The 55th GST council, If I may say, failed to live up with the expectations and the public at large.
The crucial issues such as rate rationalisation, reduction of tax rates in insurance sectors, have been put on hold for re-consideration and deliberation for different reasons. No decision on the request of the industry to include Aviation Turbine Fuel in the GST framework has come as a major setback for the industry.
The decision on whether charges collected by municipalities for granting FSI including additional FSI, should be chargeable to GST on forward charge or reverse charge basis has also been deferred.
On the top of that, food aggregators were hoping for some clarification on the ongoing notices regarding tax rate on delivery services. Much to their disappointment, the matter has been left for fitment committee to resolve.
On a positive note, long standing request of the industry to provide concessional rate of 0.1% on compensation cess in case of merchant exports has been attended to. The step is much appreciated as it will help in reduction in working capital blockage.
The decisions relating to clarification on non-levy of GST on penal charges collected by banks/NBFC from borrowers for non-completion of terms, exemption to payment aggregators for value less than Rs. 2000 are a welcome move for industry and public at large.
The reaction of the industry on increase of rates on sale of all old and used vehicles including EVs to 18% (though on margin) will have to be seen since prior to this change, sale of old EVs and small cars were taxable in 12% category, that too on margin only.
As indicated in the press release, the amendment pursuant to decision of Hon'ble Supreme Court in case of Safari Retreats is also on the cards. The said amendment will have a huge impact on the assesses who were benefitted from the said decision.
With compensation cess going to end in March 2026, it is crucial that the decisions regarding the rate rationalisation are taken in a phased and a regularised manner to avoid any burden on the end consumers.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
