The awaited 55th GST Council meeting was held on 21st December 2024 under the chairmanship of the Finance Minister of India, Nirmala Sitharaman. Throughout this meeting, significant changes have been made to the taxes on vehicles and GST rates. Besides, there are several important clarifications and recommendations deliberated in the meeting, such as the taxability of transactions in vouchers, As per the latest changes, the corporations will pay an 18% GST rate on the profit for selling used electric vehicles and old vehicles.
Besides, the key highlight of the meeting was the taxes on popcorn. The caramel popular will have an 18% tax, pre-packaged and flavored popcorn will be taxed at 12%, and plain and unpacked popcorn that is not labeled will have a 5% tax.
The Key Highlights of the 55th GST Council Meeting
Here are the major decisions taken in the GST council meeting, including tax rate changes and tax compliance simplifications:
Items that will Become Costlier
- Old and Used Vehicles: The GST has been raised from 12% to 18% on selling old and used vehicles except petrol and diesel ones.
- Popcorn: As mentioned above, a 12% tax will be imposed on Pre-packed and labeled ready-to-eat snacks, and an 18% GST rate will be on caramelized popcorn. Further, 5% GST is applicable on unpacked and unlabeled popcorn.
- Autoclaved Aerated Concrete Blocks: If blocks contain over 50% fly as content there will be a 12% GST on it.
- Corporate Sponsored Services: These services are kept under the Forward Charge Mechanism that increases costs for sponsors.
Items that will Become Cheaper
- Fortified Rice Kernels: To help the weaker societies, a 5% GST has been reduced to supply through the Public Distribution System (PDS)
- Food Preparation for Free Distribution: A 5% tax is extended to the food inputs provided under the policies of weaker sections of society.
- Long Rate Surface to AI Missile Assembly System: IGSt system exemption, sub-system, and tools that are used in making the LRSAM.
- Pepper and Raisings by Agriculturists: If agriculture is directly selling, they aren’t obligated to GST on selling.
- Gene Therapy: There will be no tax on gene therapy to make the treatments cheaper.
Additional Changes
To simplify banking operations, the Council announced that panel changes levied by banks and NBFCs for non-compliance long-term would not include GST. It also proposed reducing the pre-dem post amount needed for appeals related to penalties, decreasing it from 25% to 10%. Also, there will be no GST on vouchers, as vouchers are neither a supply of goods nor a supply of services.
During the meeting, the council suggests to redefine the pre-packaged and labeled to cover most of the other commodities that are subject to retail sales. It includes products not exceeding 25 kg or 25 liters that are pre-packed as defined under the Legal Metrology Act.
Further, the CGST Act and rules were focused on enhancing the input tax credit claims, clearing the entire procedures, and addressing the challenges related to vouchers and reconciliation statements.
The GST council focused on procedural improvements like linking the GST rates on restaurant services in hotels to the last year’s value of supply, from April next further. Besides, it talks about the measures to operate the GST Appellate Tribunal and streamline IGST settlement issues.
Bottom Line
While the 55th GST Council meeting focused on and covered various segments still, various aspects could not be resolved. The trade and industry is looking for a conclusive next GST meeting that is scheduled to happen in January 2025. The upcoming meeting is also special as it will be focused on the 2025–26 budgets. The finance ministers may present their suggestions for the upcoming budget.
