The 54th GST Council meeting held on September 9, 2024, brought in significant reforms and recommendations that could impact businesses, consumers, and healthcare. From lowering GST rates on critical cancer drugs to piloting new e-invoicing mechanisms for retail businesses, here's a detailed look at the major takeaways from the meeting.
1. Relief for Cancer Patients: GST on Cancer Drugs Reduced
The Council recommended a reduction in GST rates on certain life-saving cancer drugs, including:
- Trastuzumab Deruxtecan
- Osimertinib
- Durvalumab
The GST on these drugs has been slashed from 12% to 5%. This move aims to make essential cancer treatments more affordable, providing much-needed relief for patients and their families. This reduction is a continuation of the government's effort to reduce healthcare costs in India.
2. Snacking Just Got Cheaper: GST Reduced on Namkeen and Snacks
The Council addressed the GST rates on popular savory food items, reducing the GST on:
- Extruded/Expanded Savory Food Products (such as namkeens, bhujia, and mixtures)
These items now attract a reduced GST rate of 12%, down from 18% , bringing these snacks in line with other pre-packaged edible preparations. This is excellent news for consumers, especially small businesses in the food and snack industry, as it will reduce prices and increase affordability.
3. Life and Health Insurance: Group of Ministers to Review GST
The GST Council acknowledged the complexities surrounding the application of GST on life and health insurance premiums. To address these issues, a Group of Ministers (GoM) has been formed, consisting of representatives from multiple states, including Bihar, Karnataka, and Tamil Nadu. They are tasked with providing a holistic review of GST-related challenges in the insurance sector, with a report expected by October 2024 .
This could potentially lead to further changes that may benefit policyholders by lowering premiums or simplifying compliance processes for insurance companies.
4. Transport of Passengers by Helicopters: GST Reduced
In a lesser-discussed but significant move, the Council lowered the GST on:
- Passenger Transport by Helicopters to 5% on a seat-share basis.
This reduction applies to services where helicopters are used to transport passengers on a shared-seat basis. However, chartered helicopter services will continue to attract an 18% GST . This move aims to encourage the use of helicopter services in remote and difficult-to-reach regions, thereby improving connectivity.
5. B2C E-Invoicing Pilot Rollout
A major development in retail and business sectors is the pilot rollout of B2C e-invoicing . Following the success of e-invoicing in B2B transactions, the Council has proposed testing the same in retail (B2C) transactions on a voluntary basis . The benefits of this initiative include:
- Improved business efficiency
- Reduced tax evasion
- Enhanced transparency in retail transactions
While the rollout will initially be limited to select sectors and states, this move could pave the way for full-scale implementation in the future, making invoicing simpler and more transparent for businesses and customers alike.
6. New Compliance Measures for Metal Scrap Transactions
To prevent tax evasion in the metal scrap industry, the GST Council has introduced a Reverse Charge Mechanism (RCM) for:
- Metal Scrap Supply by unregistered suppliers to registered buyers.
In this scenario, the recipient of the scrap will now be liable to pay GST under RCM if the supplier is unregistered. This aims to improve compliance and tax collection in the sector, which has been prone to revenue leakages in the past.
7. Other Important Recommendations
- Affiliation Services: Clarified that affiliation services provided by state/central educational boards to government schools are exempt from GST, whereas affiliation services provided to private schools will attract 18% GST.
- Import of Services by Airlines: Exemption for import of services by a branch office of a foreign airline company from related entities outside India, provided the transaction is made without consideration.
- Electricity Services: Exemption granted for ancillary services like application fees for electricity connections, meter rentals, and labor charges related to electricity distribution.
What's Next?
The recommendations made during this GST Council meeting are expected to ease business operations, reduce healthcare costs, and provide relief to consumers. The next steps will involve the implementation of these changes through the issuance of formal notifications and circulars.
Businesses and consumers alike should stay informed about these developments as they are rolled out over the coming months. The pilot for B2C e-invoicing and the GoM's review on life and health insurance are particularly worth watching, as they could lead to even more significant reforms in the future.
Conclusion
The 54th GST Council meeting introduced a wide range of measures that are set to impact industries from healthcare to retail.
The reduction in GST rates on cancer drugs and snacks, the piloting of B2C e-invoicing, and the introduction of RCM in metal scrap transactions are just a few of the important steps taken. These changes reflect the government's ongoing efforts to streamline the GST framework and make it more beneficial for both businesses and consumers.
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