55th GST Council meeting issuance of 8 Notifications by CBIC

55th GST Council meeting issuance of 8 Notifications by CBIC

The 55th GST Council meeting and subsequent issuance of eight notifications by the CBIC on January 16, 2025, reflect ongoing efforts to refine and enhance the GST framework. These aim to streamline tax rates, exemptions, compliance mechanisms, and definitions to ensure greater clarity and fairness in the GST framework.

Reverse Charge Mechanism under GST has undergone significant changes

Reverse Charge Mechanism under GST has undergone significant changes with the introduction of Notification No. 07/2025-Central Tax (Rate). Key Changes via Notification No. 07/2025-Central Tax (Rate) are mention below:

• Serial No. 4: Exclusion of “Body Corporate” : Previously: Reverse charge applied to “any person.”  Now: The term “any person” excludes body corporates, meaning body corporates no longer fall under RCM for specific services (e.g., sponsorship services). Instead, GST will be handled under the forward charge mechanism.
• Serial No. 5AB: Exclusion of Composition Scheme Taxpayers : Previously: Reverse Charge Mechanism applied to “any registered person.” Now: “Any registered person” excludes taxpayers registered under the Composition Scheme. As a result, composition taxpayers are not required to pay GST under Reverse Charge Mechanism for specified services like rent payments.
• For Composite Suppliers: Composite taxpayers no longer need to pay Reverse Charge Mechanism on rent payments. Impact that Reflect this amendment while filing CMP-08 for Q3 of FY 2025-26 to ensure compliance.
• For Body Corporates: GST liability for sponsorship services will now be handled under forward charge, meaning the service provider (not the recipient) will pay GST. Businesses must adjust their invoicing and tax remittance processes accordingly.