Summary: The 54th GST Council meeting on 9 September 2024 highlighted several significant updates and recommendations. Key changes include the applicability of Reverse Charge Mechanism (RCM) on metal scrap supplied by unregistered persons to registered ones, with a 2% TDS on B2B transactions. The tax rate on certain snacks has been reduced from 18% to 12%. For construction services, location charges will be part of composite supply, while exempting import services by foreign airlines if provided without consideration. Renting of commercial properties by unregistered persons will now be subject to GST under RCM. Clarifications are expected on ancillary services by Goods Transport Agencies (GTA), and the GST liability for film distribution prior to 1 October 2021 will be regularized. The Council recommended implementing Section 128A of the CGST Act from 1 November 2024, including rules for waivers on interest and penalties, with a deadline of 31 March 2025 for availing benefits. Provisions under Sections 16(5) and (6) of the CGST Act will soon be notified, addressing ITC rectification orders. Additional clarifications are anticipated on advertising services, demo vehicle ITC, and data hosting services. Other updates include voluntary B2C e-invoicing in select areas, enhancements to the GST return system, and a forthcoming GOM report on insurance-related GST services.
1. GST Rates changes and clarification on goods
I. RCM to be applicable on supply of metal scrap by unregistered person to registered person. Further, a TDS of 2% will be applicable on supply of metal scrap by registered person in B to B supply.
II. Tax rate reduced from 18% to 12% on extruded or expanded product, savory or salted other than un-fired or un-cooked snacks
2. GST rates changes/clarification on following services
I. Location charges or preferential location charges (PLC) paid along with the consideration for construction services of residential/commercial/industrial complex before issuance of completion certificate would form part of composite supply wherein the principal supply is construction service.
II. Import of service by establishment of a foreign airlines company from a related person or any of its establishment outside India, when made without consideration, would be exempt from GST.
III. In case of renting of commercial property by unregistered person to registered person, GST would be payable under RCM.
IV. A suitable clarification would be issued with respect to taxability of ancillary services like loading/unloading, packing/unpacking, transshipment, temporary warehousing etc. provided by GTA considering it as composite supply. If the said services are invoiced separately, the same will not be treated as composite supply.
Other changes:
V. To regularize the GST liability in case where the film distributor or sub-distributor acts on principal basis to acquire and distribute films for the past period prior to 1 October 2021 on ‘as is where is’ basis
3. Other recommendations:
I. Implementation of provisions of Section 128A of CGST Act:
i. Section 128A of CGST ACT, 2017 may be notified with effect from 01.11.2024
ii. Insertion of Rule 164 in CGST Rules, along with certain forms providing for procedure and conditions for availment of benefit of waiver of interest or penalty of both
iii. Council recommended to notify 31 March 2025 as the date on or before which the payment of tax may be made by registered person for availing the benefit under this section
iv. Council has recommended to issue circulars to clarify various issues related to availment of benefit under this section
II. Section 16(5) and (6) of CGST Act,2017
i. Council recommended to notify the provisions of Section 16(5) and (6) of CGST Act at the earliest
ii. Special procedure for rectification of orders may be notified for the taxpayers against whom any Order under Section 73 or Section 74 or Section 107 or Section 108 of CGST Act has been issued confirming demand for wrong availment of ITC on account of contravention of provisions of Section 16(4) of CGST Act, however such ITC is now available in terms of Section 16(5) or (6) of CGST Act and where appeal against the said Order has not been filed
iii. A circular clarifying the procedure and various issues related to implementation of said provisions would be issued
III. Clarification to be issued with respect to following:
i. Clarification on the place of supply of advertising services provided by Indian advertising companies to foreign entities
ii. Clarification regarding availability of ITC on demo vehicles by dealers of vehicle manufacturers
iii. Clarification on place of supply of data hosting services provided by service providers located in India to cloud computing service providers located outside India
4. Other relevant updates
i. GST Council has recommended to rollout B2C E-invoicing on voluntarily basis in selected Sectors and States.
ii. GST Council took note of the agenda on the enhancements being made to the existing GST return architecture including introduction of RCM ledger, an ITC reclaim ledger and an Invoice Management System.
iii. GST Council recommends Group of Ministers (GOM) on life and health insurance related GST service by end of October 2024.
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