The 55th meeting of the GST Council, chaired by Union Finance Minister Nirmala Sitharaman, was held on Saturday in Jaisalmer, Rajasthan. The meeting, attended by senior officials and representatives from states and union territories, resulted in several significant decisions aimed at tax rate changes, trade facilitation, and compliance streamlining under GST.
The Council recommended a reduction in the GST rate on Fortified Rice Kernel (FRK) to 5%. It also announced a full exemption of GST on gene therapy and contributions made by general insurance companies from third-party motor vehicle premiums to the Motor Vehicle Accident Fund. Additionally, the Council clarified that no GST would be levied on transactions involving vouchers, as they are neither classified as goods nor services. The provisions related to vouchers are set to be simplified further.
In a move to streamline banking operations, the Council declared that penal charges levied by banks and NBFCs for non-compliance with loan terms would not attract GST. Moreover, the Council proposed lowering the pre-deposit amount required for appeals related solely to penalties, reducing it to 10% from the earlier 25%.
Several tax rate revisions were approved, including extending exemptions for specific imports and goods used in government welfare schemes. For instance, the concessional 5% GST rate on food inputs used for free distribution under government programs will continue. The Council also clarified tax classifications for items like popcorn and pepper, resolving ambiguities that had led to disputes.
On the compliance front, significant steps were announced. These included introducing a Track and Trace Mechanism for certain goods to curb tax evasion and mandating the recording of accurate state details for online services provided to unregistered recipients.
Additionally, amendments to the CGST Act and Rules were proposed to improve input tax credit claims, clarify procedures, and address issues related to vouchers and reconciliation statements. The Council also agreed to amend provisions related to the Input Services Distributor mechanism and enable temporary identification numbers for unregistered entities required to make tax payments.
The Council emphasized procedural improvements, such as linking the GST rate on restaurant services in hotels to the previous year’s value of supply, effective April 1, 2025. Furthermore, it discussed measures to operationalize the GST Appellate Tribunal (GSTAT) and streamline IGST settlement issues.
In response to requests from states like Andhra Pradesh, a Group of Ministers will be formed to examine policies for levies related to natural disasters. The Council also extended timelines for specific committees and deferred discussions on certain municipal charges.
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