53rd GST Council meeting: Exemption for student hostels, railway services; lower tax rate for milk cans, solar cookers

Federal indirect tax body, the Goods and Services Tax (GST) Council on Saturday decided to cut tax rates on a few items such as milk cans and solar cookers, signaled the end of the anti-profiteering regime, and took a slew of measures to improve the ease of doing business, Union finance minister Nirmala Sitharaman said after the council’s 53rd meeting in the New Delhi.

The council decided to lower the tax rate on milk cans, solar cookers—whether single or dual energy source—cartons, boxes and cases such as those used for packaging fruits from 18% to 12%.

The indirect tax body also exempted hostel stays of and over 90 days outside educational institutions, Sitharaman said. Hostel stays within an educational institution are already exempt from GST, she added.

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The exemption announced on Saturday applies to hostel fees of up to ₹20,000 per person a month. “This is meant for students, who stay for 90 days continuously, but not for tourists,” the minister said.

Tax rates on many mass-use items have come down significantly after the introduction of GST and subsequently due to successive rate cuts in the new tax regime.

Flour or atta, taxed at 3.5% in the pre-GST regime, and sanitary napkins, taxed at 12% earlier, attract no tax in the GST regime. Unbranded ayurvedic medicines, taxed at 12% earlier, are now taxed at 5%. The tax rate on detergents, televisions and cosmetics has also come down from 28% to 18%. Mobile phones, electric appliances, washing machines and refrigerators, which were taxed at more than 31% in the pre-GST regime, currently attract 18%, shows data from the Central Board of Indirect Taxes and Customs (CBIC).

The council exempted railway platform tickets, retiring room facilities, cloak rooms and battery-operated car services provided by Indian Railways from GST. The services provided by special purpose vehicles to Indian Railways during concession periods will also not attract any GST.

The council will again meet in August, Sitharaman said.

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Ease of doing business measures 

To improve the ease of doing business, the council has recommended legislative changes to provide for conditional waiver of interest or penalty or both on certain tax demands raised for fiscal year 2017-18, 2018-19 and 2019-20. “Considering the difficulties faced by taxpayers, during the initial years of GST implementation, the council recommended waiving interest and penalties for demand notices in cases where the taxpayer pays the full amount of tax demanded in the notice by 31 March 2025," the Union finance minister said.

The decision offers relief to businesses and will promote tax compliance, said Sandeep Sehgal, partner-tax at AKM Global, a tax and consulting firm.

The council recommended amendment to Central GST Act to provide a sunset clause for the anti-profiteering regime under GST and to provide for the handling of anti-profiteering cases by the principal bench of GST Appellate Tribunal (GSTAT), which is being set up.

From 1 April 2025, no further complaints of profiteering by companies will be accepted. That is because the GST system has stabilized. The provision was introduced in 2017 to prevent profiteering during the transition to the new tax system.

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The council recommended amendment in Section 9 of the CGST Act for not levying GST on extra neutral alcohol used for manufacturing of alcoholic liquor for human consumption. This will only be taxed by states under their excise duty-value added tax regimes.

Agenda for future meetings

A person close to discussions in the council said the indirect tax body will start discussions on the GST cess levied on items like cars and aerated drinks at future meetings.

Bihar deputy chief minister Samrat Chaudhary will now head a key ministerial group looking into GST rate rationalization.

The council decided to reduce the amount to be deposited by parties while filing appeals at the GST appellate tribunal.

“Introducing measures to address certain issues like fake invoicing aims to enhance the integrity of the GST system. Uniform GST rates of 12% on milk cans and carton boxes simplify tax structures, benefiting industries like dairy and agriculture. Exempting services provided by Indian Railways and certain hostel accommodations from GST will reduce costs for the public,” said Sehgal of AKM Global.

The council cut the tax collected at source requirement from 1% to 0.5% for sellers on e-commerce platforms.

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“The decision will provide as big relief for lakhs of small and mid-sized sellers and unlock several hundred crore worth of working capital for them, thereby reducing their cost of doing business," said a Flipkart spokesperson, adding that the reduction in pre-deposit amounts for litigation against GST disputes will "improve the ease of doing business”.