Highlights Of 55th GST Council Meet: Hike On Used Car Sale Tax, Cut On Fortified Rice Kernels | News

Summary

The 55th GST Council meeting, chaired by Finance Minister Nirmala Sitharaman, made several key decisions, including a hike in GST on the resale of used vehicles by businesses to 18%, though individual sellers are unaffected. Notably, GST on gene therapy for cancer treatment was waived, while the tax on fortified kernel was reduced to 5%. Key decisions on health and life insurance GST were deferred due to lack of consensus. The meeting also addressed issues like the taxation of used EVs and popcorn, with varying rates based on ingredients and packaging. Discussions on aviation fuel and small business registrations were also explored.

Takeaways

• 😀 18% GST will be levied on businesses reselling old and used vehicles, but it will not impact individual sellers. The tax will apply only on the margin (difference between purchase and resale price).
• 😀 The GST on gene therapy for cancer treatment has been completely waived, making it more accessible for patients.
• 😀 GST on fortified rice kernels has been reduced from 18% to 5%, aiming to make fortified rice more affordable.
• 😀 No GST will be charged on penalties levied by banks and NBFCs for non-compliance with loan terms, which is important for small businesses.
• 😀 The GST on electric vehicles (EVs) will not apply to individual sales of used EVs, but businesses involved in reselling used EVs after refurbishing will face an 18% GST on the margin.
• 😀 The contentious issue of GST on health and life insurance has been deferred as states couldn't reach a consensus, delaying any tax changes in this sector.
• 😀 The decision on GST for aviation turbine fuel (ATF) has also been deferred, meaning airlines will continue to face costs without a tax reduction.
• 😀 The GST rate on popcorn varies based on ingredients and packaging: salted or spiced popcorn is taxed at 5%, prepackaged labeled popcorn at 12%, and caramel popcorn at 18%.
• 😀 The issue of popcorn tax has drawn criticism, with some calling the rates 'unbelievable' due to the complexity of ingredient-based taxation.
• 😀 The GST Council's focus on easing company registrations for small businesses was discussed, with some new decisions aimed at reducing administrative burdens.

Q & A

What is the new GST rate on the reselling of old and used vehicles by businesses?

The new GST rate on the reselling of old and used vehicles by businesses has been increased to 18%, up from the earlier 12%. However, this does not affect individual sellers.

Are gift vouchers included under GST after the recent GST Council meeting?

No, gift vouchers offered by several sectors are excluded from the GST purview as per the latest decisions.

What decision was made regarding GST on gene therapy used to treat cancer?

The GST on gene therapy used to treat cancer has been completely waived off, providing relief for those seeking such treatments.

How has the GST on fortified kernel changed?

The GST on fortified kernel has been reduced from 18% to 5% as per the latest decisions from the GST Council meeting.

Was there any decision made regarding the reduction of tax rates on insurance?

No, the decision on the reduction of tax rates on insurance has been deferred. The issue requires more deliberation and input from insurance regulators.

Is GST applicable on used electric vehicles (EVs) when sold by individuals?

No, there is no GST applicable on used electric vehicles when sold by an individual to another individual. However, businesses or registered sellers adding value to the vehicle will be charged GST on the margin.

What was the consensus on GST for health and life insurance in the meeting?

The decision on GST for health and life insurance was deferred as all states could not collectively agree on the issue. Further deliberations are required.

How did the GST Council handle the issue of GST on aviation turbine fuel (ATF)?

The decision regarding the inclusion of aviation turbine fuel (ATF) under GST was deferred, which would have benefited airlines by lowering their costs.

What change in GST was made for popcorn, particularly regarding ingredients and packaging?

The GST on popcorn varies depending on the ingredients and packaging. For example, salted popcorn attracts a 5% GST, while prepackaged and labeled popcorn attracts a 12% GST. Caramelized popcorn, mixed with sugar, is taxed at 18%.

What was the political reaction to the new GST rates on popcorn?

The political reaction, especially from the Congress party, was critical of the new GST rates on popcorn. J. Ramesh called the rates 'absolutely unbelievable' and labeled them as 'sheer madness.'