Key Updates from the 54th GST Council Meeting: A Step Towards Simplification.
The 54th GST Council meeting brought several key changes aimed at easing the compliance burden and providing tax relief. Among the notable recommendations:
- Reduced GST on Cancer Drugs: Life-saving drugs like Trastuzumab Deruxtecan, Osimertinib, and Durvalumab now attract 5% GST, down from 12%.
- B2C e-Invoicing Pilot: A voluntary pilot program for e-invoicing in B2C transactions will be introduced to improve efficiency.
- Exemptions on R&D Services: Supplies related to research funded by government or private grants will now be exempt from GST.
Additionally, the Council has taken steps to streamline processes such as the Reverse Charge Mechanism (RCM) for metal scrap and clarified GST applicability on several goods and services. G
GST Rate Changes on Goods and Services
- Namkeens & Savory Food Products: The Council reduced the GST rate on extruded or expanded food products, bringing them to 12% from the previous 18%. This move ensures parity with other similar food items like namkeens and mixtures.
- Metal Scrap: For better regulation, the supply of metal scrap by unregistered persons to registered buyers will be subject to the Reverse Charge Mechanism (RCM). A Tax Deducted at Source (TDS) rate of 2% is also set for registered suppliers in B2B transactions.
- Life & Health Insurance: The Council has recommended the formation of a Group of Ministers (GoM) to review GST implications on life and health insurance premiums. This is expected to provide a holistic review and bring necessary reforms.
Compliance Relief and Streamlined Processes
The meeting also focused on easing the compliance burden for businesses:
- Research Services Exemptions: Research and development services provided by government entities, universities, and other notified institutions will be exempt from GST when funded by government or private grants.
- Commercial Property Renting: Renting commercial properties from unregistered individuals to registered businesses will now come under RCM, ensuring better revenue tracking and reducing tax evasion.
- E-Invoicing Rollout: A pilot for B2C e-invoicing will be initiated, which promises enhanced transparency and reconciliation of retail transactions, leading to reduced errors in GST returns.
New Reforms to Boost Trade Facilitation
In an effort to further simplify GST, several changes were recommended for trade facilitation:
- Invoice Management System (IMS): This new system will allow taxpayers to manage and reconcile invoices, reducing errors in claiming Input Tax Credit (ITC). It provides the option to accept, reject, or pend invoices, helping with smoother ITC claims.
- Amendments in CGST Rules: The Council has also introduced amendments to several CGST rules, such as clarifications on input tax credit for dealers of demo vehicles and refunds on IGST paid exports. These changes aim to remove ambiguities and provide clear guidance to taxpayers.
A Future-Focused Approach
The 54th GST Council meeting reflects a future-focused approach by addressing critical sectors like healthcare and simplifying compliance for businesses. By recommending e-invoicing in the B2C segment and offering relief in areas such as R&D services and commercial property renting, the Council has shown its commitment to improving the ease of doing business and ensuring transparency in tax compliance.
As these recommendations roll out, businesses and consumers alike can expect more streamlined processes, enhanced transparency, and significant cost savings.
