GST Council Meeting: 18% Tax On Popcorn, List Of Things That Become More Expensive And Cheaper

The 55th GST Council meeting, held in Jaisalmer, Rajasthan, on Saturday and chaired by Union Finance Minister Nirmala Sitharaman, introduced several significant changes to the Goods and Services Tax (GST) framework. The meeting focused on adjusting tax rates for various goods and services, with certain items becoming more expensive and others cheaper.

Things That Become More Expensive?

1. Used Cars, Including Used EVs
   In a move aimed at promoting new electric vehicles (EVs), the GST rate for used cars, including used EVs, has been increased from 12% to 18%. This new rate will only apply to used cars sold by businesses; private individuals selling used cars will remain unaffected by the tax increase.
2. Caramelised Popcorn
   The GST rate on caramelised popcorn will remain at 18%. However, ready-to-eat popcorn mixed with salt and spices will attract a 5% GST if not pre-packaged and labelled, and a 12% GST if it is pre-packaged and labelled.

Things That Becomes Cheaper?

1. Gene Therapy and IGST
   Gene therapy will now be completely exempt from GST, providing relief in this growing medical field. Additionally, the exemption of IGST (Integrated Goods and Services Tax) on surface-to-air missiles has been extended.
2. Fortified Rice Kernels, AAC Blocks, Raisins, and Pepper
   The GST rate on fortified rice kernels, which are used in public distribution schemes, has been reduced from 18% to 5%. Similarly, Autoclaved Aerated Concrete (AAC) blocks containing 50% fly ash will now attract a reduced GST rate of 12%. Black pepper and raisins supplied directly by farmers will also be exempt from GST.
3. Bank Penal Charges
   GST will no longer be levied on penal charges imposed by banks and non-banking financial companies (NBFCs) for non-compliance with loan terms.
4. Payment Aggregators
   Payment aggregators handling payments below ₹2,000 will be eligible for a GST exemption, simplifying the compliance burden for smaller transactions. However, this exemption does not apply to payment gateways or fintech companies.
5. Compensation Cess
   The compensation cess on supplies to merchant exporters has been reduced to 0.1%, aligning it with the GST rate for such supplies.
6. Registration of Small Companies
   To ease the process for small companies to get GST registered, the government has approved in-principle amendments to the GST Act.

Decisions Those Are Pending

1. Aviation Turbine Fuel (ATF)
   The decision to bring aviation turbine fuel under the GST regime has been deferred. Several states did not agree to include ATF, which is part of the crude petroleum diesel basket. As a result, no panel has been appointed, and the matter remains unresolved.
2. Floor Space Index (FSI)
   No consensus was reached on the taxation of Floor Space Index (FSI), and the matter has been postponed for further discussion.
3. Calamity Cess
   The Council has decided to form a Group of Ministers (GoM) to review the possibility of allowing states to levy a special cess under GST during natural calamities or disasters to generate additional resources.
4. Quick Commerce, E-commerce, and Food Delivery Charges
   A decision on imposing GST on quick commerce services, e-commerce platforms, and food delivery services has been deferred for further deliberation.
5. Health Insurance Premiums
   The GST Council deferred a decision on reducing the GST rate on health insurance premiums. The GoM had examined exempting premiums for term life insurance and health insurance for senior citizens, but no conclusions have been made yet.
6. Rate Rationalisation
   The GoM on rate rationalisation has yet to finalise its report on tweaking the GST rates for 148 items, with more time granted for decision-making.

The 55th GST Council meeting has brought about key changes, including price adjustments on everyday goods and services. While certain items like used cars and caramelised popcorn will become more expensive, others, including rice kernels and gene therapy, will become more affordable. Several crucial decisions, such as the taxation on quick commerce and health insurance premiums, have been deferred, allowing more time for in-depth analysis and deliberation.

Also Read: GST Council Meet: 12% GST On Popcorn, 18% GST On Caramel Popcorn