GST Council Meet: What’s Cheaper, What’s Costlier? Find Out

New Delhi: The 55th GST Council meeting chaired by Union Finance Minister Nirmala Sitharaman on Saturday proposed several key recommendations to simplify tax procedures and provide relief to taxpayers, including individuals and businesses.

A Closer Look at the Key Decisions:

What’s Getting Cheaper?

– Fortified Rice Kernels (FRK): The GST on Fortified Rice Kernels (FRK) has been reduced to 5 per cent when supplied through the Public Distribution System (PDS) to benefit weaker sections of society.

– Gene Therapy: Gene Therapy has been fully exempted from GST. This makes advanced medical treatments more affordable.

– Food Preparations for Free Distribution: Inputs for food distributed under government schemes for economically weaker sections will now attract a reduced 5 per cent GST rate.

– Long Range Surface-to-Air Missile (LRSAM) Assembly: Exemption from Integrated Goods and Services Tax (IGST) on systems, sub-systems, and tools used for LRSAM manufacturing, aiding the defense sector.

– Inspection Equipment for IAEA: IGST exemption on imports of equipment and consumable samples for International Atomic Energy Agency (IAEA) inspections, supporting international compliance efforts.

– Pepper and Raisins (Direct Sales): Clarified as not liable to GST when sold directly by agriculturists, offering relief to agricultural producers.

What’s Getting Costlier?

– Old and Used Vehicles (Including EVs): GST increased from 12 per cent to 18 per cent on all old and used vehicles, except for certain petrol and diesel variants.

– Ready-to-Eat Popcorn: Pre-packed and labelled snacks will now attract 12 per cent GST.

• Caramelized popcorn will attract 18 per cent GST.
• Popcorn mixed with salt and spices, classified as namkeens, will continue to attract 5% GST if not pre-packaged and labelled.

– Autoclaved Aerated Concrete (ACC) Blocks: GST of 12 per cent will apply if the blocks contain more than 50 per cent fly ash content.

– Sponsorship Services by Corporates: Now under the Forward Charge Mechanism, potentially increasing costs for corporate sponsors.

– Penalty-Only Appeals: Higher pre-deposit required for penalty-only appeals under the Appellate Authority.

Other Key Changes

– Vouchers: No GST will apply to voucher transactions, as they are not considered a supply of goods or services.

– Penal Charges: Penalties collected by banks and NBFCs for non-compliance with loan terms will no longer attract GST.

– Definition Update for Pre-Packaged and Labelled Goods: The Council has recommended revising the definition to include all retail commodities pre-packed (up to 25 kg or 25 liters) as per the Legal Metrology Act. These goods must carry declarations mandated under the Act and its rules.