Comprehensive Analysis of 54th GST Council meeting Recommendations

Summary: The 54th GST Council meeting, chaired by the Union Finance Minister, took place in New Delhi on September 9, 2024. Key decisions included maintaining the GST rates on online gaming, with a 412% revenue increase reported. A new GoM will assess potential rate reductions on medical health insurance, with a final decision expected in November. GST on cancer drugs was reduced from 12% to 5%, and taxes on certain snacks were lowered from 18% to 12%. Foreign airlines were granted GST exemptions for service imports, and government universities and research centers received GST exemptions for research funding. A new GoM will address the compensation cess post-March 2026. The council also discussed resolving the IGST balance issue and rate rationalization, with further discussions scheduled for September 23. Additional clarifications included GST ITC for demo vehicles, reverse charge on metal scrap and renting services, and voluntary B2C e-invoicing. Provisions for waiving interest or penalties for FY 2017-20 under Section 128(A) were introduced, with new rules for rectifying input tax credit claims under Section 16(5) and 16(6). The next meeting is scheduled for November 2024.
The 54th meeting of the Goods and Services Tax (GST) Council, chaired by union Finance Minister concluded at New Delhi on 09-09-2024. The Key takeaways are
1. Status of GST on Online Gaming and Casinos
GST on online gaming, there has been a 412 per cent jump in revenue, as per a status report submitted to the fitment committee. No changes recommended in this GSTC.
2. On medical insurance premium
The council has decided to form new GoM on GST rate reduction on medical health insurance.  It will be headed by the Deputy Chief Minister of Bihar but with newer members added for this limited purpose which will submit its report by October 2024 end. The GST council which will meet in November 2024 will finalize based on this report.
3. GST on cancer drugs slashed
There will be a rate reduction in GST on cancer drugs from 12% to 5% which is aimed at further reducing the overall cost of cancer treatment.
4. Namkeen snacks to get cheaper
The GST council has recommended to slash tax on selected snacks from 18% to 12%.
5. Relief for foreign airlines
The Goods and Services Tax (GST) Council has decided to recommend exemption for import of services by foreign airline companies.
6. Govt established Universities exempted
Universities and research centers established by central or state government laws, or those granted income tax exemptions, will now be exempt from paying Goods and Services Tax (GST) on research funding. It was clarified that these institutions can receive research funds from both public and private sources without being liable for GST.
7. GoM on Compensation cess
During the GST Council meeting, it was revealed that the total cess collection projected until March 2026 stands at Rs 8.66 lakh crore.  After settling the loan payments, a projected surplus of around Rs 40,000 crore is expected. It was confirmed that the position on compensation cess was thoroughly discussed in the meeting. The Honorable FM said that a GoM will be formed to decide on purpose of the cess, way forward after March 2026, if the cess has to be collected after the said period as it cannot be called Compensation cess.
8. On IGST Balance:-
The GST Council discussed key issues related to the Integrated Goods and Services Tax (IGST) balance. The GST panel decided to set up a committee headed by the Additional Secretary of Revenue, who will address the negative IGST balance, focusing on retrieving excess IGST disbursed to states.
9. On rate rationalization:
The Group of Ministers (GoM) presented their status report on rate rationalization during today’s GST Council Meeting. The Honorable FM stated that the GoM will convene on September 23 to discuss the same.
10. Other decisions:-

GST Council clarifies availability of GST ITC for Demo Vehicles, Renting of Commercial Property from Registered to Unregistered Person Covered under RCM for GST Purposes.
B2C e-Invoicing to Start on Voluntary Basis will be made available soon on a pilot project basis.
GST levy on EV Charging Station & GST Rates to be Re-Examined by Fitment Committee
IMS-Implementation of Invoice Management System w.e.f. 01st October 2024.
Ancillary services provided by GTA who issue Consignment note shall be considered as composite service. Rate of GTA shall apply on such ancillary services.

Another very important change proposed on RCM  is to amend Notification 7/2019- CTR issued under Section 9(4) of CGST Act 2017 to tax metal scrap received from unregistered suppliers on reverse charge basis.  Likewise the said Notification will be amended to make recipients of commercial renting services pay tax on reverse charge basis on the services supplied by unregistered persons. It may be noted that presently Notification 7/2019- CTR requires the builders in real estate sector to pay GST on reverse charge basis on the goods and services that are received from unregistered suppliers and fall short of 80% in the mandated ratio of 80:20 as stipulated in Notification 3/2019- CTR. Further, Section 9(4) RCM in case of unregistered suppliers is different from Section 9(3) RCM which is applicable to notified goods and services notified through Notification 4/2017- CTR and Notification 13/2017- CTR respectively.
Well the most awaited decisions on Section 128(A) / Section 16(5) & 16(6) are………
(A) 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:
The GST Council recommended insertion of rule 164 in CGST Rules, 2017, along with certain Forms, providing for the procedure and conditions for availment of benefit of waiver of interest or penalty or both, relating to tax demands under section 73 of CGST Act, pertaining to FYs 2017-18, 2018-19 and 2019-20, as per section 128A of CGST Act.
The Council also recommended to notify under subsection (1) of section 128A of CGST Act, 31.03.2025 as the date on or before which the payment of tax may be made by the registered persons, to avail the said benefit as per section 128A of the CGST Act.
The Council also recommended the issuance of a circular to clarify various issues related to availment of waiver of interest or penalty or both as per section 128A of CGST Act. The Council also recommended that section 146 of Finance (No. 2) Act, 2024, which provides for insertion of section 128A in CGST Act, 2017, may be notified with effect from 01.11.2024.
(B) Providing a mechanism for implementation of newly inserted sub-section (5) and sub-section (6) in section 16 of CGST Act, 2017:
The GST Council recommended that section 118 and 150 of the Finance (No. 2) Act, 2024, which provides for insertion of sub-section (5) and sub-section (6) in section 16 of CGST Act, 2017 retrospectively with effect from 01.07.2017, may be notified at the earliest.
The Council also recommended that a special procedure for rectification of orders may be notified under section 148 of the CGST Act, to be followed by the class of taxable persons, against whom any order under section 73 or section 74 or section 107 or section 108 of the CGST Act has been issued confirming demand for wrong availment of input tax credit on account of contravention of provisions of sub-section (4) of section 16 of the CGST Act, but where such input tax credit is now available as per the provisions of sub-section (5) or sub-section (6) of section 16 of the CGST Act, and where appeal against the said order has not been filed.
The Council also recommended issuance of a circular to clarify the procedure and various issues related to implementation of the said provisions of subsection (5) and sub-section (6) of section 16 of CGST Act, 2017.
This will save a lot of work both for Departmental Officers as well as the Tax payers.
The Next meeting is likely to be in November 2024.