GST Exempted on Community Hostels

 Railway services, community hostels exempted from GST: Nirmala Sitharaman

ByRajeev Jayaswal, New Delhi

Jun 23, 2024 07:46 AM IST

This was the first meeting of the GST Council after the new government was formed at the Centre and ahead of the full Union budget, which is expected next month

The Centre and the states decided at the Goods and Services Tax (GST) Council meeting on Saturday to provide tax relief to people visiting railway platforms, students staying in community hostels, apple growers, milkmen, households and the housing sector, besides introducing a slew of taxpayer-friendly measures while implementing stricter compliance to check fraudsters.

Union finance minister Nirmala Sitharaman addresses a press conference after the 53rd GST Council Meeting, at the National Media Center in New Delhi on Saturday. (ANI)

Union finance minister Nirmala Sitharaman addresses a press conference after the 53rd GST Council Meeting, at the National Media Center in New Delhi on Saturday. (ANI)

After the 53rd meeting of the GST Council, Union finance minister Nirmala Sitharaman said the federal body that met after October 2023 “has actually taken a lot of decisions on trade facilitation, easing compliance burden and giving relief to taxpayers… So this will benefit traders, MSMEs and taxpayers”.

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She said the Council has decided to exempt GST on accommodation services provided to students outside an education institution. Students residing within the campus of an institution are already exempted from paying GST. The exemption is conditional to the accommodation rent being up to ₹20,000 per person per month and the accommodation service being supplied for a minimum continuous period of 90 days (to avoid tax evasion by short-stay hotels classified as hostels).

In order to provide relief to the general public, the Council also exempted several services provided by the Indian Railways from GST. These are sale of platform tickets, facility of retiring rooms or waiting rooms, cloak room services and battery-operated car services. It also exempted intra-railway transactions from the ambit of GST, which will help in reducing operational costs.

In order to provide relief to milkmen, the Council made GST levy uniform on all types of milk cans (steel, iron and aluminium) irrespective of their use at 12%. Apple growers of J&K and Himachal Pradesh have been given relief as the GST rate on carton, boxes and cases of both corrugated and non-corrugated paper or paper-board has been reduced from 18% to 12%. Households will pay 12% GST on all types of solar cookers irrespective of single or dual energy sources, she said. The FM clarified that all types of sprinklers including fire water sprinklers will attract 12% GST, helping the housing sector.

This was the first meeting of the GST Council after the new government was formed at the Centre and ahead of the full Union budget, which is expected next month. Sitharaman said the Centre and the states discussed budget-related matters in the first half of Saturday while the second half was dedicated to GST-related issues. She chaired a pre-budget consultation with finance ministers of states and Union territories (UTs). The meeting was also attended by the CMs of Goa, Meghalaya, Mizoram, Nagaland, and Sikkim as well as the deputy CMs of Bihar, Madhya Pradesh, Odisha, Rajasthan and Telangana.

Addressing a press conference after the GST Council’s meeting, Sitharaman said that the federal body recommended to roll out nationwide a biometric-based Aadhaar authentication system in a phased manner. “This will strengthen the registration process in GST and will help in combating fraudulent input tax credit (ITC) claims made through fake invoices,” she said. The Council has taken several (more than two dozen) measures for facilitation of trade, which includes extension of timelines and provisions to reduce tax litigation, she added.

Sitharaman said a group of ministers (GoM) under the chairmanship of Bihar’s deputy CM Samrat Chaudhary is working on overall rate rationalisation and its basic contours would be discussed in the next meeting of the Council. Meanwhile, in the 53rd meeting several other rate-related clarifications have been issued.

Other decisions related to changes in GST rates of goods included application of a uniform 5% integrated GST (IGST) rate on imports of parts, components, testing equipment, tools and tool-kits of aircraft to provide a fillip to MRO activities subject to specified conditions, the finance ministry said in a statement. It also extended IGST exemption on imports of specified items for defence forces for a further period of five years till June 30, 2029 making imports of such items cheaper. Similarly, IGST exemption on imports of research equipment imported under the Research Moored Array for African-Asian-Australian Monsoon Analysis and Prediction (RAMA) programme was extended.

The Council also exempted compensation cess on supply of aerated beverages and energy drinks to authorised customers by unit-run canteens under the ministry of defence and provided ad hoc IGST exemption on imports of technical documentation for AK-203 rifle kits imported for the defence forces.

Pratik Jain, partner at PwC India, said the first GST Council meeting after the formation of a new government at the Centre seemed to have two key points -- ease of doing business and bringing certainty in the tax regime. “Waiver of interest and penalty for past GST demands is a great step which would hopefully bring down the litigation to some extent. Sunset clause 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 cash flow standpoint,” he said adding that it is one of the “very positive and fruitful” council meetings.

“Pan-India implementation of biometric-based registration in a phase-wise manner would help weed out fake registrations and fake credits. This measure would nip in the bud any bogus registrations,” said Abhishek Jain, indirect tax head and partner at KPMG.

In a major relief to students, the Council, chaired by Union Finance Minister Nirmala Sitharaman, decided to exempt services by way of hostel accommodation outside educational institutions up to Rs 20,000 per person per month. Hostels within educational institutions are already exempted from the GST.

No GST on railway services, hostels; 12% tax on milk cans 

Services provided by the railways like platform tickets, waiting and cloak room facilities, battery-operated car services and intra-railway transactions have been exempted from GST. Gyanendra ...