Important GST Updates Effective from 16th January 2025! Stay Ahead of the Curve

The Goods and Services Tax (GST) regime in India continues to evolve, with recent updates aimed at streamlining compliance, promoting affordability, and addressing industry-specific concerns. As businesses gear up for these changes effective from 16th January 2025 , staying informed is no longer optional—it’s essential. Here’s a comprehensive breakdown of the latest GST notifications and their implications for taxpayers:

1. Fortified Rice Kernel (FRK) – GST Slashed to 5%

What’s Changed? Fortified Rice Kernels (FRK), which were earlier taxed at 18% , will now attract a reduced GST rate of 5% . This move aligns with the government’s focus on enhancing nutrition accessibility and affordability.

Impact:

• Consumers benefit from lower prices, making fortified rice more accessible.

• Suppliers and manufacturers gain an incentive to produce and distribute FRK, contributing to better public health outcomes.

Effective Date: 16th January 2025

Action Point: Businesses dealing in FRK should update their invoicing systems to reflect the new rate and ensure compliance.

2. Gene Therapy – Now GST Exempt

What’s Changed? A new entry (S. No. 105A ) has been introduced in the GST exemption schedule, making Gene Therapy services tax-free.

Impact:

• Patients requiring advanced medical treatments will face reduced costs, improving affordability.

• Hospitals and healthcare providers offering gene therapy services can pass on savings to patients, fostering trust and accessibility.

Effective Date: 16th January 2025

Action Point: Healthcare providers must review their service offerings and update their GST filings to reflect this exemption.

3. GST on Old & Used Vehicles Increased to 18%

What’s Changed? The GST rate on the sale of old and used vehicles has been hiked from 12% to 18% . The calculation methodology remains unchanged:

• For registered dealers claiming depreciation, GST applies to the difference between the selling price and the depreciated value.

• For others, GST applies to the difference between the selling price and the purchase price.

Impact:

• Buying and selling used vehicles will become more expensive, potentially impacting demand.

• Dealers and individuals must adjust pricing strategies to account for the increased tax burden.

Effective Date: 16th January 2025

Action Point: Vehicle sellers should re evaluate their pricing models and ensure accurate GST calculations to avoid penalties.

4. Hotel Accommodation – Redefining "Specified Premises" & Removing "Declared Tariff" Concept

What’s Changed? The definition of “Specified Premises” has been revamped:

• Hotels where accommodation exceeded ₹7,500/unit per day in the previous financial year are included.

• Premises declared as “specified” via Annexure VII (filed between January-March of the previous FY).

• New registrants must declare within 15 days of receiving registration acknowledgment.

Additionally, the concept of “Declared Tariff” has been removed, simplifying classification under GST slabs.

Impact:

• Hotels must file declarations on time to ensure proper classification under the new system.

• Those wishing to opt out of the “Specified Premises” category must submit Annexure IX by March-end.

Effective Date: 1st April 2025

Action Point: Hoteliers must stay vigilant about filing deadlines and ensure timely submissions to avoid misclassification and penalties.

5. Reverse Charge Mechanism (RCM) – Changes for Sponsorship & Rental Services

What’s Changed?

• Sponsorship Services: RCM now applies only if the service provider is NOT a body corporate . If a body corporate provides sponsorship services, GST will be under forward charge instead of RCM.

• Renting of Immovable Property: RCM now applies only when an unregistered person rents property to a registered person (excluding composition taxpayers). Earlier, all registered persons receiving rental services were covered under RCM.

Impact:

• Businesses handling sponsorships and rentals must revise their invoicing and tax collection strategies to align with the updated rules.

• Clarity on who bears the GST liability reduces ambiguity and ensures smoother compliance.

Effective Date: 16th January 2025

Action Point: Review existing contracts and update processes to reflect the new RCM applicability.

Key Takeaways – What Taxpayers Must Do!

To navigate these changes seamlessly, here’s a quick checklist:

✅ Selling Vehicles? Factor in the increased GST rate of 18%.

✅ Running a Hotel? File the necessary declarations to classify under the new system.

✅ Handling RCM Transactions? Understand who pays GST now to avoid compliance errors.

✅ Medical Industry? Leverage the tax-free status of Gene Therapy to enhance affordability.

✅ Food Industry? Benefit from the reduced GST rate on Fortified Rice Kernel (FRK).

Why Staying Updated Matters

Ignoring these updates is akin to driving without refueling—you risk running into compliance roadblocks that could disrupt your business operations. By staying ahead of the curve, you not only ensure smooth functioning but also position your business to capitalize on opportunities created by these changes.

Conclusion:

The GST landscape is dynamic, and businesses must adapt swiftly to remain compliant and competitive. These updates reflect the government’s efforts to simplify taxation, promote affordability, and address sector-specific challenges. By understanding and implementing these changes, you can future-proof your business and thrive in the evolving GST ecosystem.