GST Council Eases Process For Small Businesses And Skill Providers, Clarifies EV Taxation

Finance Minister Nirmala Sitharaman announced key decisions after the 55th GST Council meeting, aimed at simplifying the GST process for small businesses and skill training providers.

Sitharaman confirmed that the GST Council approved a concept note to simplify GST registration for smaller companies. This will ease the process for smaller firms to comply with GST requirements.

GST Exemption for Skill Training Providers

In another significant move, Sitharaman announced that GST will not apply to skill training providers. She added that a formal notification will be issued to implement this exemption, making skill development more affordable and accessible.

Compensation Cess and EV Tax Updates

Regarding the compensation cess, Sitharaman said there is no fixed timeline for the Group of Ministers (GoM) to resolve the issue. The Council has not yet finalized any changes on this front.

The Central Board of Indirect Taxes and Customs (CBIC) clarified that the compensation cess on SUVs will apply only prospectively. Vehicles sold before this decision will not be affected.

Sitharaman also addressed the GST structure for electric vehicles (EVs). New EVs will attract a 5% GST. The Council is focused on promoting the adoption of EVs. Used EVs sold between individuals will not attract GST. However, used EVs sold to companies or those modified for resale will be taxed at 18%, based on the margin between purchase and sale price.

She emphasized that the decision to apply 18% GST on used EVs followed extensive discussions within the GST Council. Initially, the Centre proposed a 5% rate, but after detailed deliberations, the final decision was made.

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