The 54th GST Council met under the Chairpersonship of the Union Minister for Finance & Corporate Affairs in New Delhi.

Key Highlights of 54th GST Council

• Cancer Drugs: The GST rate on cancer drugs namely, Trastuzumab Deruxtecan, Osimertinib and Durvalumab to be reduced from 12% to 5%.
• Metal Scrap: Reverse Charge Mechanism (RCM) to be introduced on supply of metal scrap 
• Exemption: GST Council recommends to exempt supply of research and development services by a Government Entity; or a research association, university, college or other institution notified u/s 35 of Income Tax Act using government or private grants.
• GST Council also recommends formation of a Group of Ministers (GoM) to study the future of compensation cess
  • Compensation Cess: States are guaranteed compensation for any revenue shortfall below 14% growth (base year 2015-16) for the first five years ending 2022.
  • GST compensation is paid out of Compensation Cess every two months by the Centre to states.
• Life and Health Insurance: The Council has set up a Group of Ministers (GoM) to thoroughly review GST issues concerning life and health insurance. 
• Launch Of B2C E-Invoicing Pilot: One of the most notable decisions from the 54th GST Council meeting was the launch of a pilot for B2C e-invoicing.

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What is Reverse Charge Mechanism?

• Typically: The supplier of goods or services pays the tax on supply. 
• Under the reverse charge mechanism: The recipient of goods or services becomes liable to pay the tax, i.e., the chargeability gets reversed.
• Objectives:
  • To widen the scope of levy of tax on various unorganised sectors;
  • To exempt specific classes of suppliers of goods/services
  • To tax the import of services 

About GST Council

• About: It is a constitutional body formed under Article 279A(1), enacted by the 101st Constitutional Amendment Act.
• Recommendations: According to Article 279A(4), the GST Council recommends the GST rates for the Union and the States.
• Composition of GST Council (Article 279A(2)): The GST Council brings together representatives from the Centre and the States to oversee the nationwide implementation of GST. Its membership includes:
  • Chairperson: Union Finance Minister
  • Member: Union Minister of State in charge of Revenue or finance
  • Members nominated by each State Government, typically in charge of finance or taxation
  • Vice-Chairperson elected from among the Council members (Article 279A(3))
• Decision Making Process: The GST rates are jointly determined by the states and the central government during GST Council meetings.
  • The GST Council requires at least half of its total members to be present to conduct a meeting. 
  • Decisions are made based on a majority of no less than three-fourths of the weighted votes of members present and voting. 
  • The central government’s vote carries a weight of one-third of the total votes cast, while all states collectively hold the remaining two-thirds weightage.

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