The 54th GST Council meeting is likely to be on September 9 in New Delhi, with a packed agenda that promises both relief and challenges for various industries, according to CNBC-TV18 sources. A key issue likely to be addressed is relief for foreign airlines operating in India through branch offices.
Sources indicate that the GST Council's fitment committee is expected to recommend exempting the import of services by a foreign airline's head office abroad when received via no consideration. This proposal could also regularise past demands on as is basis, providing much-needed relief to the sector.
The Directorate General of GST Intelligence (DGGI, or the top GST anti-evasion authority) recently issued show-cause notices to 10 foreign airlines, claiming 18% GST on services received by their head offices abroad, totaling ₹10,500 crore.
The airlines affected include Emirates (₹7,550 crore), Etihad Airways (₹1,660 crore), and Saudi Arabia Airlines (₹612 crore) Oman Airlines (₹71 crore), Thai Airways (₹60 crore), Qatar Airways (₹53 crore), Singapore Airlines (₹40 crore), British Airways (₹33 crore) and Lufthansa Air Cargo (₹10 crore).
The Council is also expected to address concerns within the FMCG sector, particularly regarding the taxation of snacks and namkeen. Sources suggest the Council may propose aligning the GST rate on snacks prepared through extrusion processes with that of other snacks like bhujia and namkeen.
The committee is likely to recommend treating past periods at an 18% GST rate, while moving forward, a 12% GST rate may apply. This clarification could ease litigation and reduce the compliance burden for companies like ITC, PepsiCo, and Haldiram, which are currently contesting 18% GST demands.
The GST Council is also likely to consider giving relief to educational institutions and universities, including IIT Delhi.
The fitment committee is expected to propose exempting GST on grants and donations received for research purposes. DGGI has recently issued show-cause notices to seven educational institutions, demanding ₹220 crore in unpaid taxes.
The Council is also set to review amendments related to casinos, online gaming, and horse racing, following the decision in the 51st GST Council to impose a 28% GST rate from October 1, 2023.
However, the fitment committee may propose deferring clarity on past demands for these sectors from 2017 to 2023, pending further data collection.
The DGGI had sent notices to the online gaming, casinos and horse racing sector demanding past claims of over ₹1 lakh crore, and the industry is contesting the demand in the Supreme Court against the Centre.
The Council is also likely to bring in clarity for I-T major Infosys. Sources said that the "upcoming GST Council is likely to consider provisions to give relief to Infosys."
In addition, the Council is expected to address issues affecting major IT and data hosting companies like Amazon, Google, and Meta.
"Council is considering a proposal to clarify the pending issues about service providers of software, cloud computing, data hosting, etc. The council was presented with a detailed request of the industry based on which there could be clarity on the treatment of the place of supply, what should be treated as export of services and the GST rate treatment when the recipient is abroad," sources further said.
The rate parity between car and two-wheeler seats is another topic on the agenda. The fitment committee is expected to recommend increasing the GST on car seats from 18% to 28%, while maintaining the 28% GST on two-wheeler seats.
Finally, the electric vehicle (EV) sector may face disappointment, as the fitment committee is unlikely to recommend exempting GST on charging services at public stations.
Additionally, the committee is expected to advise against reducing GST rates on the manufacturing of Li-ion cells, battery packs, electric motors, and other EV components, to avoid duty inversion.
"The Fitment committee to avoid inversion of duties, is likely to recommend no cut in GST rates," sources said.
