Key takeaways from the 55th GST council meeting

The finance minister stated the council chose to boost the GST rate to 18% from 12% on all used EV sales, just as in the case of non-electric cars. The tariff will be applied only to the value representing the margin.

The Goods and Services Tax (GST) Council’s 55th meeting addressed critical taxation policies and deferred decisions on several contentious matters. Here’s a breakdown:

Taxation on Used Electric Vehicles (EVs)

The Council has revised the GST rate on used electric vehicles to 18%, up from 12%. This tax will apply only to the margin value, defined as the difference between the purchase and selling prices (or the depreciated value if applicable). This aligns EV taxation with non-electric vehicle policies.

Exclusion of Jet Fuel from GST Framework

Aviation turbine fuel (ATF) remains outside the GST regime, signaling a continuation of the current taxation framework for the aviation sector.

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Clarity on Popcorn Tax Rates

• Caramelized popcorn will attract 18% GST.
• Pre-packed and spiced popcorn will incur a 12% GST rate.
• Unpacked and unlabelled popcorn will be taxed at 5%.
• The Council decided to address past disputes in this category on an “as-is-where-is” basis to avoid litigation.

Reduced GST for Fortified Rice Kernels

To support Public Distribution System (PDS) operations, the tax on fortified rice kernels has been lowered from 18% to 5%.

Exemption on Penal Charges by Banks and NBFCs

Penal charges imposed on borrowers for non-compliance with loan terms will now be exempt from GST, providing clarity on this issue.

Pending Deliberations on Insurance and Food Delivery Platforms

Proposals to exempt tax on term life insurance and health insurance premiums (for senior citizens and smaller coverage amounts) are under review. Taxation on food delivery by app-based platforms also remains undecided.

Focus on Rate Rationalization

The GoM tasked with rationalizing rates on 148 items has been granted additional time to finalize recommendations.

These updates underscore efforts to refine tax policies, address ambiguities, and foster economic growth. For more details, refer to government releases or industry analyses.