From Surface-to-Air Missiles and raisins to caramelised popcorn: Key decisions from the 55th GST Council

The Council approved a concept note to simplify GST registration for small companies and clarified that no GST will be levied on penal charges by banks and NBFCs.

The 55th GST Council meeting, chaired by Finance Minister Nirmala Sitharaman in Jaisalmer, Rajasthan, introduced several pivotal updates to the Goods and Services Tax (GST) framework. Here are the key decisions and discussions from the meeting:

Tax Rate Changes and Clarifications

Fortified Rice Kernels: The GST rate on fortified rice kernels has been reduced to 5%.

Gene Therapy: Fully exempted from GST, providing relief for patients requiring advanced medical treatments.

ACC Blocks with 50% Fly Ash: Will now attract 12% GST, clearing ambiguity on the rate for these items.

Black Pepper & Raisins: When supplied directly by agriculturalists, these items will not be liable for GST.

Caramelised Popcorn: Discussion on categorizing items with added sugar under a separate tax bracket has been initiated.

Recommendations of the 55th Meeting of the #GSTCouncil GST Council recommends reduction in #GST rate on Fortified Rice Kernel (FRK), classifiable under 1904, to 5% GST council also recommends to fully exempt GST on #GeneTherapy GST Council recommends exemption of pic.twitter.com/B9cV7ALp5A
Ministry of Finance (@FinMinIndia) December 21, 2024

Exemptions and Reliefs

Surface-to-Air Missiles: IGST exemption for these items has been extended.

Merchant Exporters: Compensation cess on supplies to merchant exporters has been reduced to 0.1%, boosting export competitiveness.

Skilled Training Partners: GST exemption has been approved, with a notification to follow soon.

Payment Aggregators: Transactions below Rs 2,000 are now eligible for GST exemptions, simplifying operations for small businesses.

Penal Charges by Banks/NBFCs: No GST will be levied on penal charges imposed on borrowers.

Gift vouchers: GST Council declared that gift voucher transactions will not be subject to GST, providing relief to retailers.

Concept Notes and Simplification

GST Registration for Small Companies: The Council approved a concept note to simplify GST registration processes, encouraging ease of doing business.

Used Electric Vehicles (EVs): GST will not apply to used EVs when sold from one individual to another. For used cars, an 18 percent GST will be imposed on the margin value between purchase and selling prices.

Deferred Decisions

Health Insurance GST: The Group of Ministers (GoM) requires more time to finalize inputs from insurance regulators regarding a potential reduction in GST on premiums.

Aviation Turbine Fuel (ATF): States were not comfortable including ATF under GST, and it will remain outside its purview.

Quick Commerce and Food Delivery Apps: The Council discussed the imposition of GST on platforms like e-commerce and food delivery apps but deferred taking a decision.

Floor Space Index (FSI): The majority felt the issue impacts municipal and state revenues, so no conclusion was reached.

Caution Against Speculation

Finance Minister Nirmala Sitharaman cautioned against speculation regarding GST rate rationalisation or pending decisions, emphasising that such matters impact society as a whole.