55th GST Council Meeting: The 55th GST Council Meeting, chaired by Finance Minister Nirmala Sitharaman in Jaisalmer, Rajasthan, brought significant updates to India’s Goods and Services Tax (GST) framework. Key discussions ranged from taxation on insurance products and electric vehicles (EVs) to popcorn and fortified rice kernels. However, the much-anticipated GST restructuring for insurance products has been deferred pending further consultation.
Insurance: Relief Discussions Await Final Report
During the press briefing on December 21, Finance Minister Sitharaman stated that the decision on GST exemptions for insurance products remains postponed. The Group of Ministers (GoM) on insurance continues to deliberate on relief for health and life insurance. The GoM awaits inputs from the Insurance Regulatory and Development Authority of India (IRDAI) before finalizing its report.
While no timeline has been given for the completion of the report, Sitharaman assured that thorough discussions on rate rationalization are underway, with significant progress expected once IRDAI’s input is received.
Electric Vehicles: GST Relief for Individual Sellers | 55th GST Council Meeting
The GST Council addressed the taxation structure for used electric vehicles (EVs). Sitharaman clarified:
- Individual-to-individual sales of used EVs will attract 0% GST.
- For registered companies or dealers, an 18% GST will be applied on the margin value (difference between purchase price and resale value).
This decision aligns with the government’s push to promote EV adoption while maintaining a fair tax structure for the resale market.
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Taxation Updates: Popcorn, Fortified Rice, and More
Several notable changes and clarifications emerged from the meeting:
- Popcorn Taxation:
- Unpackaged popcorn: 5% GST
- Pre-packaged and labeled popcorn: 12% GST
- Caramel-coated popcorn: 18% GST
The Council emphasized that these tax rates have not changed. A circular from the Central Board of Indirect Taxes and Customs (CBIC) will clarify the current popcorn taxation structure.
- Fortified Rice Kernels: GST reduced to 5% from the earlier 18%, regardless of the end use, marking a significant standardization in this category.
- Autoclaved Aerated Concrete (ACC) Blocks: GST reduced to 12% from 18% for blocks containing over 50% fly ash, offering cost relief in the construction sector.
Key Highlights from the Meeting
- Calamity Cess: A proposal for a 1% calamity cess on certain goods and services to support disaster recovery was approved. A GoM comprising representatives from states like West Bengal, Uttar Pradesh, and Andhra Pradesh will finalize its implementation process.
- Food Delivery Apps: Taxation on food delivery by e-commerce platforms remains undecided. The matter has been deferred for further deliberation by the GoM.
- Aviation Turbine Fuel (ATF): The Council rejected a proposal to bring ATF under the GST regime. Despite requests from the Civil Aviation Ministry and industry stakeholders, the inclusion of ATF under GST has not been agreed upon.
- Floor Space Index (FSI): Discussions on whether GST for FSI should follow a reverse or forward charge mechanism remain inconclusive. The Council acknowledged concerns about the potential impact on municipal revenue, as land is a state subject.
Looking Ahead
The 55th GST Council Meeting highlighted the government’s commitment to refining GST policies while addressing sector-specific challenges. With pending decisions on insurance, food delivery apps, and FSI, upcoming meetings are expected to provide further clarity on these issues.
Stay tuned for more updates as the GST Council continues its deliberations on streamlining India’s taxation landscape.
