GST Council Meeting Outcome: Reliefs, Concessions And Exemptions - Top Decisions

The 55th GST Council meeting, led by Finance Minister Nirmala Sitharaman on December 21, introduced several decisions. These updates aim to address industry-specific concerns while providing clarity on taxation across diverse sectors.

Below are the top decisions:

Exporters get a breather

In a move to support merchant exporters, the Council slashed the compensation cess on supplies to 0.1%. This reduction is expected to ease financial pressures, enabling exporters to manage their working capital more efficiently.

EV taxation: A mixed bag

The taxation structure for electric vehicles (EVs) received much-needed clarification. While newly purchased EVs will continue to attract 5% GST, pre-owned EVs sold privately remain exempt. However, transactions involving companies or modified EVs will incur an 18% GST, calculated on the margin.

No changes in ATF tax rates

Despite speculation, the Council retained the current taxation framework for Aviation Turbine Fuel (ATF). Finance Minister Sitharaman confirmed that there would be no Group of Ministers (GoM) formed to review this matter.

Skill development gets a boost

To encourage skill training, the Council announced an exemption from GST for recognized skill development partners. This exemption will come into effect post formal notification.

Food delivery tax reforms deferred

Proposals to lower GST on e-commerce food delivery charges remain under consideration. The Council urged stakeholders to avoid conjecture until further announcements are made.

Popcorn tax: Clarity at last

The GST rates on different types of popcorn were clarified. Ready-to-eat popcorn will be taxed at 5%, pre-packaged variants at 12%, and caramel popcorn at 18%.

Insurance rate cuts await review

Discussions on reducing GST rates for health and life insurance premiums were deferred. The Council is awaiting recommendations from the Insurance Regulatory and Development Authority of India (IRDAI).

Construction sector updates

Clarity was provided for the taxation of ACC blocks containing at least 50% fly ash. These will attract a 12% GST rate, addressing long-standing industry queries.

Simplifying GST registration for SMEs

Smaller companies are set to benefit from simplified GST registration processes. The Council approved a framework designed to reduce compliance burdens for businesses with lower turnovers.

Disaster management funding in focus

A GoM will explore the feasibility of introducing a disaster management cess. This group, including representatives from key states, will evaluate whether specific disasters warrant additional levies.

No immediate decisions on rate rationalisation

The much-anticipated GST rate rationalisation remains on hold as the GoM delayed its report submission. Sitharaman stressed the importance of avoiding premature conclusions, which could lead to unnecessary concerns.

Exemptions for gene therapy and defence projects

Recognising its critical role in treating life-threatening conditions, gene therapy was granted a complete GST exemption. Similarly, exemptions for the Long-Range Surface-to-Air Missile (LR-SAM) system were extended, benefiting its development and associated technol8ogies.

Additional announcements

The Council updated definitions for pre-packaged and labeled retail items. It also confirmed that black pepper and raisins, when supplied directly by agriculturalists, would not attract GST.