54th GST Council Meeting likely to Discuss Relief Measures and Specific Challenges related to Sector

The 54th GST Council Meeting is scheduled for September 9 in New Delhi, with a pack of agendas including key issues from multiple industries.

According to sources, the Council may consider granting assistance to foreign airlines that operate in India through branch offices. The GST Council’s fitment committee is expected to propose exempting the import of services from a foreign airline’s head office abroad that are received without consideration. This decision could normalize previous requests and provide relief to airlines facing large GST claims.

Lately, the Directorate General of GST Intelligence (DGGI) issued show-cause notices to ten foreign airlines, demanding Rs.10,500 crore in taxes for services provided by their overseas headquarters. Airlines affected include Emirates (Rs.7,550 crore), Etihad Airways (Rs.1,660 crore), and Saudi Arabian Airlines (Rs.612 crore).

The FMCG sector may also benefit, with the Council set to clarify the GST rate on snacks and namkeen, thereby lowering litigation for companies such as ITC, PepsiCo, and Haldiram. The fitment committee is likely to suggest a 12% GST rate for snacks manufactured using extrusion technologies in the future while treating previous periods at 18%.

In the education sector, the Council may exempt GST from grants and donations made to universities and research institutions, including IIT Delhi. Recently, seven educational institutions were served with show-cause notices asking Rs.220 crore in unpaid taxes.

Online gaming, casinos, and horse racing are also on the agenda, after the Council’s previous decision to levy a 28% GST charge on these industries beginning October 1, 2023. However, clarification on previous demands spanning 2017-2023, which amount to more than Rs.1 lakh crore, may be delayed pending additional data.

The IT sector is also likely to be addressed, with the Council anticipated to clarify GST laws for software services, cloud computing, and data hosting businesses such as Infosys, Amazon, Google, and Meta. This could entail establishing the place of supply and determining what constitutes a service export.

Meanwhile, the electric vehicle (EV) sector may be disappointed, as the fitment committee is unlikely to suggest exempting GST from EV charging services at public stations. To avoid duty inversion, the committee may advise against cutting GST on the manufacture of EV components such as Li-ion cells, battery packs, and electric motors.

Finally, the Council may address rate parity between cars and two-wheeler seats by proposing to raise the GST on car seats from 18% to 28% while keeping the current rate of 28% on two-wheeler seats.

The next meeting offers major discussions that will define the future tax landscape for a variety of industries.