Summary of recommendation made in 55th GST Council meeting:

1. Amendments in GST Rates includes:

• To omit the definition of declared tariff w.e.f. 01 April 2025 and suitably amend the definition of specified premises (from the services rate and exemption notifications) to link it with actual value of supply of any unit of accommodation provided by the hotel
• Increase the GST rate from 12% to 18 % on sale of all old and used vehicles, including EVs other than those specified at 18%.
• No GST is payable on the ‘penal charges’ levied and collected by banks and NBFCs from borrowers for non-compliance with loan terms.
• Reduce rate of Compensation Cess to 0.1% on supplies to merchant exporters at par with GST rate on such supplies.

2. Implementation of Invoice Management System (IMS):

• To amend relevant GST section and rules to provide a legal framework in respect of generation of FORM GSTR-2B based on the action taken by the taxpayers on the Invoice Management System (IMS).
• To specifically provide for requirement of reversal of ITC as is attributable to a credit note, by the recipient, to enable the reduction of output tax liability of the supplier

3. Amendments in transactions under reverse charge

• To exclude taxpayers registered under composition levy scheme from the RCM Notification vide which renting of any commercial/ immovable property (other than residential dwelling) by unregistered person to registered person was brought under RCM.
• To bring supply of the sponsorship services provided by the body corporates under Forward Charge Mechanism.

4. Measures for Trade Facilitation.

• Vouchers Taxability:
  • Transactions in vouchers shall be treated neither as a supply of goods nor as a supply of services.
  • Distribution of vouchers on Principal-to-Principal basis shall not be subject to GST. However, where vouchers are distributed on Principal-to-Agent basis, the commission/fee or any other amount charged by the Agent for such distribution is taxable under GST.
  • Unredeemed vouchers (Breakage) will not incur GST, and no GST is payable on income booked in the accounts in respect of breakage.
• Supply of Goods in SEZs: Supply of goods warehoused in Special Economic Zones (SEZ) to be treated as neither supply of goods nor services. This brings such transactions at par with the existing provision in GST for transactions in Customs bonded warehouse.

5. Issuance of clarifications through Circulars.

• No requirement of reversal of ITC by Electronic Commerce Operators in respect of supplies made under section 9(5) of CGST Act, 2017
• In case of ex-Works contract ITC would be available as per section 16(2)(b) of CGST Act, 2017 in respect of goods which have been delivered by the Supplier at his (supplier’s) place of business

6. Other Legal and Procedural Measures.

• Amendment in section 17(5)(d) of CGST Act, 2017 to replace the phrase "plant or machinery" with "plant and machinery", retrospectively, with effect from 01.07.2017.
• Pre-deposit for Appeals: Reduction of pre-deposit for filing Appeals involving only penalty amount from 25% to 10% before the First Appellate Authority.
• To insert new rule 16A in CGST Rules, 2017 to provide for generation of temporary identification number for unregistered persons but required to make any payment as per rule 87(4) of CGST Rules, 2017.