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    IndiaRate Rationalisation and Exemptions

    Rate Rationalisation and Exemptions


    The Council introduced several rate clarifications, including a uniform 12% rate for various products like milk cans, carton boxes, sprinklers, and solar cookers. Services provided by Indian Railways to the common man and hostel services with a value of supply up to ₹20,000 per person per month (subject to a minimum stay of 90 continuous days) will be exempt from GST.

    Furthermore, rectified spirits/extra neutral alcohol (ENA) supplied for manufacturing alcoholic beverages for human consumption will be excluded from the GST purview.

    The reduction in TCS payable from e-commerce operators from the current 1% (0.05% CGST, 0.05% SGST) to 0.5% (0.025% CGST, 0.025% SGST) is another positive step.

    In a move to clarify valuation of corporate guarantees, the Council clarified that valuation as prescribed on 26.10.2023 will not be applicable if the taxpayer can avail full ITC. The anti-profiteering clause under GST has been extended till April 1, 2025. Further, the Council recommended clarifying the invoice value shall be deemed to be the open market value of services between foreign affiliate and Indian affiliate where ITC is fully eligible.


    While the recent GST Council reforms are a positive step, further action is needed to unlock the full potential of a simplified and taxpayer-friendly GST regime.

    A key industry ask is GST rate rationalisation. With GST maturing, the Council should now aim to minimise the number of tax slabs. This will significantly enhance transparency in the rate structure and reduce classification headaches for businesses.

    The Council also missed the opportunity to address the high 28% GST rate burdening the online gaming industry. It's critical to find a solution that fosters growth in this sector.

    To truly reduce taxpayer burdens and streamline operations, an amnesty scheme for past GST disputes is a vital consideration. This one-time settlement mechanism, without hefty penalties, would significantly ease the burden on taxpayers, courts, and the GST Tribunal.

    Clarity on GST treatment for deemed import of services in by foreign airlines and shipping lines is another pressing industry need. The clarity in this regard is required to ensure that there are no supply chain disruptions and multilateral issues on account of tax jurisdiction.

    Finally, the Council must address the ongoing dispute around GST on expat secondment. Clear guidelines are needed to minimise litigation and bring much-needed certainty to this area.

    The upcoming GST Council meeting in August, post-, presents an excellent opportunity to address these industry priorities and pave the way for a more efficient and taxpayer-centric GST system. (Northlines Webdesk-CNBCTV)

    The authors; Saurabh Agarwal and Akanksha Agarwal, are Tax Partner and Tax Director, respectively at EY India. The views expressed are their personal.

    The Northlines is an independent source on the Web for news, facts and figures relating to Jammu, Kashmir and Ladakh and its neighbourhood.

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