The 55th Goods and Services Tax (GST) Council meeting is currently being held in Jaisalmer, where several crucial decisions regarding tax rates and clarifications on specific goods and services have been made.
One of the key decisions involves Autoclaved Aerated Concrete (AAC) blocks. The council has clarified that AAC blocks containing more than 50% fly ash will be categorized under HS code 6815, attracting a reduced GST rate of 12% instead of the earlier 18%.
Additionally, the council has approved a tax hike on the sale of old and used cars, including electric vehicles (EVs), from 12% to 18%.
In another important move, the council has simplified the GST structure for fortified rice kernels. Instead of maintaining complicated tax concessions, the council has decided to set a standard 5% GST rate on all fortified rice, irrespective of its end use.
Tax On Popcorn
The GST Council also addressed the taxation of ready-to-eat popcorn. Popcorn mixed with salt and spices will be taxed at 5% GST if sold unpackaged, while pre-packaged popcorn will attract a 12% GST. However, caramel popcorn mixed with sugar will be considered a sugar confectionery, attracting a higher GST rate of 18%.
On the insurance front, the council deferred a decision on the taxation of insurance-related matters due to a lack of consensus during the Group of Ministers (GoM) meeting. A detailed review will be conducted at the next council meeting.
A significant clarification was also made regarding transactions involving vouchers. These transactions will not be considered as the supply of goods or services and therefore will not attract any taxation.
Looking ahead, the council is expected to discuss rationalizing tax rates for around 148 items, including luxury goods such as watches, pens, and apparel. Another proposal includes creating a 35% tax slab for “sin goods,” which would be distinct from the existing four-tier GST structure.
Tax Reduction For Food Delivery : Swiggy , Zomato
Additionally, the GST Council is considering a tax reduction for food delivery platforms like Swiggy and Zomato, aiming to lower the GST rate from 18% with input tax credit to 5% without credit. This would simplify compliance and reduce costs for consumers.
Lastly, the council may grant an extension for the ministerial panel on compensation cess, which is set to expire on December 31, 2024. The panel could be given more time, potentially until June 2025, to submit its report on the future of the cess, which affects goods in the 28% tax bracket and is slated to end in March 2026.
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