GST Council Meeting: Here’s What Will Be Cheaper And What’s Set To Get Expensive

The 55th GST Council meeting, chaired by Union Finance Minister Nirmala Sitharaman on Saturday (21 December), announced several key recommendations aimed at simplifying tax procedures and providing relief to both businesses and individuals.

What’s Becoming More Affordable?

Fortified Rice Kernels (FRK): A GST reduction to 5 percent has been approved for FRK supplied through the Public Distribution System (PDS), targeting support for economically weaker groups.

Gene Therapy: Full GST exemption has been granted, lowering the cost of this advanced medical treatment.

Food Preparations Intended for Free Distribution: A concessional 5 per cent GST rate extended to food inputs supplied under government programs for economically weaker sections.

Systems for Long Range Surface-to-Air Missile (LRSAM) Assembly: IGST exemption extended to systems, sub-systems, equipment, parts, sub-parts, tools, test equipment, software meant assembly/manufacture of LRSAM system.

Inspection Equipment for IAEA: The Council approved an exemption on IGST imports of all equipment and consumable samples by Inspection Team of the International Atomic Energy Agency (IAEA) subject to specified conditions.

Pepper and Raisins (Supplied by Agriculturists): Clarified as not liable to GST when sold directly by agriculturists.

What’s Getting More Expensive?

Old and Used Vehicles (Including EVs): GST increased from 12 per cent to 18 per cent on the sale of all old and used vehicles except certain petrol and diesel variants.

Ready-to-Eat Popcorn: Pre-packaged ready-to-eat popcorn will now be taxed at 12 percent, with caramelised versions attracting 18 percent GST.

Popcorn sold without pre-packaging continues to attract 5 percent GST.

Autoclaved Aerated Concrete (ACC) Blocks: ACC blocks with over 50 percent fly ash content will attract 12 percent GST.

Sponsorship Services by Corporates: Sponsorship services have been brought under the Forward Charge Mechanism, which may lead to higher costs for sponsors.

Penalty-Only Appeals: Higher pre-deposit for penalty-only appeals under the Appellate Authority.

Other Changes Related to GST

Vouchers: The GST Council has recommended no GST on the transaction in vouchers as they have been classified neither as a supply of goods nor as a supply of services.

Penal Charges: No GST payable on penalties collected by banks and NBFCs for non-compliance with loan terms.

Definition Update: The Council has recommended to amend the definition of ‘pre-packaged and labelled’ to cover all commodities that are intended for retail sale and containing not more than 25 kg or 25 litre, which are ‘pre-packed’ as defined under the Legal Metrology Act, or a label affixed thereto is required to bear the declarations under the provisions of the Act and rules.

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