Changes in GST Tax Rates

• Namkeen and Extruded/ Expanded Savoury Food Products: - The rate of extruded or expanded products, savoury or salted (other than un-fried or un-cooked snack pellets, by whatever name called, manufactured through process of extrusion which is taxable @ 5%) having HSN 19059030 has been reduced from 18% to 12%. The rate on similar edible preparations in ready for consumption form which are classified under HSN 210690 is also taxed @12% instead of 18%. Such a change will be applicable prospectively.

• Cancer Drugs: - The rate on products namely Trastuzumab Deruxtecan, Osimertinib and Durvalumab to be reduced from 12% to 5%.

• Metal Scrap: - Reverse charge mechanism is applicable on supply of metal scrap by unregistered person to registered person. The supplier, i.e., unregistered person is required to take registration as and when he crosses the threshold limit. The recipient will continue to pay the tax under RCM Scheme even when the supplier is below the threshold limit to get registered under the GST Regime.

In the case of B2B supply of metal scrap, a TDS @ 2% is applicable.

• Roof Mounted Package Unit (RMPU) Air Conditioning Machines for Railways: - It is classified under HSN 8415 having GST @28%.

• Car and Motorcycle Seats: - Car Seats having HSN 9401 will attract GST @28% instead of 18% prospectively. Motorcycle seats are already taxable @28%. This change has been recommended to impose uniform rate and to bring parity between the tax on car seats and motorcycle seats.

• Transportation of passengers by helicopters: - GST@ 5% is levied on transportation of passengers by helicopter on seat share basis. GST on past periods will be regularized on “as is where basis”. Charter of helicopter will attract 18% GST.

• Flying Training Courses: - Approved Flying Training course conducted by DGCA approved Flying Training Organization (FTO’s) are exempt from GST.

• Supply of Research and Development Service: - The GST Council recommended to exempt supply of research and development services by a Government Entity; or a research association, university, college or other institution, notified under clauses (ii) or (iii) of sub-section (1) of section 35 of the Income Tax Act, 1961 using Government or private grants. Past demands will be regularized on “as is where basis”.

• Preferential Location Charges (PLC): - To clarify that location charges or Preferential Location Charges (PLC) paid along with the consideration for the construction services of residential/commercial/industrial complex before issuance of completion certificate forms part of composite supply where supply of construction services is the main service and PLC is naturally bundled with it and are eligible for same tax treatment as the main supply that is, construction service.

• Affiliation Services: - Affiliation services provided by educational boards like CBSE are taxable. However, to exempt affiliation services provided by State/Central educational boards, educational councils and other similarly placed bodies to Government Schools prospectively.

Issues arising from past period (01.07.2017 to 17.06.2021) will be regularized on “as is where basis.”

GST @18% is applicable to these affiliation services provided by universities to their constituent colleges.

• Import of Service by branch office: - Import of services by an establishment of a foreign airlines company from a related person or any of its establishment outside India, when made without consideration. The past period will be regularized on “as is where basis”.

• Renting of Commercial Property: - Renting of commercial property by unregistered person to a registered person will be taxable under RCM.

• Ancillary/ Intermediate services are provided by GTA: - Ancillary/ Intermediate services like loading/unloading, packing/unpacking, transshipment, temporary warehousing, etc., as provided by GTA along with transportation of goods by road, when the GTA is issuing the Consignment Note, then it will constitute as composite supply.

If such services are not provided in the course of transportation of goods and invoices separately, then these services will not be treated as a composite supply of transportation of goods.

• Regularize the GST liability for the past period i.e., 01.07.2017 to 01.10.2021 on “as is where basis”, where the film distributors or sub-distributors acts on a principal basis to acquire and distribute films.

• Supply of Services like application fees for providing electricity connection, rental charges against electricity meter, testing fees for meters/ transformers/capacitors, labour charges from customers for shifting of meters/service lines, charges for duplicate bills etc. which are incidental, ancillary or integral to the supply of transmission and distribution of electricity by transmission and distribution utilities to their consumers, when provided as a composite supply is exempt from GST. GST for the past period to be regularised on ‘as is where is’ basis.

Measures for Facilitation of Trade

• Procedure and conditions for waiver of interest or penalty or both, in respect of tax demands under section 73 of CGST Act, 2017 for FYs 2017-18, 2018-19 and 2019-20 as per section 128A of CGST Act, 2017: -

1. Insertion of Rule 164 along with certain Forms providing procedure and condition for availing the benefit of waiver of interest and penalty.
2. Benefit will be available if the tax is payable on or before 31.03.2025.

• Circular is to be issued for providing the clarification on this issue.

1. Section 146 of Finance (No. 2) Act, 2024 provides insertion of Section 128A in CGST Act, 2017 which may be notified w.e.f. 01.11.2024.

• Providing a mechanism for implementation of newly inserted sub-section (5) and sub-section (6) in section 16 of CGST Act, 2017: -

1. Council recommended that Section 118 and 150 of the Finance (No. 2) Act, 2024 which provided for insertion of sub-section (5) and (6) in Section 16 of CGST Act, 2017 retrospectively from 01.07.2017, may be notified at earliest.
2. A special procedure for rectifying past orders will be provided, allowing those who have not appealed to regularize their claims.

• Amendments in rule 89 and rule 96 of CGST Rules, 2017 and to provide clarification in respect of IGST refunds on exports where benefit of concessional/ exemption notifications specified under rule 96(10) of CGST Rules, 2017 has been availed on the inputs: -

1. The council recommended clarifications for exporters who imported inputs under exemption but later paid IGST and Compensation cess.
2. Recommendation to prospectively omit Rule 96(10), 89(4A) and 89(4B) from CGST Rules, 2017 which simplify and expedite the procedure for refunds in respect of such exports.

• Issuance of clarifications through the circulars to remove ambiguity and legal disputes in certain issues: -

1. Circulars to be issued for providing clarification on the following matters

• Place of supply of advertising services provided by Indian Companies to Foreign entities.
• Availability of ITC on demo vehicles by the dealers of the vehicle manufacturer.
• Place of supply for data hosting services provided by service providers located in India to cloud computing service providers located outside India.

• B2C Invoicing: - Recommendation is issued for implementation of B2C e-invoicing. This implementation will be rolled out on a voluntary basis in selected sectors and states.

• Invoice Management System (IMS) and new ledgers: - Introduction of IMS and new ledgers like RCM Ledger, Input Tax Credit Reclaim Ledger. Taxpayers are required to declare their opening balance in these ledgers by 31^st October 2024.

IMS will allow the taxpayers to accept, reject or to keep the invoices pending for the purpose of availment of ITC. It is an optional facility provided to taxpayers to reduce errors in claiming ITC and improve reconciliation.