Highlights of 53rd GST Council Meeting-Part 1

On June 22, 2024, the 53rd GST Council meeting was held in Delhi, with Union Minister for Finance and Corporate Affairs, Smt. Nirmala Sitharaman, presiding. The council proposed various adjustments to GST rates, introduced trade facilitation measures, and sought to streamline GST compliance.

In this blog, we will understand the key recommendations of the GST Council about changes in GST rates.

Changes in GST Rates of goods

1. A uniform rate of 5% IGST will apply to imports of ‘Parts, components, testing equipment, tools and tool-kits of aircraft, irrespective of their HS classification to provide a fillip to MRO activities subject to specified conditions.
2. All milk cans (of steel, iron, and aluminum) irrespective of their use will attract 12% GST. This may slightly raise costs for dairy farmers and processors, but it simplifies taxes and reduces disputes.
3. GST rate on ‘cartons, boxes, and cases of both corrugated and non-corrugated paper or paperboard’ (HS 4819 10; 4819 20) to be reduced from 18% to 12%.
4. All solar cookers whether single or dual energy source, will attract 12% GST. This promotes renewable energy use.
5. To amend existing entries covering Poultry keeping Machinery attracting 12% GST to specifically incorporate “parts of Poultry keeping Machinery” and to regularise past practice on an ‘as is where is’ basis given genuine interpretational issues.
6. To clarify that all types of sprinklers including fire water sprinklers will attract 12% GST and to regularise the past practice on an ‘as is where is’ basis in view of genuine interpretational issues. This will bring clarity to interpretation.
7. To extend IGST exemption on imports of specified items for defense forces for a further period of five years till 30th June 2029.
8. To extend IGST exemption on imports of research equipment/buoys imported under the Research Moored Array for the African-Asian-Australian Monsoon Analysis and Prediction (RAMA) program subject to specified conditions.
9. To exempt Compensation Cess on the imports in SEZ by SEZ Unit/developers for authorized operations w.e.f. 01.07.2017.
10. To exempt Compensation cess on the supply of aerated beverages and energy drinks to authorized customers by Unit Run Canteens under the Ministry of Defence.
11. To provide Adhoc IGST exemption on imports of technical documentation for AK-203 rifle kits imported for Indian Defence forces.

Changes in GST Rates of Services

1. Co-insurance premium apportioned by the lead insurer to the co-insurer for the supply of insurance service by the lead and co-insurer to the insured in coinsurance agreements may be declared as no supply under Schedule III of the CGST Act, 2017 and past cases may be regularized on ‘as is where is’ basis. This will reduce the complexity of the compliance process.
2. Transaction of ceding commission/re-insurance commission between insurer and re-insurer may be declared as no supply under Schedule III of CGST Act, 2017 and past cases may be regularized on an ‘as is where is’ basis.
3. GST liability on reinsurance services of specified insurance schemes covered by Sr. Nos. 35 & 36 of notification No. 12 /2017-CT (Rate) dated 28.06.2017 may be regularized on an ‘as is where is’ basis for the period from 01.07.2017 to 24.01.2018.
4. GST liability on reinsurance services of the insurance schemes for which total premium is paid by the Government that are covered under Sr. No. 40 of notification No. 12/2017-CTR dated 28.06.2017 may be regularized on an ‘as is where is’ basis for the period from 01.07.2017 to 26.07.2018.
5. To issue clarification that retrocession is ‘re-insurance of re-insurance’ and therefore, eligible for the exemption under Sl. No. 36A of the notification No. 12/2017-CTR dated 28.06.2017.
6. To issue clarification that statutory collections made by the Real Estate Regulatory Authority (RERA) are exempt from GST as they fall within the scope of entry 4 of No.12/2017-CTR dated 28.06.2017.
7. To issue a clarification that further sharing of the incentive by acquiring bank with other stakeholders, where the sharing of such incentive is clearly defined under the Incentive scheme for promotion of RuPay Debit Cards and low-value BHIM-UPI transactions and is decided in the proportion and manner by NPCI in consultation with the participating banks is not taxable.

Conclusion

The 53rd GST Council meeting brought significant changes to GST rates on goods and services, aiming to promote various sectors and streamline compliance. Key adjustments include uniform GST rates for aircraft parts, reduced rates for certain packaging materials, and extended exemptions for defense imports. Additionally, clarifications on insurance and reinsurance services will simplify the compliance process. Stay tuned for Part-2.

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