Important Changes in GST Effective from January 16, 2025
On January 16, 2025, the Central Board of Indirect Taxes and Customs (CBIC) implemented several significant changes to the Goods and Services Tax (GST) framework. These updates are designed to streamline compliance and address specific sectors. Here's a breakdown of the key modifications:
1. Reduced GST Rate on Fortified Rice Kernel (FRK)
The GST rate for Fortified Rice Kernel (FRK) has been reduced from 18% to 5%. This initiative aims to promote better nutrition and make FRK more affordable for consumers. [Source]
2. GST Exemption for Gene Therapy
Gene therapy has been added to the exemption schedule, making it GST-exempt. This change reflects the government's commitment to promoting advanced medical treatments in the public interest. [Source]
3. Increased GST Rate on Old and Used Vehicles
The GST rate on the sale of old and used vehicles has increased from 12% to 18%. The taxable value is determined based on the margin of the supplier:
- For registered dealers claiming depreciation under the Income Tax Act: GST is calculated on the difference between the selling price and the depreciated value.
- For others: GST is calculated on the difference between the selling price and the purchase price.
4. Redefinition of "Specified Premises" and Removal of "Declared Tariff" for Hotel Accommodation
The concept of "specified premises" has been redefined, and the definition of "declared tariff" for hotel accommodation services has been omitted. The "specified premises" for a financial year now refers to:
- Premises where the supplier provided hotel accommodation services in the previous financial year with the value of supply of any unit of accommodation exceeding ₹7,500 per unit per day or equivalent.
- Premises where a registered person files a declaration between January 1 and March 31 of the preceding financial year, declaring the premises as specified.
- Premises where a new registrant files a declaration within 15 days of receiving the acknowledgment for their registration application, declaring the premises as specified.
Those wishing to opt out of the specified category must file the appropriate declaration during the same January-March period of the preceding financial year. [Source]
5. Amendments to Reverse Charge Mechanism (RCM)
Changes to the RCM applicability include:
- Sponsorship Services: Sponsorship services provided by any person other than a body corporate will now attract RCM. Previously, sponsorship services provided by "any person" were subject to RCM. This amendment narrows the scope, excluding services provided by a body corporate from this provision. This means that such services provided by a body corporate will now attract GST under forward charge.
- Renting of Immovable Property: Services by way of renting of any immovable property other than residential dwelling provided by any unregistered person to any registered person (other than a person who has opted to pay tax under composition levy) will now attract RCM. Previously, any registered person receiving such services was covered under RCM.
These changes are effective from January 16, 2025, unless otherwise specified. It's crucial for businesses and individuals to stay informed about these updates to ensure compliance and optimize their GST strategies.
