From reducing the GST rate on Fortified Rice Kernel (FRK) to completely exempting GST on gene therapy, the 55th GST Council meeting chaired by Union Finance Minister Nirmala Sitharaman on Saturday discussed ways to provide relief to individuals and businesses. Some major recommendations were made.
The Council recommended exemption from GST on contributions by general insurance companies from third party motor vehicle premiums to the Motor Vehicle Accident Fund. It also recommended no GST on voucher transactions as they are neither supply of goods nor supply of services. Provisions related to vouchers are also being simplified.
The GST Council clarified that no GST is payable on 'penal charges' levied and collected from borrowers by banks and NBFCs for non-compliance of loan conditions. The Council recommended reducing the payment of pre-deposit only for filing appeals before the Appellate Authority in respect of the order passed relating to penalty amount.
It recommended reducing the GST rate on Fortified Rice Kernel (FRK) classified under 1904 to 5 per cent, as this commodity is supplied to weaker sections of the society through the Public Distribution System (PDS).
Under the commodity category, the meeting decided to extend IGST exemption on systems, sub-systems, equipment, parts, sub-parts, tools, test equipment, software i.e. assembly/manufacturing of LRSAM system.
It also recommended reducing the rate of compensation cess on supplies to merchant exporters to 0.1 per cent equal to the GST rate and exempting imports of all equipment and consumable samples from International Atomic Energy Agency (IAEA) inspection team subject to specified conditions. Recommended.
GST members have proposed to extend the concessional 5 per cent GST rate on food inputs of food preparations under “HSN 19 or 21” for food preparations supplied for free distribution to economically weaker sections under the Government program subject to existing conditions. Also recommended.
Under the services category, the GST Council has brought under the forward charge mechanism the supply of sponsorship services provided by body corporates and the contributions made by general insurance companies to the Motor Vehicle Accident Fund from the third-party motor vehicle premium collected by them. But it has been recommended to give exemption from GST, which has been formed under Section 164B of the Motor Vehicles Act, 1988.
This fund has been set up to provide compensation/cashless treatment to victims of road accidents including hit and run cases. It has recommended increasing the GST rate on the sale of all old and used vehicles from 12 per cent to 18 per cent, including vehicles other than EVs specified at 18 per cent, such as those with engine capacity of 1200 cc or more and height of 4000 mm or Old and used petrol vehicles with a length of more than that; Diesel vehicles and SUVs with engine capacity of 1500 cc or more and length of 4000 mm.
The Council also clarified that autoclaved aerated concrete (ACC) blocks with fly ash content more than 50 per cent will fall under HS 6815 and will attract 12 per cent GST. It further clarified that black pepper, whether fresh green or dried chillies and raisins, when supplied by a farmer, will not attract GST.
It also clarified that ready-to-eat popcorn to which salt and spices are added will attract 5 per cent GST if they are supplied in any form other than pre-packed and labelled, and if they are pre-packaged. If supplied in packaged and labeled form, they will attract 12 per cent GST.
However, when popcorn is mixed with sugar to change its character to a sugar confectionary (e.g. caramel popcorn), it will attract 18 per cent GST. The Council has approved amendments in the definition of pre-packed and labeled goods for retail sale. The move aims to clarify the definitions for all items as there is currently a lot of confusion on the issue.
The GST Council meeting was attended by Union Minister of State for Finance Pankaj Choudhary along with the Chief Ministers of Goa, Haryana, Jammu and Kashmir, Meghalaya and Odisha, Deputy Chief Ministers of Arunachal Pradesh, Bihar, Madhya Pradesh, Rajasthan and Telangana. Senior officials of the Finance Ministry, including the Departments of Economic Affairs and Expenditure, were also present.
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