Introduction
The 55th GST Council Meeting introduced significant changes, including GST rate revisions, clarifications on taxability, and measures to simplify compliance. From updates on used vehicle taxes to exemptions for agricultural goods and improved trade facilitation, these changes aim to streamline the GST framework and resolve key ambiguities for businesses and taxpayers.
Key Updates to GST Rates
1. Increased GST on Used Vehicles
The GST rate on old and used vehicles, including electric vehicles (EVs), has been revised from 12% to 18%, except for:
- Petrol Vehicles: Engine capacity ≥1200 cc and length ≥4000 mm.
- Diesel Vehicles: Engine capacity ≥1500 cc and length ≥4000 mm.
- SUVs meeting specific criteria.
Note: GST applies only on the profit margin (purchase price minus selling price) for registered dealers. Transactions by unregistered persons are exempt.
2. Autoclaved Aerated Concrete (ACC) Blocks
ACC blocks containing over 50% fly ash content are now classified under HS 6815 and attract 12% GST.
3. Agricultural Goods Exemption
Fresh or dried pepper and raisins, when supplied by agriculturists, are exempt from GST.
4. Clarification on Pre-Packaged Goods
The term “pre-packaged and labelled” now applies to retail commodities up to 25 kg or 25 liters, ensuring alignment with the Legal Metrology Act.
5. Popcorn GST Rates
- Salted/Spiced Popcorn: 5% GST for non-packaged, 12% GST for pre-packaged.
- Sugar-Confectionery Popcorn (e.g., caramel popcorn): 18% GST.
6. Ground Clearance Clarification
The clarification for ground clearance, under Notification No. 1/2017, is applicable retrospectively from July 26, 2023.
Other Clarifications
Payment Aggregators and GST Exemptions
RBI-regulated Payment Aggregators qualify for GST exemption as “acquiring banks.” However, payment gateways and other fintech services remain taxable.
Penal Charges by Financial Institutions
Penal charges levied by banks and NBFCs for loan term non-compliance are exempt from GST.
Ready-to-Eat Food Items
The classification and taxability of ready-to-eat popcorn were clarified to resolve field-level disputes without imposing new taxes.
Simplifying Compliance and Trade Facilitation
SEZ Warehousing Transactions
Goods warehoused in SEZs or FTWZs before clearance for export or domestic sale are not treated as supplies under GST, ensuring parity with customs bonded warehouses.
Voucher Transactions
- Principal-to-Principal Transactions: Exempt from GST.
- Principal-to-Agent Transactions: Commission is taxable.
- Unredeemed Vouchers (Breakage): Not subject to GST.
Input Tax Credit Adjustments
- ITC reversal is not needed for supplies under Section 9(5).
- Ex-Works contracts deem goods delivered at the supplier’s location as received by the buyer, allowing ITC claims.
Measures to Streamline Procedures
Late Fee Waiver for GSTR-9C
Late fees for delayed GSTR-9C filings (2017-18 to 2022-23) are waived if filed before March 31, 2025.
Track and Trace Mechanism
A new provision introduces Unique Identification Marking for tracking evasion-prone goods.
Online Service Supply Compliance
Suppliers must record the recipient’s state as the address for unregistered recipients in online services.
Temporary Identification Numbers
New provisions allow tax officers to assign temporary IDs for non-registered entities making GST payments.
Future Developments
The GST Council extended deadlines for reforms, approved procedural rules for GSTAT, and initiated measures to address IGST settlement concerns. These updates aim to enhance transparency and efficiency in GST operations.
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Published on: December 25, 2024