GST Council Meeting Highlights: The 55th GST council meeting, chaired by Finance Minister Nirmala Sitharaman, announced several significant tax reforms on Saturday. The council approved GST exemption for payment aggregators handling transactions below Rs 2000, reduced compensation cess to 0.1% for merchant exporters, and extended tax relief for missile components.
During the media briefing, the Finance Minister clarified that banks and financial institutions would not need to collect GST on penalty charges imposed on borrowers.
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GST Council Meeting on December 21: Top Announcements
Key decisions from the 55th GST council meeting include:
* Fortified rice kernels’ GST rate reduced to 5 per cent
* Gene therapy receives GST exemption
* Revised definition proposed for pre-packaged and labelled items
* Penalty charges by banks exempt from GST
* Insurance premium tax reduction postponed pending IRDAI input
* 12 per cent GST applicable on ACC blocks with over 50 per cent fly ash
* GST exemption for agriculturist-supplied black pepper and raisins
* Long Range Surface to Air Missile (LR-SAM) system granted tax exemption
* Compensation cess lowered to 0.1% for merchant exporters, matching GST rate
GST Health Insurance Update:
The Finance Minister has extended the timeline for the GoM’s decision regarding health insurance taxation.
A ministerial panel led by Bihar’s deputy chief minister Samrat Chaudhary recommended GST exemption for term life insurance premium payments. The proposal includes potential GST relief for health insurance premiums paid by elderly citizens and coverage up to Rs 5 lakh for all individuals, suggesting either exemption or reduction from the current 18% rate. The final decision remains pending.
Food Delivery Platforms Status:
The council has postponed its decision on revising tax rates for Swiggy, Zomato, and similar platforms. The consideration involves reducing GST from the present 18% (with ITC) to 5% (without input tax credit).
“Food delivery through e-commerce was widely discussed, but no decision has been taken… It has been deferred…” said Nirmala Sitharaman.
Aviation Fuel Discussion:
The Finance Minister revealed that state governments rejected the proposal to include aviation turbine fuel within GST framework.
“States did not feel comfortable. They didn’t want the ATF because they saw it as part of the crude petroleum diesel basket, and therefore they said that it alone cannot be taken out, and therefore that continues to remain where it is today,” she explained during the media briefing following the 55th GST Council meeting.
Regarding ready-to-eat popcorn taxation, the council specified that salt and spice-seasoned popcorn, similar to namkeens, will incur 5% GST when sold without packaging and 12% when pre-packaged and labelled.
However, sugar-coated varieties like caramel popcorn, categorised as confectionery under HS 1704 90 90, will attract 18% GST.
