Finance Minister chairs 55th meeting of Goods and Services Tax (GST) Council.
Key decisions taken in 55th GST Council Meeting
- Used Electric Vehicles (EV): The GST Council has decided to increase the tax rate on sale of all used EVs from 12% to 18%, like non-electric vehicles.
- GST will apply only on margin value (difference between purchase and sale price, adjusting for depreciation, if claimed) in case of commercial sales. There will be no GST on individual-to-individual sales.
- Penal charges of banks: There will be no GST on penal charges levied by banks and non-banking financial companies (NBFCs) for loan tenure violations.
- Payment aggregators: Payment aggregators with payments of less than Rs 2,000 will be eligible for exemption.
- The exemption will not apply to payment gateways or other fintech services unrelated to fund settlement.
- Aviation turbine fuel (ATF): The GST Council did not agree to bring ATF under the ambit of GST as states refused to accept it.
- States consider ATF as part of the crude petroleum diesel basket and according to them it cannot be excluded from it.
- Five products namely crude oil, petrol, diesel, ATF and natural gas have been kept out of the ambit of GST. The central government levies excise duty on these and states levy VAT.
- Exemption from GST: Pepper and raisins supplied directly by farmers are exempted from GST.
- Gene therapy is completely exempted from GST and integrated GST exemption is extended to surface-to-air missiles.
- Compensation Cess: The rate of compensation cess on supplies to merchant exporters has been reduced to 0.1%.
- This cess is levied on supplies of select goods and services to compensate states for any revenue loss due to the implementation of GST.
- Popcorn: The GST Council clarified (no new tax was imposed) that caramelised popcorn will be charged 18% GST. Ready-to-eat popcorn with salt and spices will attract 5% GST (if not pre-packaged and labelled) and 12% GST if pre-packaged and labelled. Caramelised popcorn has been classified as sugar confectionery and proposed to attract 18% GST while salted popcorn will attract 5% GST.
Note
- Payment Aggregator: A payment aggregator is a third-party service provider that enables customers to make online payments and businesses to accept payments. For example PhonePe, Paytm etc.
- Payment Gateway: Payment gateway is referred to as the technology infrastructure provider for online payments.
- It includes physical card-reading devices such as point-of-sale (POS) machines, QR codes or near field communication (NFC) technology etc.
- Fintech Services: It refers to any app, software or technology that helps people or businesses to access, manage or store their finances digitally and carry out financial transactions. For example WazirX (Bitcoin and cryptocurrency exchange and trading platform).
GST Council
- The GST Council (a constitutional body under Article 279-A (101st Amendment, 2016)) makes recommendations regarding the implementation of GST.
- GST is an ad valorem and indirect tax system levied on the supply of goods and services in India.
- Members: The council consists of the Union Finance Minister (Chairman), Union Minister of State (Finance) and one Finance or other Minister from each state.
- Nature of decisions: In the Mohit Minerals case, 2022, the Supreme Court ruled that the recommendations of the GST Council are not binding as both the Parliament and the states have legislative powers with regard to GST.