The 55th GST Council meeting, chaired by Finance Minister Nirmala Sitharaman, made a series of important announcements on December 21.
These decisions address concerns across various sectors including exports, insurance, electric vehicles, and more. Here’s a quick rundown of the major updates:
Reduced compensation cess on exports | The GST Council decided to reduce the compensation cess on supplies to merchant exporters to 0.1%. This is expected to improve working capital for exporters.EVs and tax clarifications | The Council confirmed that new electric vehicles (EVs) will attract a 5% GST, while used EVs sold between individuals remain exempt from GST. However, used EVs purchased by companies or modified and sold by sellers will attract an 18% GST based on the margin value.No change in ATF taxation | There was no change in the taxation of Aviation Turbine Fuel (ATF). The Finance Minister clarified that no Group of Ministers (GoM) would be formed on this issue.Exemption for skilled training partners | The GST Council has decided to exempt skilled training partners from GST. This move, however, will be formalized through a notification with no immediate effect.Food delivery via e-commerce | The proposal to reduce GST on food delivery charges via e-commerce platforms has been deferred.Popcorn tax clarification | Ready-to-eat popcorn will be taxed at 5%, while pre-packaged popcorn will be taxed at 12%. Caramel popcorn will attract an 18% GST, providing much-needed clarity to the sector.Insurance premiums | The Council deferred the decision on reducing GST rates for health and life insurance premiums. Finance Minister Sitharaman stressed that more time is needed for a comprehensive review.ACC blocks and fly ash | The GST Council clarified that ACC blocks with 50% fly ash will attract a 12% GST.GST registration simplification for smaller companies | The Council will come out with a concept note aimed at simplifying GST registration for smaller companies. This move is designed to reduce the compliance burden for businesses with smaller turnovers.GoM for disaster management cess | Finance Minister Sitharaman announced that a Group of Ministers (GoM) will explore the possibility of introducing a cess to fund disaster management. The group will assess whether a specific cess should apply to disasters such as floods and droughts.Rate rationalisation delayed | The GoM tasked with GST rate rationalisation has postponed submitting its report. Sitharaman urged the public not to speculate on rate changes, emphasising that no decision has been made yet. Gene therapy and defence exemptions | The Council fully exempted gene therapy from GST. Additionally, the exemption on the Long-Range Surface-to-Air Missile (LR-SAM) system was extended. This relief will apply to systems, sub-systems, tools, equipment, and software crucial for LR-SAM development and operation.
Other key changes | The GST Council also amended the definition of pre-packaged and labeled items for retail sales. Furthermore, it clarified that black pepper and raisins, when supplied by agriculturalists, will not attract GST.
