The Council also clarified that no GST is payable on the ‘penal charges’ levied and collected by banks and NBFCs from borrowers for non-compliance with loan terms.
The GST Council at its 55th meeting chaired by Union Minister of Finance and Minister of Corporate Affairs Nirmala Sitharaman in Jaisalmer made several changes and clarifications in the rates of goods and services.
Among the major changes announced, the council decided to exclude taxpayers registered under the composition levy scheme from paying GST on a reverse charge basis on rented premises from unregistered persons, and regularising past transactions.
“The Council to exclude taxpayers registered under the composition levy scheme from the entry at Sr. No. 5AB introduced vide Notification No. 09/2024-CTR dated 08.10.2024, vide which renting of any commercial/immovable property (other than residential dwelling) by unregistered persons to registered persons was brought under the reverse charge mechanism,” stated a PIB press release.
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“Further, to regularize the period from the date when the notification No. 09/2024-CTR dated 08.10.2024 became effective, i.e., from 10.10.2024 till the date of issuance of the proposed notification on “as is where is” basis,” added the release.
The amendment rests on previous changes made during the 54th GST Council meeting wherein the council had decided to bring renting of commercial property by an unregistered person to a registered person under Reverse Charge Mechanism (RCM), in order to prevent revenue leakage. With this change, the responsibility for paying GST will rest on the tenant, utilising the commercial rental services, and not on the supplier, namely the landlord.
Businesses with a total annual turnover not exceeding Rs 1.5 crore are eligible for the composition scheme. The turnover of all businesses sharing the same PAN must be added to calculate the turnover.
Among other clarifications, the Council also clarified that no GST is payable on the ‘penal charges’ levied and collected by banks and NBFCs from borrowers for non-compliance with loan terms.
The meeting was also attended by Union Minister of State for Finance Pankaj Chaudhary, Chief Ministers of Goa, Haryana, Jammu and Kashmir, Meghalaya and Odisha; Deputy Chief Ministers of Arunachal Pradesh, Bihar, Madhya Pradesh, and Telangana; besides Finance Ministers of States & UTs (with legislature) and senior officers of the Ministry of Finance & States/ UTs.
