GST Council Meeting Highlights: Nirmala Sitharaman defers decision on insurance tax, no decision on GST on ATF, food delivery apps; GST on marginal value of all used cars at 18%

FM Nirmala Sitharaman explained that GST on salted popcorns at 5% but GST on caramelised Popcorn needs to be different and uniform with all other products with added sugar.

FM Nirmala Sitharaman said no decision on GST on quick commerce and GST for food delivery

FM Sitharaman said that there is no decision on GST on online gaming in current meeting

No decision on GST on cab aggregators

Compensation cess on SUVs at 22% for vehicles with

-Engine capacity exceeding 1,500 cc

-Length greater than 4,000 mm

-Ground clearance of 170 mm or higher

Compensation Cess to be applied prospectively.

FM Nirmala Sitharaman said that no time given on compensation cess, extension has been given

FM Sitharaman explained that the GST council is awaiting clarification and additional details from the Insurance regulator. Any decision on tweaking GST on insurance products will be taken after this.

GST Council is in favour of EVs. No GST on sale of used EVs for individuals. But no changes in GST rates for used cars including EVs. 18% GST to be levied on marginal value of all used cars

GST rate of fortified rice kernels has been reduced to 5%. This decision was made with the intent of ensuring these kernels, often supplied for distribution through the PDS, reach the poor at a lower cost, the finance minister said. Additionally, Sitharaman announced an extension of the IGST exemption on surface-to-air missiles.

Finance Minister Nirmala Sitharaman’s presser has begun.

Union Finance Minister Nirmala Sitharaman will shortly address a press conference following the 55th GST Council meeting. Key decisions from the meeting include:

The 55th GST Council meeting has concluded. Finance Minister Nirmala Sitharaman is set to address the media shortly.

Earlier this month, the GoM reached a consensus to increase the tax on sin goods, such as aerated beverages, cigarettes, tobacco, and related products, from the current 28% to 35%.

The GST Council on Saturday clarified the taxation on popcorn. It confirmed that pre-packed and labeled ready-to-eat snacks would attract a 12% GST, while caramelized popcorn would be subject to an 18% GST. There was no change in the existing tax rates for popcorn; instead, the Council directed the Central Board of Indirect Taxes and Customs (CBIC) to issue a circular for further clarification. “Ready-to-eat popcorn” with salt and spices, not pre-packaged and labeled, will continue to be taxed at 5%. However, when mixed with sugar (caramel popcorn), it will be classified as a sugar confectionery and attract an 18% GST.

Mehbooba Mufti, the PDP chief, on Saturday criticized the proposed GST hike on Kashmiri shawls, warning that it could threaten the survival of the traditional craft. She appealed to Jammu and Kashmir Chief Minister Omar Abdullah to step in and resolve the matter. Mufti emphasized that the shawl industry is not just a source of livelihood but also an important symbol of the region’s cultural identity. She also accused the Centre of undermining local industries, pointing to the GST increase and development work on horticultural land as efforts to make Jammu and Kashmir overly reliant on tourism.

The GST issue in the e-commerce sector has been a persistent challenge in India, with tax regulations often lagging behind the fast-changing technology-based business models. Under the current GST system, e-commerce platforms are required to fulfill two main compliance requirements for the goods and services they provide.

On Saturday, PDP leader Mehbooba Mufti strongly criticized the proposed GST increase on Kashmiri shawls, warning that it could threaten the survival of the craft. She called on Jammu and Kashmir Chief Minister Omar Abdullah to step in and resolve the matter. Mufti emphasized that the shawl industry is not just a source of income but also a key symbol of the region’s identity. She also accused the Centre of trying to make Jammu and Kashmir entirely reliant on tourism through actions like the GST hike and development projects on horticulture land.

Recent reports indicate that the GST Council might reduce the tax rate on packed drinking water, lowering it from the current 18% on 20-litre bottles to 5%. Other products that could see tax reductions include bicycles (from 18% to 5%) and exercise notebooks (from 18% to 5%).

If the GST rate revision on insurance premiums had been concluded in this meeting, it would have been very timely for the masses because a large number of insurance policies would have premiums due in the last quarter of the financial year, and a significant number of people would have benefited from the same. One would hope that the rate revision is finalized and implemented at the earliest, so as to help increase the insurance coverage in the country.

The GST Council is likely to discuss including aviation turbine fuel (ATF) in the GST regime. At present, ATF is subject to an 11% central excise duty, with a 2% concession under the Regional Connectivity Scheme, and is taxed at different Value Added Tax (VAT) rates in various states.

According to the reports, the Council has proposed a 5% GST on ready-to-eat popcorn mixed with salt and spices if not pre-packaged, 12% on pre-packaged and labeled popcorn, and 18% on caramel popcorn.

The recent Group of Ministers (GoM) recommendation on GST rate rationalisation suggests a new 35% tax slab for products like aerated beverages and tobacco. The aerated beverages industry faces a tax structure that limits growth, innovation, and job potential. India imposes one of the highest tax rates on carbonated soft drinks, while over 90% of countries with sugar-sweetened beverage taxes have lower rates.

GST Council is also likely to consider amending the GST rates on some products, such as a reduction in the rate for exercise notebooks, and bicycles costing less than Rs. 10,000 and increasing the rate of GST on watches costing more than Rs. 25,000 and shoes costing more than Rs. 15,000.

Taxpayers and citizens expect potential relief measures, particularly regarding the GST on health and life insurance premiums. This follows the establishment of a committee after the previous council meeting, tasked with reviewing GST rates in this sector.

The reduction in GST rates of health insurance would lead to a reduction in costs for the common man, helping to promote the coverage of health insurance. However, if health insurance is exempted from GST for all or specified persons, the insurance companies would lose out on input tax credits to that extent and accordingly, the reduction in costs can be less than the amount of GST previously charged.

One of the key focus areas of the 55th GST Council meet is lowering the tax burden on the consumers so rate of products that mostly impact the average consumer is on the radar and there is an effort to rationalise them.

Industry experts have urged for a reduction in tax slabs. They argued that the Group of Ministers’ recommendation to introduce a new 35% tax rate on tobacco products and carbonated beverages contradicted the goal of GST rate rationalization by adding an additional layer to the existing tax structure.

Today, Union Minister for Finance and Corporate Affairs Nirmala Sitharaman chairs the 55th GST Council meeting in Jaisalmer, Rajasthan. Attendees include Union Minister of State for Finance Pankaj Chaudhary, Chief Ministers from Goa, Haryana, Jammu and Kashmir, Meghalaya, and Odisha, Deputy Chief Ministers from Arunachal Pradesh, Bihar, Madhya Pradesh, and Telangana, Finance Ministers of various States/UTs, the Secretary of the Department of Revenue, CBIC Chairmen and Members, along with senior officials from the Ministry of Finance.