Discover the Surprising Price Changes: What Goods Are Now Cheaper or Costlier After the Latest GST Council Meeting?

The GST Council proposed various adjustments to GST tax rates, aiming to enhance compliance and streamline revenue collection. These recommendations reflect ongoing efforts to refine the taxation framework and address the evolving economic needs.

P24 News Media

December 22, 2024

1 minute

Discover the Surprising Price Changes: What Goods Are Now Cheaper or Costlier After the Latest GST Council Meeting?

India

During the 55th GST Council Meeting, convened under the leadership of Union Minister for Finance & Corporate Affairs Nirmala Sitharaman in Jaisalmer, Rajasthan, substantial recommendations were made on December 21 aimed at easing the tax obligations in various sectors. These recommendations are geared towards making essential goods and services more affordable while providing clarity on several tax issues.

One notable change is the reduction in the GST rate on Fortified Rice Kernel (FRK), categorized under HS Code 1904, from the previous rate to a more manageable 5%. This initiative seeks to enhance accessibility and affordability of fortified rice, which plays a crucial role in combating nutritional deficiencies.

In a significant move to support medical advancement, the Council has proposed a full exemption from GST for gene therapy treatments. This alteration acknowledges the importance of making cutting-edge medical therapies more available to patients in need, thus potentially improving health outcomes.

Another recommendation pertains to the contributions made by general insurance companies to the Motor Vehicle Accident Fund. The Council has recommended that these payments, sourced from third-party motor vehicle insurance premiums, be exempt from GST. This exemption is designed to facilitate the process and ensure the effective deployment of funds collected for accident victims.

Additionally, the Council has clarified that transactions involving vouchers will not incur GST, as they do not qualify as a supply of goods or services. This clarification aims to simplify the accounting process for businesses dealing with such transactions, thereby enhancing compliance in the sector.

Regarding financial institutions, it has been specified that penal charges imposed by banks and Non-Banking Financial Companies (NBFCs) on borrowers for failing to comply with loan conditions are exempt from GST. This clarification is expected to alleviate some financial pressure on borrowers and provide transparency in the banking sector.

Moreover, the GST Council has proposed a reduction in the pre-deposit amount required when lodging an appeal with the Appellate Authority, particularly for cases primarily involving penalties. This change is intended to democratize access to the appeals process, making it less financially burdensome for taxpayers seeking redress.

The meeting also yielded additional recommendations concerning the GST structure for a range of goods and services. The Council has decided to maintain a concessional GST rate of 5% on food inputs for government programs aimed at distributing food to economically disadvantaged groups. This ensures that essential food supplies remain available to those in need.

Furthermore, the Council has introduced an increase in the GST rate on the sale of old and used vehicles, raising it from 12% to 18%. This change, which also applies to electric vehicles, reflects a broader effort to regulate the vehicle market and encourage more sustainable transportation options.

Clarity was also provided on the GST rate applicable to Autoclaved Aerated Concrete (ACC) blocks, confirming that blocks with over 50% fly ash content will be categorized under HS 6815 and will incur a 12% GST. Similarly, a new definition for pre-packaged and labeled goods has been established, limiting the scope to products not exceeding 25 kilograms or 25 liters for retail sales.

In terms of other goods, ready-to-eat popcorn has had its GST clarified as well: it carries a 5% tax when sold non-pre-packaged, while pre-packaged popcorn incurs a 12% GST. The recommendations reflect a comprehensive review designed to address both existing tax structures and emerging market needs.

The GST Council also committed to regularizing previous issues on a basis of “as is where is,” providing much-needed clarity on outstanding matters. All these measures collectively aim to streamline procedures, enhance tax compliance, and ultimately contribute to a more efficient GST framework across the nation.