Image Source: X
The 55th GST Council meeting, chaired by Union Finance Minister Nirmala Sitharaman, introduced several pivotal changes aimed at easing the tax burden for individuals and businesses. The meeting, held on Saturday, was attended by senior officials, state representatives, and key stakeholders. Here are the highlights of the Council’s recommendations:
Relief Measures for Individuals and Businesses
- GST Rate Reductions:
- Fortified Rice Kernel (FRK): The GST rate on FRK, classified under HSN 1904, was reduced to 5%, benefiting the economically weaker sections who receive it through the Public Distribution System (PDS).
- Compensation Cess: The rate was reduced to 0.1% on supplies to merchant exporters, aligning it with the GST rate on such supplies.
- Ready-to-Eat Popcorn: A clarified rate structure was introduced:
- 5% GST for non-prepackaged and non-labelled popcorn mixed with salt and spices.
- 12% GST for prepackaged and labelled popcorn.
- 18% GST for caramelized popcorn classified as sugar confectionery.
- Exemptions and Clarifications:
- Gene Therapy: Fully exempt from GST.
- Pepper and Raisins: Supplied by agriculturists are not liable to GST.
- Inspection Team Imports: IGST exemption extended to equipment and consumable samples imported by the International Atomic Energy Agency (IAEA) Inspection Team under specified conditions.
- Simplification and Clarification:
- Vouchers: Transactions involving vouchers are clarified to be neither a supply of goods nor services and are hence exempt from GST. Provisions related to vouchers are also being simplified.
- Prepackaged and Labelled Goods: Amendments were approved to clarify the definition of prepackaged and labelled items intended for retail sale, addressing existing confusion.
Financial Relief Provisions
- Loan Penalty Charges: The Council clarified that banks and NBFCs are not liable to pay GST on penal charges levied for non-compliance with loan terms.
- Appeals on Penalty Orders: The payment of pre-deposit for filing appeals before the Appellate Authority was reduced for cases involving penalty amounts alone.
Image Source: X
Sector-Specific Recommendations
- Motor Vehicle Accident Fund:
- GST was exempted on contributions made by general insurance companies from third-party motor vehicle premiums collected under the Motor Vehicles Act, 1988. This fund compensates victims of road accidents, including hit-and-run cases.
- Defence Systems:
- IGST exemption extended to systems, sub-systems, equipment, and parts meant for the assembly and manufacture of the Long-Range Surface-to-Air Missile (LRSAM) system.
Tax Adjustments on Vehicles
- The GST rate on the sale of all old and used vehicles, including electric vehicles (EVs), was increased from 12% to 18%, except for:
- Petrol vehicles with engine capacity ≥1200 cc and length ≥4000 mm.
- Diesel vehicles with engine capacity ≥1500 cc and length ≥4000 mm.
- SUVs, which remain taxed at 18%.
Tax Classification Updates
- Autoclaved Aerated Concrete (ACC) Blocks: Blocks containing more than 50% fly ash will attract 12% GST under HSN 6815.
Food Preparation Concessions
- Concessional 5% GST on food inputs classified under HSN 19 or 21 for free distribution to economically weaker sections under government programs was extended.
Attendance and Stakeholders
The meeting saw participation from Union Minister of State for Finance Pankaj Chaudhary, Chief Ministers from several states including Goa, Haryana, and Odisha, as well as Deputy Chief Ministers from states like Bihar and Rajasthan. Senior officials from the Ministry of Finance and departments of Economic Affairs and Expenditure were also present.
Implications
The recommendations made during the 55th GST Council meeting aim to balance tax relief with revenue generation. The clarifications and exemptions are expected to simplify compliance and reduce the financial burden on businesses and individuals, fostering a more equitable tax environment.
By
