Highlights of the 54th GST Council Meeting

The 54th GST Council meeting was held on September 09th, 2024 under the chairmanship of the Union Finance & Corporate Affairs Minister Smt. Nirmala Sitharaman wherein the GST Council made the following recommendations:

Key Taxation Reforms and Compliance Enhancements

B2C E-invoicing

After the successful implementation of e-invoicing in the B2B sector, the GST Council has proposed its implementation in the B2C sector.

Considering its potential benefits in retail, such as improved business efficiency, environmentally friendly, cost efficiency to the business, etc, the pilot will be rolled out voluntarily in selected Sectors and States.

Invoice Management System and new ledgers

Some enhancements are being made to the existing GST return architecture including the following:

1. Invoice Management System- allows the taxpayers to accept, reject, or keep the invoices pending to avail of ITC which will reduce errors in claiming ITC and improve reconciliation.
2. RCM Ledger- will assist taxpayers in correctly reporting RCM transactions. Taxpayers would be allowed to declare their opening balance for this ledger by 31 October 2024.
3. ITC Reclaim Ledger- helps track reversal and reclaim of ITC for better compliance.

GST Rate Changes/Clarifications

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1. RCM is to be introduced on the supply of metal scrap by unregistered persons to registered persons. 
2. TDS of 2% applicable on the supply of metal scrap by the registered person in B2B supply
3. Transport of passengers by helicopters on a seat-share basis will attract GST at 5%. Charter of helicopters will continue to attract 18% GST.
4. Approved flying training courses conducted by DGCA-approved Flying Training Organizations (FTOs) are exempt from the levy of GST
5. Supply of R&D services by a government entity; or a research association, university, college, or other institution, notified under clauses (ii) or (iii) of sub-section (1) of section 35 of the Income Tax Act, 1961 using Govt or private grants
6. Location charges or Preferential Location Charges (PLC) paid along with the consideration for the construction services of residential/commercial/industrial complex before issuance of completion certificate form part of composite supply. Here the supply of construction services is the main service and PLC is naturally bundled with it. PLC is eligible for the same tax treatment as the main supply that is, construction service.
7. Affiliation services provided by educational boards like CBSE are taxable. However, affiliation services provided by State/Central educational boards, educational councils, and other similarly placed bodies to Govt. Schools are prospectively exempt.
8. Affiliation services provided by universities to their constituent colleges are taxable at 18% GST rate.
9. Import of services by an establishment of a foreign airline company from a related person or any of its establishments outside India without consideration will be exempt
10. Renting of commercial property by an unregistered person to a registered person to be brought under RCM.
11. Ancillary/intermediate services provided by GTA in the course of transportation of goods by road will be treated as a part of the composite supply, where GTA also issues consignment notes. If such services are not provided in the course of transportation of goods and invoiced separately, then these services will not be treated as a composite supply of transport of goods.
12. Supply of services such as application fees for providing electricity connection, rental charges against electricity meter, testing fees for meters/ transformers/capacitors, labour charges from customers for shifting of meters/service lines, charges for duplicate bills, etc. which are incidental, ancillary or integral to the supply of transmission and distribution of electricity by transmission and distribution utilities to their consumers, will be exempt when provided as a composite supply.

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Measures for facilitation of trade

1. For notices issued related to other than fraud cases (Section 73) for FY 2017-18, 2018-19, and 2019-20 if the tax amount is paid by 31^st March 2025, no interest or penalty, or both will be applicable.
2. An order under section 73 section 74 or section 107 or section 108 of the CGST Act was issued confirming the demand for wrong availment of ITC by contravention of Sec 16(4) of CGST Act. However, this order needs to be rectified due to ITC for FY 2017-18, 2018-19, 2019-20, and 2020-21 allowed up to 30^th November 2021. Now a special procedure would be given to rectify such adverse orders.
3. Exporters who import goods without payment of IGST and compensation cess but later on pay the IGST and compensation cess along with applicable interest and get BOE reassessed, then he can still claim IGST refund on exports without any violation.

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Conclusion

In conclusion, the 54th GST Council Meeting brings a series of progressive changes aimed at enhancing compliance, facilitating trade, and refining tax systems for businesses. Key decisions such as the introduction of e-invoicing in the B2C sector, advanced invoice and ITC management systems, and rate adjustments for crucial goods like cancer drugs reflect the Council's commitment to improving operational efficiency and reducing tax complexities. These reforms, combined with new measures for RCM and GST on various services, will simplify the tax landscape, allowing businesses to focus more on growth while ensuring compliance.