The 54th GST Council meeting, held recently, brought several significant changes aimed at simplifying the Goods and Services Tax (GST) regime, making it more industry-friendly, and addressing specific sectoral needs. With continuous efforts to refine the GST system, the council’s decisions span various industries, from healthcare to transportation and metal scrap trading. Here’s a detailed look at some of the key changes introduced.
The Goods and Services Tax (GST), introduced in 2017, marked a monumental shift in India’s tax structure by consolidating multiple indirect taxes into one unified tax. The GST Council, the governing body responsible for reviewing and recommending changes to GST, meets regularly to address concerns and improve the system. The 54th meeting continued this tradition, focusing on sectors requiring immediate intervention, such as healthcare, transportation, and small businesses.
Key Highlights of the 54th GST Council Meeting
1. Reduction in GST Rates for Life-Saving Cancer Drugs:
One of the most noteworthy outcomes of the meeting was the reduction in GST rates on certain life-saving cancer medications. Drugs like Trastuzumab Deruxtecan, Osimertinib, and Durvalumab, previously taxed at 12%, now fall under the 5% GST bracket. This decision follows the exemption on import duties for these medicines introduced in the Union Budget 2024. The aim is to make these critical drugs more affordable for cancer patients, thereby reducing the financial burden on those already facing high treatment costs(IRIS GST)(Mondaq).
2. Tax Adjustments for Food Products:
The council also approved changes in the tax rates for food products. For extruded or expanded savory snacks (except unfried or uncooked), the GST rate has been slashed from 18% to 12%. This move aligns with the rates applied to similar ready-to-eat food items, thus removing discrepancies in tax rates within the same food category. Unfried or uncooked snack pellets remain under the 5% GST rate(Mondaq).
3. Reverse Charge Mechanism (RCM) for Metal Scrap
To tighten compliance and reduce tax evasion, the GST Council has mandated the Reverse Charge Mechanism (RCM) for the purchase of metal scrap from unregistered suppliers. Under RCM, the responsibility of paying GST shifts from the supplier to the buyer. Additionally, a 2% Tax Deducted at Source (TDS) will now apply to business-to-business (B2B) transactions involving metal scrap. This change is expected to organize the metal scrap industry and ensure that larger players contribute their fair share of taxes(Mondaq).
4. GST on Helicopter Passenger Transport Services
In a move aimed at boosting tourism, particularly pilgrimage-based tourism, the GST rate for helicopter passenger transport services on a seat-sharing basis has been set at 5%. This amendment brings clarity to the tax treatment of such services, which previously faced inconsistent rates depending on whether they catered to government-sponsored pilgrimages or local pilgrimage sites. The new uniform rate is expected to level the playing field for all service providers and promote tourism growth(IRIS GST)(Mondaq).
5. Exemption for Research and Development Services
The council also decided to exempt research and development services funded by government or private grants from GST. Institutions registered under Section 35 (1) (ii) or (iii) of the Income Tax Act, 1961, will now be able to provide these services without the burden of GST, which will promote further innovation and development in various fields of research(Mondaq).
Industry-Specific Clarifications
In addition to these broader changes, the council issued clarifications on specific goods and services to ensure consistency in their GST application:
*Roof Mounted Package Unit (RMPU) Air Conditioning Machines for railways are now classified under HSN 8415 and will attract a 28% GST rate
*Car Seats, which currently fall under HSN 9401 and attract 18% GST, will see their rate increased to 28%, bringing them in line with the tax rate on motorcycle seats(IRIS GST)(Mondaq).
The 54th GST Council meeting brought several changes aimed at creating a more streamlined and fair GST regime. By addressing key sectors like healthcare, transportation, and metal scrap trading, these adjustments are likely to ease compliance burdens while ensuring greater tax consistency. As the GST system evolves, the council’s proactive steps towards resolving issues in specific industries reflect its commitment to refining and improving the tax structure.The changes introduced in this meeting are expected to provide significant relief to taxpayers in certain sectors while ensuring that the GST regime remains robust and equitable. With further discussions underway, including a potential reduction in GST rates for life and health insurance services, businesses and consumers alike can expect more industry-friendly decisions in the future – JSPCO
