GST Council Meeting: Health Insurance To Old Cars To Food Delivery; What Gets Cheaper And What’s Costlier

GST Council Meeting: Union Finance Minister Nirmala Sitharaman-led goods and services tax (GST) Council Meeting in Jaisalmer on Saturday, December 21, brought changes affecting the prices of various goods and services.Below is a breakdown of items that will become costlier, those that will get cheaper, and decisions that have been postponed.
GST Council Meeting: Health Insurance To Old Cars To Food Delivery; What Gets Cheaper And What's Costlier

What becomes more expensive?

1) Used cars, including used EVs

The GST Council in a bid to promote the sales of new EVs has decided to raise the tax rate of used cars which also includes used EVs to 18 per cent from the current 12 per cent.

However, this is only for used cars by businesses. Private individuals can sell such used cars without attracting the GST.

2) Caramelised popcorn

Caramelised popcorn will continue to attract an 18 per cent GST, while ‘ready-to-eat popcorn’, mixed with salt and spices, and has the essential character of namkeens, attracts a 5 per cent GST currently if not pre-packaged and labelled. Also, pre-packaged and labelled ready-to-eat snacks/popcorns will attract 12 per cent GST.

What becomes cheaper?

1) Gene therapy and IGST

The GST Council has totally exempted gene therapy from attracting any GST.
Meanwhile, it extended the exemption of IGST on surface-to-air missiles.GST Council

2) Rice kernels, AAC blocks, raisins, pepper

The GST Council has cut GST rates on the fortified rice kernels used for public distribution to 5 per cent from 18 per cent earlier.

AAC blocks with 50 per cent fly ash will get a 12 per cent GST rate.

Black pepper and raisins supplied directly by farmers will be exempt from GST.

3) Bank penal charges

No GST will be levied on penal charges imposed by banks and non-banking financial companies (NBFCs) on borrowers for not complying with loan terms.

4) Payment aggregators

Payment aggregators handling payments less than Rs 2,000 will be eligible for a GST exemption, but this does not apply for payment gateways or fintech companies.

5) Compensation Cess

The compensation cess rate has been reduced to 0.1 per cent on supplies to merchant exporters, which aligns it with the GST rate on such supplies.

6) Registration of small companies

Sitharaman said that amendments to the GST Acts have to be made to make it easier for small companies to get registered. For this, a concept note has received in-principle approvals.
GST Council Meeting: Health Insurance To Old Cars To Food Delivery; What Gets Cheaper And What's Costlier

Deferred decisions

1) Aviation turbine fuel (ATF)

Many states didn’t agree on bringing aviation turbine fuel under the GST ambit since it was a part of the crude petroleum diesel basket. Thus, GST was not imposed on it for the time being and the decision has been deferred and no panel will be appointed for this issue.”
ATF has also been kept out of the ‘one-nation-one-tax’ regime.GST Council

2) Floor Space Index (FSI)

The GST Council could not reach a decision on taxation related to Floor Space Index (FSI), and
the matter has been deferred.

3) Calamity cess

The Council has decided to set up a Group of Ministers (GoM) to mull over allowing states to levy cess under GST to overcome financial distress after natural calamities.

The GST law provides for levy of special taxes for a specified period to raise additional resources during natural calamities or disasters.

4) Quick commerce, ecommerce, food delivery charges

The GST Council has deferred the decision to impose GST on quick commerce services, e-commerce, and food delivery platforms as no decision has been reached yet.
GST Council Meeting: Health Insurance To Old Cars To Food Delivery; What Gets Cheaper And What's Costlier

5) Health insurance premium

The GST Council has also deferred the decision to reduce the GST rate on insurance premiums due to pending comments of the regulator.

The GoM had examined exempting insurance premiums for term life insurance policies from GST and also the premium paid by senior citizens for health insurance coverage.

It had also suggested GST exemption on premiums paid by individuals other than senior citizens for health insurance with coverage of up to Rs 5 lakh.GST Council

Life and medical insurance premiums attract a GST rate of 18 per cent.

6) Rate rationalisation

“No report (on rate rationalisation) has been finalised,” Sitharaman said, on the matter of tweaking rates on 148 items. The GoM will be given more time to decide.GST CouncilSouth Korea: Vice FM to visit US, Japan this week for talks on trilateral cooperation

GST Council Meeting: Health Insurance To Old Cars To Food Delivery; What Gets Cheaper And What's Costlier

Related Articles