The 54th GST Council meeting, chaired by Union Finance Minister Smt. Nirmala Sitharaman, brought about several pivotal recommendations aimed at fine-tuning India’s GST regime. Attended by key officials and ministers from various states, the meeting resulted in decisions on tax rates, trade facilitation, and procedural improvements, benefiting both businesses and consumers. Here are some of the key outcomes:
1. Reduction in GST Rates for Critical Cancer Drugs
In a significant relief for patients, the GST rates on three essential cancer drugs—Trastuzumab Deruxtecan, Osimertinib, and Durvalumab—have been slashed from 12% to 5%. This reduction ensures more affordable treatment options for those battling cancer, reflecting the government’s commitment to easing the burden on healthcare costs.
2. Lowering GST on Savory Snacks
The Council also recommended reducing the GST rate on extruded or expanded savory food products from 18% to 12%, aligning them with namkeens and other similar edible preparations. This move will provide a much-needed reduction in costs for both manufacturers and consumers in the snack food industry.
3. Research and Development Services Exemptions
Another key decision is the exemption of GST on research and development services provided by government entities, research associations, and educational institutions, supported by government or private grants. This exemption encourages innovation by reducing costs for research institutions.
4. Pilot Rollout for B2C E-Invoicing
The Council is moving towards enhancing transparency and business efficiency by recommending a pilot for Business-to-Consumer (B2C) e-invoicing. Following the success of e-invoicing in the B2B sector, this new initiative aims to improve invoice reporting, reduce errors, and allow retail customers to verify their invoices in GST returns.
5. Formation of Group of Ministers for Insurance-Related GST
A Group of Ministers (GoM) has been constituted to review GST policies related to life and health insurance, with recommendations due by the end of October 2024. This study aims to ensure a comprehensive overhaul of GST rates and policies in the insurance sector.
6. Clarification on Metal Scrap Transactions
To prevent tax evasion, the Council introduced a Reverse Charge Mechanism (RCM) on the supply of metal scrap by unregistered persons to registered buyers. This ensures that the buyer pays the GST, thus streamlining tax collection in the sector.
7. Other Key Clarifications
- Car and Motorcycle Seats: The Council has clarified that car seats will now attract a higher GST rate of 28%, aligning them with motorcycle seats.
- Preferential Location Charges (PLC): The Council clarified that PLC paid along with construction services forms part of a composite supply and will be taxed accordingly.
- Affiliation Services: While GST applies to services provided by universities to constituent colleges, affiliation services provided to government schools by educational boards will be exempted.
8. Future of Compensation Cess
The Council has recommended forming a GoM to study the future of the GST compensation cess, which is crucial for bridging the revenue gap for states.
Conclusion
The decisions made during the 54th GST Council meeting mark significant steps toward a streamlined tax system, benefiting multiple sectors. With a focus on healthcare, innovation, and trade facilitation, the Council’s recommendations reflect a commitment to easing business operations while ensuring consumer welfare.