Here’s What Gets Cheaper & Dearer After 55th GST Council Meeting Decisions.

The 55th GST Council meeting, chaired by Finance Minister Nirmala Sitharaman took place in Jaisalmer, Rajasthan on December 21, Saturday and the council made several key decisions on GST rates and deferred some matters.

Tax Rate Changes and Clarifications

•  Fortified Rice Kernels: The tax rate has been reduced from 18% to 5% for fortified rice kernels used for public distribution.
• ACC Blocks: ACC blocks containing 50% fly ash will attract a 12% GST rate.
• Black Pepper and Raisins: When supplied directly by farmers, black pepper and raisins will be exempt from GST. This means that agriculturalists won’t have to pay GST on these items.

The GST Council also clarified the taxability of popcorn. Caramelised popcorn will continue to attract tax at the rate of 18%. Pre-packed and spiced popcorn will attract a 12% tax rate, while unpacked and unlabeled ones will attract 5% GST.

Used Electric Vehicles and Old Vehicles

The GST Council decided to levy an 18% GST on the margin value of used electric vehicles sold by businesses. However, the sale and purchase of used vehicles by individuals will continue to be exempt from GST. The council also imposed an 18% tax rate on used or old vehicles sold by registered sellers.

The GST Council totally exempted gene therapy from GST and extended the IGST exemption on surface-to-air missiles. The council also reduced the compensation cess rate to 0.1% on supplies to merchant exporters. No GST will be levied on penal charges imposed by banks and non-banking financial companies (NBFCs) on borrowers.

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The council approved a concept note to simplify GST registration processes for small companies. Payment aggregators handling payments of less than Rs 2,000 will be eligible for GST exemptions.

Health Insurance Premium

The GST Council decided to set up a Group of Ministers (GoM) to mull over allowing states to levy cess under GST to overcome financial distress after natural calamities. The GST law provides for a levy of special taxes for a specified period to raise additional resources during any natural calamity or disaster.

It had also suggested GST exemption on premiums paid by individuals, other than senior citizens for health insurance with coverage of up to RS 5 lakh.

On the matter of health insurance, the GST Council provided relaxation to the GoM to decide on the reduction of GST rates on insurance premiums.

Sitharaman noted that the GoM felt more time was needed for broader deliberations to determine an appropriate tax rate on insurance premiums.

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Bihar Deputy Chief Minister Samrat Chaudhary, who heads the panel on GoM on insurance, said one more meeting is required to take a call on taxation of group, individual, and senior citizen’s policies.

The issue of GST on life and health insurance was placed before the GST Council in its 54th Meeting held on September 9, 2024, in New Delhi.

The GoM was tasked to look into GST rates related to medical insurance and come up with a report so that the GST Council could take up the matter. Both life insurance and medical insurance premiums attract a GST rate of 18%.

GST Council Meeting: Deferred Decisions

The Council deferred a decision on reducing the tax rate on insurance premiums. The GoM examining the issue had recommended exempting insurance premiums paid for term life insurance policies from GST and premiums paid by senior citizens for health insurance coverage.

The GST Council could not decide on the taxation related to the Floor Space Index (FSI), and this matter remains under consideration.

The GST Council also discussed the imposition of GST on quick commerce services, e-commerce, and food delivery platforms like Swiggy, Zomato and so on, but no decision was reached. Levying tax on delivery charges by the platforms was delayed.

“This has been deferred,” said FM Nirmala Sitharaman, adding the Fitment Committee (comprising officials from the Centre and state GST department) will again review it and the issue being debated is if the tax should be equivalent to five per cent GST rate levied on food or more.

The 55th meeting of the GST Council was held in Jaisalmer, Rajasthan, chaired by Union Minister Nirmala Sitharaman. The meeting was attended by Union Minister of State for Finance Pankaj Chaudhary, Chief Ministers of several states, and other key officials.