Recommendations of the 55th Meeting of the GST Council

The GST Council made recommendations relating to changes in GST tax rates, providing relief to individuals, measures for facilitation of trade and measures for streamlining compliances in GST.

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Key Recommendations

• Tax Rate Changes: Reduction of GST rate on Fortified Rice Kernel (FRK) to 5%.
• Full GST exemption on gene therapy and third-party motor vehicle premium contributions to the Motor Vehicle Accident Fund.
• No GST on transactions involving vouchers.
• Penal charges by banks and NBFCs for non-compliance with loan terms will not attract GST.
• The pre-deposit amount for penalty-related appeals reduced from 25% to 10%.
• Tax Rate Revisions and Exemptions: Extended exemptions for specific imports and goods used in government welfare schemes.
• The concessional 5% GST rate on food inputs for free distribution under government programs will continue.
• Clarified tax classifications for items like popcorn and pepper.

 

Goods and Services Tax

• It was introduced in 2017 by the 101st Constitutional Amendment Act, 2016 as a comprehensive indirect tax for the entire country.
• It is levied at all stages right from manufacture up to final consumption.
• Types of GST
  1. Central GST (CGST): Levied by the Center.
  2. State/Union Territory GST (SGST/UTGST): Levied by States or UTs.
  3. Integrated GST (IGST): Tax levied and collected by the Center on all inter-state supplies of goods and/or services.
  4. Currently, GST is a four-tier tax structure with slabs at 5, 12, 18 and 28%.

 

About GST Council

• It is a constitutional body responsible for making recommendations on issues relating to the implementation of GST.
• It was established in 2016 through the 101st Constitutional Amendment Act.
• Article 279A of the Constitution solidifies its authority and importance.
• Chaired by: Union Finance Minister
• Member: Union Minister of State in charge of Finance or Revenue
• Decisions are made through voting: the Centre holds 1/3rd voting power and states hold 2/3rd voting power, ensuring cooperative federalism.
• A quorum of at least half of the total members is required to conduct a meeting.
• The council recommends the GST rates for both the Union and the States.