The 55th GST Council meeting, chaired by Finance Minister Nirmala Sitharaman in Jaisalmer, Rajasthan, introduced several updates to the taxation framework while deferring discussions on GST restructuring for insurance products.
Addressing the media on December 21, Sitharaman highlighted that GST exemption in insurance was postponed as input from Insurance regulator Insurance Regulatory and Development Authority of India (IRDAI) is awaited and the Group of Ministers (GoM) felt it needed a bit more time.
The GoM on insurance has discussed relief on health, life insurance in detail. But after getting IRDAI’s inputs the GoM will finalise report, said Sitharaman. There are still a lot of details yet to be finalised in GoM on rate rationalisation. But after getting IRDAI’s inputs the GoM will finalise report. No timeline has been given to GoM on cess to finalise report, she added.
The finance minister also clarified GST structure on used EV purchase. She said that the GST council favours promoting EV. Used EV (individual selling to another individual) will pay 0 percent tax, but a company/registered used car seller dealing with resale of EV/petrol/diesel will have to pay 18 percent on margin value.
Margin value is the value between purchase price & re-sale value of that particular vehicle, she clarified.
The FM also said that GST rate of fortified rice kernels has been reduced to 5 percent, while gene therapy has been totally exempted from the GST.
55th GST Council meeting highlights
Popcorn taxation: Popcorn with salt and spices (if unpackaged) will attract 5 percent GST, pre-packaged popcorn will have a 12 percent GST rate, and caramel-coated popcorn will be taxed at 18 percent.
The GST Council later issued a clarification on popcorn taxes. It said that pre-packed and labelled ready-to-eat snacks will attract a 12 percent tax, whereas an 18 percent GST will be levied on caramelised popcorn. However, it said that the tax rate on popcorn has not changed, and the Council has agreed that the Central Board of Indirect Taxes and Customs (CBIC) will issue a circular on the current taxes on popcorn.
Fortified rice kernels: The GST rate was standardized at 5 percent, down from the previous 18 percent, regardless of end use.
Autoclaved Aerated Concrete (ACC) blocks: ACC blocks containing more than 50 percent fly ash will now attract 12 percent GST, reduced from 18 percent.
Used cars and EVs: The Council approved increasing GST on the sale of old and used cars, including smaller petrol/diesel vehicles and electric vehicles, to 18 percent from the earlier 12 percent.
Calamity Cess: The Council has agreed to form a GoM, including representatives from West Bengal, Uttar Pradesh, Andhra Pradesh and other states to determine the procedure and system for implementing a 1 percent calamity cess on certain goods and services. This cess will help states recover from natural disasters.
Food delivery apps: Food delivery by e-commerce and quick commerce -- taxation for delivery and taxation for food was deliberated. However, no decision has been taken yet. GST Council has not taken any decision on this, it has been deferred, the GoM will deliberate on this once again.
ATF: States have rejected a proposal to include Aviation Turbine Fuel (ATF) in the ambit of the Goods and Services Tax (GST) regime, Finance Minister Nirmala Sitharaman said on December 21 during a briefing after the GST Council meeting. Periodically, there have been requests from the Civil Aviation Ministry as well as the industry to include ATF in GST, however, while the Council deliberated on this issue, it was not agreed to.
Floor space index: GST on Floor space index should be in reverse charge or forward charge was discussed. No decision on it. It is believed that land is a state subject. It was recognised that it will affect municipality revenue.