The 54th GST Council Meeting is set to convene in New Delhi on September 9, 2024. This significant meeting follows a record GST revenue collection of ₹1.82 lakh crore in July. Key agenda items include discussions on simplifying the GST structure from four to three tiers and exploring ways to improve compliance and facilitate trade. The Council will also consider whether to end the GST compensation cess, initially introduced to aid states during the GST transition.

Expectations for the Meeting:
Rate Rationalisation
The Finance Minister has indicated that the Group of Ministers (GoM), led by Bihar’s Deputy CM Sumant Chaudhary, will report on the progress of rate rationalisation. The GoM, established in 2021, might propose adjustments to reduce the number of tax slabs.

GST Compensation Levy
The GST Compensation Levy was introduced to offset states' financial losses due to the GST’s implementation on July 1, 2017. Originally set for five years, its duration was extended until March 2026 for luxury and socially harmful products. The Council may decide to integrate this levy with the highest GST rate of 28% or propose its complete abolition.

Inverted Duty Rate Structure
There is a concern about the inverted duty rate structure, where manufacturers face higher input tax rates compared to finished products. This issue particularly affects industries like paper and solar glass. A review is expected to address these concerns.

Changes in GST Rates:

GST on Cancer Drugs
The Council may lower GST on crucial cancer medications, including Deruxtecan, Trastuzumab, and Osimertinib, from 12% to 5% to make these treatments more affordable.

GST on Online Gaming
The 50th Council meeting imposed a 28% GST on online gaming, horse racing, and casinos. Despite concerns from the industry, this rate is unlikely to be revisited until six months after its implementation in October 2023.

GST on Health Insurance Premiums
There may be a reduction in GST on health and life insurance premiums from the current 18%, providing relief to policyholders and potentially expanding insurance coverage.

Waiver of Taxes on Electricity Meter Services
Currently, ancillary services like rental charges for electricity meters are taxed, while the supply of electricity is exempt. The Council may clarify that these services should be exempt from GST if treated as part of a composite supply.

Relief on Metal Scrap
The GST rate for metal recycling is currently 18% under the forward charge mechanism. The Material Recycling Association of India (MRAI) has requested a review of this rate due to compliance challenges and tax evasion concerns.

Potential Inclusion of Petrol and Diesel
There is speculation that the Council will discuss GST rates for petrol and diesel, addressing concerns about potential price increases if these fuels are included under GST.

GST on Transactions Between Foreign Branch Offices of Indian Companies
Clarification is expected regarding the taxation of transactions between foreign branch offices of Indian companies and their head offices. This issue has arisen due to GST notices for unpaid taxes on service imports by Indian branches.

The 53rd GST Council meeting, held on June 22, 2024, in New Delhi, was chaired by the Union Minister for Finance & Corporate Affairs, and attended by several state finance ministers and officials.

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