cess on utility vehicles, particularly those with engines exceeding 1,500 cc and certain dimensions, may be discussed at the next GST Council meeting, even though the GoM may request a three-month extension to complete its recommendations on the cess roadmap.
Conclusion
Changes to GSTR forms and appeal procedures are intended to increase the overall effectiveness of the GST system, even if they may not immediately impact everyday purchases. In the long run, this can result in a steadier and more predictable price situation. By eliminating instances of tax evasion and ensuring that businesses are functioning in accordance with the GST legislation, the council's attention on clarifying various aspects of GST and guaranteeing compliance may indirectly benefit consumers.
FAQs
Q1. What other key decisions were made in the 55th GST Council meeting?
Payment aggregators are excluded from GST on transactions under Rs. 2,000.
Raisins and dried black pepper supplied by farmers are not subject to GST.
Refurbished EVs sold by businesses are subject to 18% GST.
Caramelised popcorns are now taxed similarly to items with additional sugar.
Q2. What services were affected by the recommendations?
Sponsorship Services: Provided through the Forward Charge System.
Third-Party Motor Vehicle Premiums: General insurance firms' contributions to the Motor Vehicle Accident Fund are not subject to GST.
Penalties Assessed by Banks and NBFCs: Penalties for violating loan terms are exempt from GST.
Q3. Were there any legislative changes discussed in the 55th GST Council meeting?
In order to provide clarification about the taxability and availability of the Input Tax Credit (ITC) in specific industries, the Council did indeed discuss legislative revisions. One important issue was the Supreme Court's ruling on ITC for the building of real estate.
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