The 55th GST Council Meeting: Examining Reforms and Rate Adjustments in India's GST Framework

Journal of Research and Development Peer Reviewed International, Open Access Journal. ISSN : 2230-9578 | Website: https://jrdrvb.org Volume-17, Issue-1(III) | January - 2025 33 The 55th GST Council Meeting: Examining Reforms and Rate Adjustments in India's GST Framework Mrs. Shreedevi S. Munde Lecturer, Department of Commerce K.L.E. Society’s G. I. Bagewadi Arts, Science and Commerce College, NipaniKarnataka, India Manuscript ID: JRD -2025-170108 ISSN: 2230-9578 Volume 17 Issue 1|(III) P p33-37 January 2025 Submitted: 01 Dec. 2024 Revised: 24 Dec. 2024 Accepted: 20 Jan. 2025 Published: 31 Jan. 2025 Abstract: India had been called as ‘King of Taxes’ because multiple taxes were levied by central and state Governments. That was resulted in more burdens on consumers and also tax evasion. The introduction of new tax regime GST has given big change in the taxation system of India; subsequently India has been called as ‘One Nation One Tax’. As there will be only one indirect tax framework, it will help to transform the Indian economy by encouraging transparency and facilitating ‘One country One tax’ concept. It is comprehensive tax that it will integrate all the indirect taxes under one umbrella. GST will help to create a unified common market for India by giving boost to foreign investment and Make in India campaign. The present study focuses on the recommendations of 55th GST Council Meeting held in Jaisalmer Rajasthan on 21st December, 2024. The study revealed that GST council meet has made changes in tax rates on some goods and services. GST had given relief to various sectors of Indian Economy and resolve compliance challenges. The Council is paving the way for a more efficient and business friendly tax environment. Keywords: GST, 55th GST Council Meeting, Recommendations and Trade Facilitation. Introduction Government collects the revenue from different sources. Tax is a major source of revenue to the Government. The Government collects the tax revenue from direct and Indirect taxes. Direct taxes are taxes which are levied on income or profit and wealth of a person. Indirect taxes are levied on goods and services. GST in India was implemented on 1st July, 2017. It is a landmark taxation reform in India. GST in India was made on the recommendation of Vijay Kelkar Committee. GST has been implemented by the 101st Constitution Amendment Act, 2016 under Article 279. It is a comprehensive, multistage, destination based tax. This has replaced many indirect taxes that previously existed in India. GST is an Indirect Tax levied on value of supply of goods and services or both. GST has subsumed various indirect taxes under one umbrella like VAT, Excise duty, Service tax, Sales Tax etc. GST eliminates cascading effect and has made compliances very easy. India has adopted Dual Model of GST. Quick Response Code: Website: https://jrdrvb.org/ DOI: Access this article online This is an open access journal, and articles are distributed under the terms of the Creative Commons Attribution 4.0 International, The Creative Commons Attribution license allows re-distribution and re-use of a licensed work on the condition that the creator is appropriately credited Address for correspondence: Shreedevi S. Munde , Lecturer, Department of CommerceK.L.E. Society’s G. I. Bagewadi Arts, Science and Commerce College,NipaniKarnataka, India How to cite this article: Shreedevi S. Munde . (2025). The 55th GST Council Meeting: Examining Reforms and Rate Adjustments in India's GST Framework . Journal of Research and Development,33-37 Original Article Journal of Research and Development Peer Reviewed International, Open Access Journal. ISSN : 2230-9578 | Website: https://jrdrvb.org Volume-17, Issue-1(III) | January - 2025 34 History of GST Year Event 2000 Proposal for introduction of GST 2014 Introduction of Constitution (122nd Amendment) Bill 2016 Constitution Amendment Bill was passed in Rajya sabha 2017 The Government Rolled Out GST Key Features of GST: i. Multistage: There are multiple changes of hands an item goes through along its supply chain from manufacturer to final sale to the consumer. GST will be levied on each stage. ii. Unified Tax: The GST integrates different indirect taxes into one unified tax regime. iii. Destination based tax: GST follows destination principle. The taxable event under GST is consumption of goods or services. iv. Dual model of GST: GST has two components, one is levied by the Central Government (CGST) and other is levied by States (SGST). v. Supply of Goods and Services: The GST is applicable on supply of goods or services or both. The taxable event under GST is the Value of supply of Goods or Services or both. vi. Input Tax Credit: Under GST regime, taxpayer is allowed to take credit of taxes paid on inputs and utilize the same while payment of output tax to the Government. vii. Technology: GST is fully technology based regime. The registration, filling of return, payment of tax, refund claiming, ITC, etc will be done through GST common portal with the help of GSTN( Goods & Service Tax Network) Objectives of the Study The main objectives of the study are as follows: i. To know the key changes of 55th GST Council Meeting. ii. To understand changes in the GST rates of Goods and Services. iii. To find out the Trade Facilitation provided by GST Council. iv. To know the correction of anomalies in the tax structure. Scope and Limitation of the Study This study examines the key reforms, rate adjustments, and policy decisions undertaken during the 55th GST Council Meeting, focusing on their implications for India's economic landscape and GST framework. A detailed evaluation of the changes in GST rates for specific goods and services, highlighting sectors most impacted by these adjustments. Insights into the rationale behind rate revisions and their alignment with broader economic objectives. The study focuses exclusively on the reforms and decisions of the 55th GST Council Meeting and may not account for developments in subsequent meetings or policies. The analysis relies on publicly available reports, minutes, and official announcements. Limited access to comprehensive data may restrict deeper insights into certain decisions. Journal of Research and Development Peer Reviewed International, Open Access Journal. ISSN : 2230-9578 | Website: https://jrdrvb.org Volume-17, Issue-1(III) | January - 2025 35 Research Methodology The paper is based on secondary data published in journals, books and websites. Based on available literature and research material , the present paper gives clear picture regarding the recommendations of 55th GST Council Meeting and changes in the tax rates of goods and services. 55th GST Council Meeting The 55th GST Council Meeting was held in Jaisalmer , Rajasthan on 21st December, 2024. The GST Council is chaired by Union Finance & Corporate Affairs Minister Smt. Nirmala Sitharaman. The GST Council has inter-alia made the following recommendations relating to the changes in GST rates on Goods & Services and other measures for facilitation of trade. The Recommendations of 55th GST Council Meeting Changes in the GST Rate i. GST rate on Fortified Rice Kernel (FRK) , classifiable under HSN 1904, has been reduced to 5 % from existing rate of 18%. ii. GST exemption is allowed on Gene Therapy. iii. GST Council has exempted the IGST on systems, sub-systems, equipments, parts, tools, software meant for manufacture of Long Range Surface to Air Missile System. iv. Rate of compensation Cess is reduced to 0.1% on supplies to merchant exporters. This reduction brings the Compensation Cess at Par with the GST rate. v. IGST is exempted on imports of all the equipments and consumable samples by the inspection team of International Atomic Energy Agency subject to specified conditions. vi. Concessional 5 % GST rate is allowed on inputs of food preparation for free distribution to economically weaker sections under Government Programs. vii. GST rate on sale of old and used vehicles including Electrical Vehicles has been increased from 12% to 18%. viii. No GST is applicable on Penal Charges levied by banks and NBFC for non-compliances with loan terms. ix. Pepper and Raisins supplied by agriculturist is not liable for GST. Services i. GST Council recommends exemption of GST on contributions by General Insurance Companies from Third Party motor vehicle premiums for Motor Vehicle Accident Fund. ii. No GST on transaction of Vouchers as they are neither supply of goods nor supply of services. Others i. Autoclaved Aerated Concrete (ACC) blocks containing more than 50% fly ash content will fall under HS 6815 and attracts 12% GST. ii. Ready to eat Popcorn which is mixed with salt and spices are classifiable under HS 2106 90 99 and attracts 5% GST if supplied as other than pre-packaged and labelled. And if its supplied as pre-packaged and labelled then it attracts 12% GST. When Popcorn is mixed with sugar (caramel popcorn) is classifiable under HS 1704 90 90 and attracts 18% GST. Trade Facilitation i. Amendment to Schedule III of the Central GST Act, 2017: Transactions involving supply of goods warehoused in Special Economic Zone(SEZ) or Free Trade Warehousing Zone(FTWZ) are subject to differing Journal of Research and Development Peer Reviewed International, Open Access Journal. ISSN : 2230-9578 | Website: https://jrdrvb.org Volume-17, Issue-1(III) | January - 2025 36 interpretation regarding taxability because it was not clear that whether goods warehoused in SEZ or FTWZ are covered under entry 8(a) or 8(b) of schedule III of the CGST. SEZ or FTWZ transactions faced ambiguity leading compliance challenges. ii. GST Council Recommended supply of goods warehoused in SEZ or FTWZ to any person before clearance ( for export or Domestic Tariff Area use) will be treated as a supply of neither goods nor services. It has simplified the compliances for businesses operating in SEZ or FTWZ. Previously Disputes arose as tax authorities sought ITC reversal on supplies made by E-Commerce Operators, even when they were required to pay GST directly. iii. GST Council Recommended: E-Commerce Operators paying tax under section9(5) of the CGST Act, 2017 are not required to reverse ITC proportionally U/S 17(1) or 17(2) of the CGST Act. Rule 19 of the CGST Rules to be amended to allow Composition Tax payers to modify their ‘Category of Registered Person’ through Table 5 of Form GST CMP-02. This is now being done by using Form GST REG-1. States have raised concerns regarding the formula and methodology used for IGST settlement, which has direct affect on state’s revenue distribution. There is a dispute for IGST allocation between Centre and States. Some states are claiming unfair treatment in settlement mechanism. iv. GST Council Recommended: Committee of officers to suggest improvements in IGST settlement process and changes will be finalised and implemented by March 2025. What will be cheaper and what will be costlier after 55th GST Council Meeting? Sl. No Goods or Services HSN /SAC Code Current Rate Recommended Rate Costlier/Cheaper/ Clarified 1 Fortified Rice Kernels 1904 18% 5% Cheaper 2 Gene Therapy - Taxable Exempted Cheaper 3 Food items for free distribution to economically weaker section under Government Programs 19 or 21 Taxed higher since not clarified 5% Cheaper 4 ACC Blocks (Concrete) Containing more than 50% Fly ash 6815 5% 12% Costlier 5 Pepper and Raisins supplied by Agriculturist 0904 5% No GST Cheaper 6 Sale of Old & used Vehicles including Electrical Vehicles - 12% 18% Clarified 7 Sub-System of Long Range Surface to Air Missile 9023 Taxable Exempted Cheaper 8 Penal Charges by Banks or NBFC for loan defaults - Taxed Exempted Clarified Findings and Conclusion The study shows that 55th GST Council Meeting , held on 21st December,2024 brought forward a series of important decisions and clarifications aimed at simplifying tax procedures, enhancing business compliances and addressing the key issues in the Goods and Service Tax regime. The meeting introduced several critical changes including GST exemption, rate adjustments and procedural improvements like no GST on Penal Charges, exemption Journal of Research and Development Peer Reviewed International, Open Access Journal. ISSN : 2230-9578 | Website: https://jrdrvb.org Volume-17, Issue-1(III) | January - 2025 37 for supply of Pepper and Raisins supplied by agriculturist, Clarification on GST for Caramelised Popcorn, Change in the tax rate on sale of Old and used vehicles including Electrical Vehicles. Exemption on Gene Therapy etc,. These decisions are designed to provide relief to various sectors of Indian Economy and resolve compliance challenges. The Council is paving the way for a more efficient and business friendly tax environment. These changes will reduce the operational changes; foster the smoother compliances and benefits all the people within the GST framework. References 1. Ahluwalia, M. S. (1995). India’s economic reforms. 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