54th GST Council Meeting, Key Highlights, Updates, Outcomes

The 54th GST Council Meeting, chaired by Union Finance Minister Nirmala Sitharaman on September 9, 2024, introduced important changes in India's tax framework. The council deliberated on key aspects such as tax rate adjustments, industry-specific relief measures, and technological advancements in the GST system aimed at improving compliance and reducing the tax burden on crucial sectors. Below is a detailed summary of the key decisions and their impact.

54th GST Council Meeting Key Highlights

Here are the key highlights of 54th GST Council meeting-

• Phased Rollout of E-invoicing for B2C Transactions
  A key highlight from the 54th GST Council Meeting was the gradual introduction of e-invoicing for Business-to-Consumer (B2C) transactions. This initiative aims to enhance transparency and minimize tax evasion. E-invoicing, which is already required for Business-to-Business (B2B) transactions for entities with an annual turnover of ₹5 crore or more, will now extend to B2C transactions.
  Expected Outcome: Expanding e-invoicing to B2C transactions is anticipated to limit false invoicing and unreported sales, leading to improved GST compliance and higher revenue collection for the government.
• GST Rate for Online Gaming Remains Unchanged
  The 54th GST Council Meeting confirmed the earlier decision to impose a 28% GST on online gaming, casinos, and racecourses, maintaining the rate on the total face value of gaming transactions despite industry concerns.
  Impact: This decision supports the government's efforts to ensure fair tax contributions from the gaming sector, though concerns have been raised about its potential impact on industry growth.
• Establishment of New Groups of Ministers (GoMs)
  Two new Groups of Ministers (GoMs) were created to address key issues:
  • GoM on Medical and Health Insurance Rates: This group will assess GST rates on medical insurance premiums to recommend measures to lower the tax burden on consumers.
  • GoM on Compensation Cess: This group will review the current state of compensation cess and suggest ways to manage revenue shortfalls faced by states.
    Significance: These GoMs are expected to provide crucial recommendations for rate rationalization in key sectors and ensure that states receive adequate compensation for revenue losses.
• Tax Relief for Foreign Airlines
  A significant relief was provided to foreign airlines operating in India by rationalizing the Integrated GST (IGST) on the import of aircraft. This step aims to ease the financial burden on foreign airlines and boost investment in the aviation industry.
  Impact: This move is expected to encourage foreign airlines to expand their fleet and improve operations in India, fostering greater competition and enhancing air travel services for consumers.

54th GST Council Meeting-Major GST Rate Changes Announced

Several revisions to GST rates were approved in the meeting, addressing key sectors like healthcare and food products. The notable changes include:

• Life-saving Cancer Drugs: The GST on essential cancer drugs like Trastuzumab Deruxtecan, Osimertinib, and Durvalumab was reduced from 12% to 5%.
  Benefit: This will help lower treatment costs for cancer patients, offering much-needed financial relief to families burdened by high medical expenses.
• Namkeens and Savoury Food Products: GST on popular consumer goods was reduced from 18% to 12%.
  Consumer Impact: This reduction will make these items more affordable, likely boosting consumption and benefiting the food manufacturing industry.
• Helicopter Passenger Transport: GST on helicopter transport services was cut from 18% to 5%, promoting regional connectivity and tourism.
  Sector Impact: The reduced rate aims to boost the aviation industry, especially under the UDAN scheme, improving access to remote areas and promoting tourism. 

54th GST Council Meeting Technological and Compliance Enhancements

The GST Council introduced several technological upgrades to enhance compliance:

• Invoice Management System (IMS): A new system was launched to help businesses efficiently manage invoices and ensure adherence to GST regulations.
• RCM and ITC Ledgers: Two new ledgers—the Reverse Charge Mechanism (RCM) ledger and the Input Tax Credit (ITC) Reclaim ledger—were introduced to boost transparency and improve accountability in tax filings.

54th GST Council Meeting Compensation Cess Extension 

The GST Council discussed the compensation cess and agreed to extend its levy on luxury items such as cars and tobacco until March 2026. This extension aims to assist states in repaying loans taken during the COVID-19 pandemic, when the Centre borrowed funds to offset the revenue shortfall following GST implementation.

54th GST Council Meeting Other Key Announcements

Exemption for Research Funding: The GST Council approved a GST exemption on state-provided funding to universities and research centres for research purposes. This move is expected to boost research and development activities across multiple sectors.

54th GST Council Meeting- Impact on Indian Economy

The decisions from the 54th GST Council Meeting are poised to impact several key sectors of the economy. The phased rollout of e-invoicing for B2C transactions is expected to significantly enhance GST compliance and boost government revenues. Rate reductions on essential drugs and transport services will offer consumer relief and encourage spending, while easing tax on foreign airlines is likely to promote growth in the aviation industry.

These decisions reflect the government’s approach to balancing revenue collection with sectoral support. By addressing concerns such as online gaming taxes, foreign airline operations, and healthcare expenses, the GST Council aims to streamline tax policies and foster a more business-friendly environment.

Overall, the 54th GST Council Meeting introduced crucial reforms to improve compliance and tackle sector-specific challenges. From healthcare to online gaming, the decisions made will have long-term implications for businesses, consumers, and the government's tax strategy. The emphasis on rate rationalization and technological advancements showcases the government’s ongoing commitment to ease of doing business and equitable tax practices.

54th GST Council Meeting FAQs

Q1. What is GST Council?

Ans. The GST Council is a constitutional body in India responsible for making decisions on Goods and Services Tax (GST) policies, including tax rates, exemptions, and regulations.

Q2. When was the 54th GST Council Meeting held?

Ans. The 54th GST Council Meeting was held on 9th September 2024.