• The Council recommended implementing e-invoicing for B2C transactions and extended the GST Compensation Cess until March 2026.
• The GST rates on certain cancer drugs were reduced, and a pilot project for B2C e-invoicing will be rolled out.
• The next GST Council meeting is scheduled for September 23, with the industry anticipating decisions on the GST rate for health and life insurance, and B2C e-invoicing.

The 54th GST Council meeting, chaired by Finance Minister Nirmala Sitharaman, was a significant event that brought forth several key resolutions. The meeting, held on 9th September 2024, was attended by Finance Ministers of State and Union Territories with State Legislatures. The decisions taken during this meeting are expected to have far-reaching implications for various sectors, including health and life insurance, automobile, and e-commerce.

One of the most anticipated outcomes of the meeting was the Group of Ministers' (GoM) recommendation on the GST rate for health and life insurance. The GoM is expected to submit its report by the end of October 2024. The current GST rate on life and health insurance remains at 18%, and a decision on this rate is eagerly awaited by the industry.

Abhishek Jain, National Head-Indirect Tax, KPMG in India, highlighted the significance of the upcoming decision on the compensation cess for specific sectors like the automobile industry. He also noted the importance of the proposed B2C e-invoicing, which, although voluntary, will be significant for businesses.

GST Council's Recommendations and Their Implications

The Council has recommended implementing e-invoicing for B2C transactions in a phased manner to prevent false invoicing. This move is expected to enhance business efficiency and transparency in the retail sector.

The Council also recommended the formation of a GoM to study the future of the compensation cess. The Finance Minister confirmed the extension of the GST Compensation Cess until March 2026, stating that the loan and interest dues on borrowings made to compensate states during the COVID period will likely be cleared by January 2026. The new GoM will evaluate each state's claims and decide on the steps to be taken after March 2026.

Krishan Arora, Partner and Leader, Indirect Taxes at Grant Thornton Bharat, noted that while some industry concerns were addressed, more decisions are expected at the next GST Council meeting scheduled to be held in Goa on September 23. The India Inc is looking forward to discussions on a range of measures, including provisions proposed in the budget, long-pending clarifications on GST rates for insurance premiums, and GST on online payments and payment aggregators.

Key Decisions and Their Impact on Various Sectors

Despite the tax department authorities serving show-cause notices to payment aggregators, demanding GST on transactions below Rs 2,000 routed through payment aggregators, the matter was not deliberated upon, leaving the matter in the hand of the adjudicators. However, research institutes and universities will be relieved to know of the recommendation to exempt them from GST on grants.

In addition to these significant resolutions, the Council also decided on several other matters. The GST rates on cancer drugs- Trastuzumab Deruxtecan, Osimertinib and Durvalumab-were reduced from 12% to 5%. The Council also decided there will be 5% GST on transport of passengers by helicopters on a seat-share basis and 18% on the charter of helicopters.

A pilot project for Business-to-Customer (B2C) e-invoicing will be rolled out, following successful B2B e-invoicing implementation. This aims to enhance business efficiency and transparency in the retail sector. The GST rate for extruded or expanded savoury snacks will be reduced from 18% to 12%, aligning with rates for similar edible products.

The Council also exempted supply of research and development services by a government entity, or a research association, university, college or other institutions notified u/s 35 of the Income Tax Act using government or private grants. This decision comes as a relief to institutions like IIT Delhi, which had received a show-cause notice from the directorate general of GST intelligence (DGGI) amounting to Rs 120 crore.

As the country awaits the next GST Council meeting scheduled to be held in Goa on September 23, the industry is hopeful that the Council will continue to take measures to facilitate trade and streamline GST compliances. The industry experts' anticipation of the GoM's report on the GST rate for health and life insurance, as well as the proposed B2C e-invoicing, underscores the importance of these decisions for the future of the Indian economy.