The 55th meeting of the GST Council, chaired by Union Finance Minister Nirmala Sitharaman, took place on December 21, 2024, at Jaisalmer, Rajasthan. The meeting saw the participation of various officials, including Union Minister of State for Finance Shri Pankaj Chaudhary, Revenue Secretary Ajay Seth, and Chief Ministers from Goa, Haryana, Jammu and Kashmir, Meghalaya, and Odisha, as well as Deputy Chief Ministers from Arunachal Pradesh, Bihar, Madhya Pradesh, and Telangana.
Here are the key takeaways from the meeting:
1. GST Rate Cut on Fortified Rice Kernels
The GST Council announced a reduction in the GST rate for Fortified Rice Kernels under a specific HSN code to 5%, offering relief to producers in the nutrition sector.
2. Full GST Exemption on Gene Therapy and Life-Saving Drugs
A major decision was made to fully exempt GST on Gene Therapy and Life-Saving Drugs, further easing the financial burden on critical medical treatments and innovations.
3. Reduction in Compensation Cess for Merchant Exports
The Council recommended reducing the Compensation Cess to just 0.1% on supplies to merchant exports, aiming to support export activities and ease trade processes.
4. IGST Exemption on IAEA Samples
The Council approved an exemption from IGST on samples to the International Atomic Energy Agency (IAEA), subject to specific conditions, ensuring smoother international collaborations.
5. GST on AAC Blocks Clarified
There was clarification regarding the GST rate on Autoclaved Aerated Concrete (AAC) blocks. Blocks with over 50% fly ash content will attract a 12% GST, providing greater transparency to the construction industry.
6. Exemption on Food Preparation Inputs for Free Supplies
The GST Council exempted GST on food preparation inputs for supplies that are provided free of charge, which will benefit various charitable organizations and social initiatives.
7. No GST on Fresh Green and Black Pepper from Agriculturists
Fresh green and black pepper supplied by agriculturists will no longer be liable for GST, providing relief to local farmers and promoting agricultural exports.
8. GST Exemption for Payment Aggregators
Payment aggregators processing transactions less than Rs. 2000 will now be eligible for GST exemption. However, this exemption does not extend to payment gateways, creating a distinction in the sector.
9. No GST on Penal Charges Collected by Banks
Banks will not be required to pay GST on penal charges collected from borrowers, which will bring clarity to banking operations and customer transactions.
10. Delay on Insurance Premium Rate Cuts and Rate Rationalisation
While there were discussions, no major decisions were made regarding cuts in insurance premium rates or any rationalization of rates, leaving these matters for future consideration.
11. Approval for Simplified GST Registration for Small Companies
A concept note for simplifying the GST registration process for small companies received in-principle approval, aiming to reduce compliance burdens for smaller businesses.
12. Amendment in Definition of Pre-Packaged Goods
The definition of pre-packaged and labeled goods was amended to cover all commodities intended for retail sale, aligning with consumer protection and fair trade practices.
13. “Please Avoid”: Media Advised on Rate Cut/Hike Speculations
Finance Minister Sitharaman advised the media to refrain from speculative reports on potential GST rate cuts or hikes, urging the public to wait for official announcements.
14. Deferral of Decision on FSI in Realty Sector
The Council deferred the decision on the applicability of GST on Floor Space Index (FSI) in the real estate sector, leaving the matter open for further deliberations.
15. No Agreement on Bringing ATF under GST
Despite ongoing discussions, the Council did not reach an agreement on bringing Aviation Turbine Fuel (ATF) under the GST ambit, leaving it outside the GST framework for now.
16. Exemption for Training Partners in Skill Development
The Council exempted GST for training partners working under Skill Development Councils, providing relief to organizations involved in skilling the workforce.
17. GST Treatment of Caramelized Popcorn
A nuanced decision was made regarding the taxation of caramelized popcorn with added sugars, which will now be treated differently from salted popcorn, ensuring clearer tax application.
18. GST on EV Sales
The sale of new electric vehicles (EVs) will be taxed at 5% GST, while used EVs sold between individuals will remain GST exempt. The margin on the sale of second-hand EVs will be taxed at 18%, creating a clear framework for the EV market.
In Conclusion
While several important updates were discussed at the 55th GST Council meeting, no major decisions were made, leaving much still to be addressed. Key issues, such as the reduction of insurance premium rates and the inclusion of ATF under GST, were postponed for further deliberation. As expected, much was anticipated, but the final decisions will now depend on continued discussions by the GoMs (Groups of Ministers) in future meetings. The focus on simplifying processes, reducing rates on essential goods, and providing clarity on tax applications across sectors, including agriculture, healthcare, construction, and electric vehicles, remains. However, stakeholders will have to wait for the next meetings for concrete outcomes.