GST Council Meet: What’s Cheaper and Expensive Now?

The Goods and Services Tax (GST) Council, led by Finance Minister Nirmala Sitharaman, convened on Saturday, December 21, 2024, and made several key decisions. The Council decided to impose an 18% GST on the margin value from the sale of used electric vehicles (EVs) by businesses. Additionally, it clarified that caramel popcorn will continue to be taxed at 18%, while spiced and pre-packaged popcorn will be subject to a 12% GST, and unpackaged, unlabeled popcorn will attract a 5% tax.

The meeting, held in Jaisalmer, Rajasthan, also deferred crucial decisions on reducing tax rates for life and health insurance premiums and imposing GST on food delivery by app-based platforms such as Swiggy, Zepto, and Zomato.

Impact on Your Pocket

Used Electric Vehicles (EVs)

The Council confirmed that the sale and purchase of used EVs by individuals remain exempt from GST. However, businesses reselling used EVs will face an 18% GST on the margin value—the difference between the purchase and resale price—similar to the taxation of non-electric used vehicles.

Popcorn

• Caramelised popcorn will continue to attract 18% GST.
• Pre-packaged and spiced popcorn will be taxed at 12%.
• Unpacked and unlabeled popcorn will have a 5% GST rate.

Fortified Rice Kernels and Other Products

• The tax rate on fortified rice kernels used in public distribution has been reduced to 5% from 18%.
• ACC blocks with 50% fly ash will be taxed at 12%.
• Black pepper and raisins supplied directly by farmers will be exempt from GST.

Bank Penal Charges

• GST Rate: Exempt
• No GST will be levied on penal charges imposed by banks or non-banking financial companies (NBFCs) on borrowers for non-compliance with loan terms.

Payment Aggregators/Fintechs

Exemption: Payment aggregators handling payments of less than ₹2,000 are exempt from GST. However, this exemption does not apply to payment gateways or fintech companies.

Compensation Cess

• Reduction: The compensation cess on supplies to merchant exporters will be reduced to 0.1%, aligning it with the GST rate.
• A Group of Ministers (GoM) will be given an extension to further discuss the issue of compensation cess.

Old Vehicles

• Tax Rate: 18% GST
• The sale of old or used vehicles by registered sellers will attract an 18% GST. However, sales directly between individuals will not be taxed.

Gene Therapy and IGST

• Gene therapy is fully exempt from GST.
• The exemption of IGST on surface-to-air missiles is also extended.

Aviation Turbine Fuel (ATF)

• Status: Deferred
• States did not agree to bring ATF under GST, and the decision on its inclusion remains deferred. The current taxation system will continue, where ATF remains outside the GST regime.

Registration for Small Companies

The Finance Minister mentioned that a concept note to ease the registration process for small companies has received in-principle approval. This may require amendments to the GST Acts.

Deferred Decisions

Several important decisions were deferred:

• FSI (Floor Space Index) taxation remains under consideration.
• The GST Council has formed a Group of Ministers (GoM) to explore the option of allowing states to levy a calamity cess to raise funds during natural disasters, as requested by Andhra Pradesh after recent floods.
• No decision was made regarding the GST on delivery charges for quick commerce services like food delivery platforms.
• The decision to reduce GST on health insurance premiums has been deferred, pending further review.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.