54th GST Council meeting was held in New Delhi on 23rd May under the Chairmanship of Union Minister of Finance & Corporate Affairs, Smt. Nirmala Sitharaman.The GST Council, headed by Union Finance Minister Nirmala Sitharaman, on decided to form a Group of Ministers (GoM) to consider reducing tax rates on life and health insurance and cutting GST on cancer medicines and salves. Sitharaman said it has been decided to form a Group of Ministers (GoM) to consider the GST rate on life and health insurance.
Key recommendations made in the 54th GST Council Meeting
Changes in GST rates
- Snacks and savoury food products: GST rate on savoury and savoury food products will be reduced from 18% to 12%.
- Cancer drugs: GST rate on cancer drugs will be reduced from 12% to 5%.
- Metal scrap: Reverse charge mechanism (RCM) will be applicable on supply of metal scrap by an unregistered person to a registered person. TDS of 2% will be applicable in B2B supplies.
- Railway air conditioning machines: GST rate on railway air conditioning machines will be 28%.
- Car and motorcycle seats: GST rate on car and motorcycle seats will be increased from 18% to 28%.
GST on services
- Life and health insurance: A Group of Ministers (GoM) will be formed on issues related to GST on life insurance and health insurance.
- Transportation of passengers by helicopter: Transportation of passengers by helicopter will attract 5% GST, while helicopter charter will attract 18% GST.
- Flight training courses: Flight training courses approved by DGCA will be exempt from GST charges.
- Research institutions and development services: Supply of research and development services by government or research institutions has been recommended to be exempted.
Measures to facilitate trade
- Section 128A of CGST Act: Procedure for exemption of interest or penalty relating to tax demands under section 73 of the CGST Act for financial years 2017-18, 2018-19 and 2019-20 has been recommended.
- Amendments to CGST Rules 2017: Amendments to rules 89 and 96 of CGST Rules 2017 and clarifications regarding IGST refund on exports will be provided.
Other measures
- B2C e-invoicing: It is recommended to introduce pilot programs for B2C e-invoicing in selected sectors to improve business efficiency and customer transparency.
- Invoice Management System and New Ledger: For the introduction of Invoice Management System (IMS) and new ledgers, taxpayers will be given an opportunity to declare opening balances by October 31, 2024. These recommendations will be legalized through relevant circulars and notifications for implementation.
Structural Form
- GST Council has been constituted under Section 279A of the Indian Constitution. GST Council is an important body to govern and regulate the Goods and Services Tax (GST) system in India.
- It was constituted in India under the 101st Constitutional Amendment Act, 2016.
- The Goods and Services Tax (GST) system is a major initiative of taxation reform in India, which was implemented on 1 July 2017.
- This council is a major body for discussing and deciding on the matters of Goods and Services Tax (GST) between the Government of India and the State Governments.
Its structural form is as follows
- Chairman: The Chairman of the GST Council is the Finance Minister of India.
- Members: The Council includes the Finance Ministers of all the states. For the Union Territories, their representatives are included.
- Special Representative: The Central Government is represented in the Council by the Revenue Secretary of the Union Finance Ministry.
- Committee: Some special committees also work under this council which advise on various issues related to GST and submit their suggestions.
Major functions of GST Council
- Determining GST rates and recommending rate structures: The major responsibility of the GST Council is to determine the rates and structures of GST on goods and services. It recommends GST rates on various goods and services so that a uniform tax system can be implemented across India.
- Reviewing revenue allocation: This council ensures the distribution and allocation of GST revenue between the central and state governments. It ensures that the states get their share of tax equitably.
- Taking decisions on legal and administrative issues: The GST Council decides on necessary amendments and updates in the GST law. It also discusses administrative issues related to the enforcement of GST law and rules.
- Resolving tax-related disputes: This council helps in resolving disputes related to GST and ensures that tax policies are transparent and fair.
- Recommending amendments to the Constitution: The council can recommend amendments to the constitution as required so that the enforcement and implementation of GST can be improved.
- Functions of providing regulatory guidelines relating to regulation and implementation: The Council provides regulatory guidelines relating to the implementation of GST and monitors operational issues related to it.