GST Council Meet: Tax rates changed for goods & services – Check what gets cheaper and costlier

The GST Council has exempted services related to hostel accommodation outside educational institutions, up to Rs 20,000 per person per month, provided the student stays in the hostel for at least 90 continuous days. This condition aims to prevent hotels from misusing the exemption. This was decided at the 53rd GST Council meeting that was chaired by the Finance Minister Nirmala Sitharaman. This followed her pre-Budget consultations with finance ministers of states and Union Territories.

“Waiver of interest and penalty for past GST demands is a great step which would hopefully bring down the litigation to some extent. Sunset clauses for anti profiteering provisions will bring in much needed certainty for industry. Reduction in pre deposit for filing the appeal also is an important one and would help the industry from a cash flow standpoint,” Pratik Jain, Partner, PwC India, said.

Additionally, the Council has exempted the purchase of railway tickets and payments for waiting room and cloak room charges from GST. Services such as battery-operated vehicle rides and intra-railway services will also be GST-free.

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The Council recommended waiving interest on penalties for tax demand notices and established a uniform GST rate of 12% on milk cans.

“The 53rd GST Council meeting, held on June 22, 2023, marked a significant milestone as the first meeting in the new term of the Modi 3.0 government and the one before the budget is tabled. The industry had high expectations, and the FM has met the same with a series of positive proposals aimed at simplifying tax compliance and reducing litigation,” Krishan Arora, Partner, Grant Thornton Bharat, said.

In the pre-Budget meeting, FM emphasised the Centre’s commitment to supporting states through timely tax devolution and clearing GST compensation arrears to stimulate growth. She urged states to leverage the Centre’s scheme offering 50-year interest-free loans for undertaking specific reforms.

“Announcement of a sunset clause for anti-profiteering provisions comes as a great relief to Industry. Also, transferring the cases to GSTATs may bring in consistency in determination and adjudication of matters. The clarification on corporate guarantees is a welcome step and will lead to reduction in disputes on the matter. The fact that GST on online gaming was not taken up for discussions may come as a major disappointment to the sector which was expecting relief from the high rate of taxation and retrospectivity of demands,” Manish Mishra, Partner, JSA Advocates and Solicitors, said.

In her address, Sitharaman emphasised the Union Government’s commitment to supporting states through timely tax devolution, Finance Commission grants, and clearing GST compensation arrears. She discussed the ‘Scheme for Special Assistance to States for Capital Investment,’ noting that while most loans under this scheme are untied, some are conditional, linked to citizen-centric reforms by states and sector-specific capital projects. She urged the states to take advantage of these loans by meeting the necessary criteria.

The Finance Minister assured the ministers that their recommendations would be duly considered in the formulation of the Union Budget for the next fiscal year.