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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.
Finance Minister Nirmala Sitharaman, while addressing the media on Saturday, said the Bihar deputy chief minister Samrat Chaudhary felt that any decision on GST on health insurance would require GoM some more time.
GST Council has given approval for a new registration process for small firms. On this issue, Sitharaman said, “Small companies have issues in registration with various kinds of verifications...we have prepared a concept note, and it has received approval of GST council...This will bring in a new registration process which will ensure the smooth registration of small companies.”
There is no decision on food delivery GST, “Food delivery through e-commerce was widely discussed, but no decision has been taken... It has been deferred…” she added.
On the issue of GST on Aviation Turbine Fuel (ATF) she said, “A request was placed on the agenda whether ATF should be brought into the GST...It has not been agreed on as the states did not feel comfortable and it continues to remain where it is today.”
The GST rate of fortified rice kernels has been reduced to 5%. Gene therapy has been totally exempted from the GST, Sitahraman stated.
Speaking on GST levied on caramelised popcorn, she said, “We had a wide-ranging discussion on caramelised popcorn, all states agreed that all items with added sugar are treated under a separate tax bracket.”
Products such as salted, caramelised, and plain popcorn in certain states are being sold as namkeen. Caramelised popcorn comes with added sugar, so the treatment of rate is different from namkeen," she added.
"…ACC blocks containing more than 50 per cent fly ash will attract 12 per cent GST...Black pepper whether fresh green black pepper or dried black pepper and raisins when supplied by an agriculturist is not liable to GST...No GST is payable on penal charges or levies collected by banks and NBFCs for non-compliance with loan terms..." Sitharaman said.
Key takeaways from the meeting included tax rate adjustments across various sectors:
Popcorn Taxation: Popcorn with salt and spices (if unpackaged) will attract 5% GST, pre-packaged popcorn will have a 12% GST rate, and caramel-coated popcorn will be taxed at 18%.
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 per cent tax, whereas an 18 per cent 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, reported PTI.
Fortified Rice Kernels: The GST rate was standardized at 5%, down from the previous 18%, regardless of end use.
Autoclaved Aerated Concrete (ACC) Blocks: ACC blocks containing more than 50% fly ash will now attract 12% GST, reduced from 18%.
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% from the earlier 12%.
Union Minister of State for Finance Pankaj Chaudhary, along with chief ministers, deputy chief ministers, and finance ministers from various states and union territories, attended the meeting alongside officials from the Central Board of Indirect Taxes & Customs (CBIC).
According to various media reports, the Council opted to defer decisions regarding insurance-related GST changes, citing the need for further review following discussions among the Group of Ministers. "Some members said more discussions are required. We (GoM) will meet in January again,” Bihar Deputy Chief Minister Samrat Chaudhary, who leads the GoM on insurance, said.
“We will submit the GoM report on rate rationalisation at the next meeting of the Council,” he added.
The GST Council postponed its decision on reducing tax rates for life and health insurance premiums during its 55th meeting held on Saturday. Chaired by Union Finance Minister Nirmala Sitharaman, the meeting saw council members agree that further technical discussions were needed. A Group of Ministers (GoM) has been tasked with additional deliberations on the matter.
Arvind Subramaniam, the Former Chief Economic Advisor to the Government of India has reacted to the recent changes introduced by the GST Council and said on X, "This is a national tragedy, violating the spirit of the Good & Simple Tax the GST was meant to be
The folly is compounded because instead of at least moving in the direction of simplicity we are veering to greater complexity, difficulty of enforcement & just irrationality. Sad."
The Council's updated rulings aim to streamline the tax structure on items such as popcorn, fortified rice, and AAC blocks while increasing revenue through adjustments in used vehicle taxation. However, proposals regarding GST on insurance products will continue to be studied before any final decisions are made.
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