GST Council Meet Updates: No GST on Penal Charges by Banks, 5% GST on New EVs & more; Here are top 10 outcomes

GST Council Meet Updates: The 55th Goods and Services Tax (GST) council meeting headed by Finance Minister Nirmala Sitharaman on Saturday exempted indirect tax for payment aggregators who do less than Rs 2000 payment, reduction in rate of compensation cess to 0.1% on supplies to merch exporters, extension of exemption of missile parts and more. Additionally, the Finance Minister while briefing the media, announced that no GST would be payable on penal charges levied on borrowers by banks or financial institutions.

Here are the key outcomes of the 55th GST Council Meet:

i) The GST Council has reduced the tax rate on fortified rice kernels to 5 percent.

II) Gene therapy has been exempted from GST

III) The Council has also proposed a revision to the definition of pre-packaged and labelled products.

IV) Additionally, no GST will be applicable on penal charges imposed on borrowers by banks or financial institutions.

V) The Council has postponed its decision regarding the reduction of tax on insurance premiums, pending the receipt of various inputs, including comments from the IRDAI.

VI) ACC blocks that containing more than 50 per cent fly ash will be subject to 12 per cent Good and Services Tax (GST)

VII) Fresh Green Black pepper, dried black pepper and raisins when supplied by an agriculturist are exempt from GST

VIII) An Exemption given for Long Range Surface to Air Missile (LR-SAM) system

IX) Additionally, the compensation CESS rate has been reduced to 0.1 percent for supplies to merchant exporters, aligning it with the GST rate applicable to such supplies.

Decision on EVs: Announcing the results, the Finance Minister Nirmala Sitharaman said that the GST Council aims to promote electric vehicles (EVs) by levying 5% GST on new EVs. 18% tax will be levied when a company buys a used EV or when a seller modifies an old EV for resale, but there will be no indirect tax when the transaction is done by one person to another. This 18% GST will also apply to the margin value between the purchase price and the selling price of the used car.

Decision on Health Insurance: During the press conference, the Finance Minister announced that the Group of Ministers has been given more time to reach a decision on imposing taxation on health insurance.

Decision on Popcorn: The GST committee headed by Finance Minister Nirmala Sitharaman has given clarification regarding tax on popcorn. It has been decided that pre-packaged and labelled ready-to-eat popcorn will attract 12% GST, while caramelised popcorn (mixed with sugar) will attract 18% tax.

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