GST Meet Highlights: Taxation On Used Cars, Popcorn - Know All Key Decisions 

The 55th GST Council meeting was held in Jaisalmer, Rajasthan on December 21. The meeting was chaired by the Finance Minister, Nirmala Sitharaman.  The 55th GST Council Meeting was attended by Union Minister of State for Finance Pankaj Chaudhary. Several chief ministers, deputy chief ministers and finance ministers from multiple states and union territories also attended the meeting along with officials from the Central Board of Indirect Taxes & Customs (CBIC).

Several changes were announced by the GST Council which included an increased tax on the sale of old electric vehicles and tax slabs for different corn and rice-based products. Here’s a look at some of the key changes announced by the Finance Minister at the press briefing held after the GST Council meeting:

Gene Therapy Exempt from GST

The GST Council has made Gene Therapy GST-exempt. The therapy is used to treat or prevent certain ailments by modifying a patient’s genes. The therapy is used for the treatment of certain types of cancer, genetic diseases, cystic fibrosis and AIDS.

GST On Compensation Cess

In order to help traders who are engaged in export-based businesses the GST Council has reduced the rate of compensation cess to 0.1% on supplies to merchant exporters. The rate has been reduced to par with GST on such supplies.

Taxation Norms On Popcorn

New taxation rules were announced on the sale of popcorn at the GST Council Meeting. As per the announcement unpackaged popcorn which has been seasoned with salt and spices will attract 5% GST. On the other hand, packaged popcorn will attract a 12% GST rate. Caramelised popcorn has been categorised as a confectionary product since its manufacturing process involves altering its character with sugar. The GST charged on caramel-coated popcorn has been fixed at 18% which is in line with the GST charged on other confectionery products.

GST Rate Applicable On Fortified Rice Kernels Lowered

Fortified rice kernels refer to grains which have been enriched with essential micronutrients such as iron, folic acid, and vitamin B12. The GST council extended the concessional 5% GST applied on inputs used for food preparation for the purpose of free distribution under government programmes. The GST rate for fortified rice kernels was lowered to 5% from the previous rate of 18%.

GST On Black Pepper and Raisins

Dried black pepper and raisins have been declared as GST-exempt by the GST Council. However, the exemption is applicable only when the raisins and the dried pepper are supplied by agriculturalists. GST will continue to be charged on the sale of the two goods by merchants.

GST Exemption For Payment Aggregators

Payment aggregators who conduct transactions with a value of less than Rs 2000 payment are eligible for GST exemption. The Finance Minister clarified that the exemption does not cover payment gateways and fintech services which do not involve settlement of funds.

GST On Penal Charges Levied By Banks

No GST will be payable on penal charges levied and collected by banks and NBFCs on non-compliance with loan terms.

New Registration Process For Small Companies

Finance Minister Nirmala Sitharaman said that a concept note detailing a new registration process for small companies has been prepared by the GST Council. The move is aimed at simplifying the registration process for small companies. The minister added that the concept note has also been given in-principle approval by the GST Council.

GST On Autoclaved Aerated Concrete Blocks Reduced

Autoclaved Aerated Concrete Blocks are made from a mixture of cement, sand, fly ash, water, and an expansion agent. These concrete blocks are used for the construction of exterior walls, and partition walls. The GST Council announced that the GST rate charged on AAC blocks has been reduced to 12% if the blocks contain more than 50% fly ash.

Increased Taxation On Sale Of Used Cars and EVs

The GST Council has approved the hike in the GST charged on the resale of small petrol and diesel vehicles and electric vehicles by car reselling businesses. The Finance Minister said in the press briefing that the GST will be charged on the profit earned by such companies. The GST charged on such profits has been hiked to 18%. Prior to the announcement the GST rate applicable for such sales was 12%.

Decisions Deferred By GST Council

The GST Council did not make any announcement related to the reduction of tax rates applicable to life and health insurance premiums during the 55th meeting held on Saturday.

However, a Group of Ministers (GoM) has been tasked with undertaking further deliberations on the matter. The GoM will meet again in January.

Additionally, the decision regarding the application of GST on the delivery of food and other goods via quick commerce has also been deferred. The decision related to the methodology used for applying GST on the construction of floors in buildings has also been deferred. The GST Council has denied the proposal to bring Aviation Turbine Fuel (ATF) under the ambit of GST.