Nirmala Sitharaman: Railway services, community hostels are free from GST.

The Center and states on Saturday decided to give a tax rebate to railway platform visitors, students staying in hostels, apple farmers, dairy farmers, households, and the residential sector during the Goods and Services Tax (GST) Council meeting. The Taxpayer-friendly measures will be implemented for stronger enforcement to prevent fraud.

Speaking after the 53rd meeting of the GST Council, Union Finance Minister Nirmala Sitharaman said that after October 2023, the federal body “has taken many decisions to ease business, ease the compliance burden and make it easier for taxpayers”.

She said the Council decided to exempt accommodation services provided to students outside the educational institution. Students living on campus are already exempt from paying GST. The accommodation rent is not more than ₹ 20,000 per person and the accommodation service is provided for at least 90 consecutive days (to avoid tax evasion by short-stay hotels classified as guest houses).

For the convenience of the general public, the Council has also exempted several services provided by the Indian Railways from GST. These include platform tickets, retirement or waiting rooms, changing rooms, and battery cars.

Interrail transactions have also been exempted from the ambit of GST, which will help reduce operational costs. To facilitate milkmen, the Council harmonized the GST tax on all types of milk cartons (steel, iron, and aluminum) irrespective of their use to 12%. Apple growers in JandK and Himachal Pradesh got relief as GST on both corrugated and corrugated cardboard boxes, crates, and cartons was reduced from 18% to 12%.

She said households will pay 12 percent GST on all types of solar cookers regardless of one or two sources of energy. The FM clarified that all types of sprinklers, including sprinklers, will get 12% GST, which will help the housing sector. This was the first meeting of the GST Council after the formation of the new government at the Center and ahead of the full Union Budget due next month.

Sitharaman said the Center and states discussed budgetary matters in the first half of Saturday, while the second half was devoted to GST matters. She led the budget negotiations with the finance ministers of the states and union territories. The government councils of Goa, Meghalaya, Mizoram, Nagaland, and Sikkim and representatives of Bihar, Madhya Pradesh, Odisha, Rajasthan, and Telangana also participated in the meeting.

Addressing a press conference after the GST Council meeting, Sitharaman said the federal body has recommended a nationwide rollout of the Aadhaar biometric authentication system. “This will strengthen the GST registration process and help combat fraudulent input tax credits through fake invoices,” she told reporters.

The Council implemented several (more than twenty) business-friendly measures, including extending deadlines and provisions to reduce tax disputes, he added. Sitharaman said the Group of Ministers (GoM) led by Bihar Deputy Chief Minister Samrat Chaudhary is working on rationalization of the general interest rate and its drafts will be discussed in the next council meeting.

At the same time, the 53rd meeting gave several other clarifications related to interest rates. Other decisions related to changes in GST rates on goods included the application of a single 5% integrated GST rate (IGST) on imports of aircraft parts, components, test equipment, tools, and equipment to complete MRO, measures under certain conditions, announced the Ministry of Finance in a statement.

It also extended the IGST exemption on some defense items for five years, till June 30, 2029, making such imports cheaper. Similarly, IGST exemption has been extended to the import of research equipment under the Africa Asia-Australia Monsoon Analysis and Prediction Program (RAMA).

The Council also exempted from compensation tax the supply of carbonated beverages and energy drinks to authorized customers in canteens maintained by units operating under the Ministry of Defense and granted a temporary IGST exemption for the importation of technical documents for the AK-203 rifle sets defense forces.

PwC India partner Pratik Jain said the first meeting of the GST Council after the formation of the new government at the Center seemed to have two key issues – ease of doing business and bringing certainty to the tax system. “It’s an excellent move to do away with the prior GST obligations for interest and penalties since this should help to somewhat lessen litigation.”

The sunset clause on anti-profiteering provisions will bring much-needed certainty to the industry. Reducing the upfront cost of filing appeals is also important and would help the industry out of cash flow perspective,” she said and added that it was one of the Council’s “very positive and fruitful” meetings.

“Progressive roll-out of biometric registration across India would help curb fake registration and fake credit. This move will curb all fake registrations,” said Abhishek Jain, Head of Indirect Taxes and Partner, KPMG.