GST Council's Recommendations: What's Getting Expensive And Cheaper

The 55th GST Council meeting, chaired by Union Finance Minister Nirmala Sitharaman on Saturday, announced several key recommendations to streamline tax processes and offer relief to individuals and businesses.

Here are the major decisions:

What's Getting Cheaper?

Fortified Rice Kernels (FRK): GST reduced to 5 per cent when supplied through the Public Distribution System (PDS), aimed at helping weaker sections of society.

Gene Therapy: Fully exempt from GST, making treatments more affordable.

Food Preparations 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 on systems, sub-systems, and tools used for LRSAM manufacture.

Inspection Equipment for IAEA: IGST exemption on imports of equipment and consumable samples for inspection by the International Atomic Energy Agency.

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

Items Getting Costlier

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-packed and labelled ready-to-eat snacks will attract a 12 per cent tax while an 18 per cent GST will be levied if it is caramelised. "Ready-to-eat popcorn", which is mixed with salt and spices, and has the essential character of namkeens currently attracts a 5 per cent GST if it is not pre-packaged and labelled.

Autoclaved Aerated Concrete (ACC) Blocks: Attracts 12 per cent GST if containing more than 50 per cent fly ash content.

Sponsorship Services by Corporates: Now brought under the Forward Charge Mechanism, potentially increasing costs for sponsors.

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

Other Changes

Vouchers: The GST Council has recommended no GST on the transaction of vouchers as they are neither supply of goods nor 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.