55th GST Council Meeting

• 24 Dec 2024

Source: PIB 

Why in News?

Recently, the Finance Minister chaired the 55th Goods and Services Tax (GST) Council meeting. 

What are the Key Decisions Taken in the 55th GST Council Meeting? 

• Used Electric Vehicle (EVs): GST council decided to raise the rate of tax to 18% from 12% on all used EV sales, just as in case of non-electric vehicles. 
  • GST will apply only to the margin value (difference between purchase and selling price, adjusted for depreciation if claimed) in case of business sales. No GST applies to individual-to-individual sales. 
• Bank's Penal Charges: No GST applies to penal charges by banks and non-banking financial companies (NBFCs) for loan term violations. 
• Payment Aggregators: Payment aggregators handling payments of less than Rs 2,000 will be eligible for an exemption. 
  • This exemption does not extend to payment gateways or other fintech services unrelated to fund settlement. 
• Aviation Turbine Fuel (ATF): GST council did not agree on bringing ATF under the ambit of GST because states refused to accept it. 
  • States see ATF as part of the crude petroleum diesel basket, saying that it alone cannot be taken out. 
  • 5 products i.e., crude oil, petrol, diesel, ATF and natural gas were kept out of purview of GST. The central government levies excise duty on them and states levy VAT. 
• GST Exemption: Black pepper and raisins supplied directly by farmers will be exempt from GST. 
  • Gene therapy is fully exempt from GST, and Integrated GST exemption on surface-to-air missiles is extended. 
• Compensation Cess: Reduced compensation cess rate to 0.1% on supplies to merchant exporters. 
  • This Cess is collected on the supply of select goods and or services to compensate the states for any revenue loss on account of implementation of GST.  
• Popcorn: GST Council clarified (no new tax imposition) that caramelized popcorn is taxed at 18% GST. Ready-to-eat popcorn with salt and spices attracts 5% GST if not pre-packaged and labeled, and 12% if pre-packaged and labeled. 
  • Caramelised popcorn is classified as sugar confectionery, and attracts 18% GST while salted popcorn is a namkeen and subject to 5% GST.

Note:

• Payment Aggregator: A payment aggregator is a third-party service provider that enables customers to make and businesses to accept payments online. E.g., PhonePe, Paytm etc. 
• Payment Gateways: Payment gateways are termed as technology infrastructure providers for online payments.  
  • It includes physical card-reading devices like 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 allows people or businesses to digitally access, manage, or gain insights into their finances or make financial transactions. E.g., WazirX (Bitcoin and cryptocurrency exchange & trading platform). 

GST Council 

• About: The GST Council, a constitutional body under Article 279-A (101^st Amendment, 2016), makes recommendations on GST implementation. 
  • GST is a value-added (Ad Valorem) and indirect tax system that is levied on the supply of goods and services in India. 
• Members: The Council includes the Union Finance Minister (Chairperson), Union Minister of State (Finance), and a finance or any other minister from each state. 
• Nature of Decisions: In the Mohit Minerals case, 2022, the Supreme Court ruled GST Council recommendations are not binding, as Parliament and states have simultaneous legislative powers on GST.

UPSC Civil Services Examination Previous Year Question (PYQ) 

Prelims

Q. Consider the following items: (2018)

1. Cereal grains hulled
2. Chicken eggs cooked
3. Fish processed and canned
4. Newspapers containing advertising material

Which of the above items is/are exempted under GST (Good and Services Tax)? 

(a) 1 only 

(b) 2 and 3 only 

(c) 1, 2 and 4 only 

(d) 1, 2, 3 and 4 

Ans: (c)

Q. What is/are the most likely advantages of implementing ‘Goods and Services Tax (GST)’? (2017) 

1. It will replace multiple taxes collected by multiple authorities and will thus create a single market in India.
2. It will drastically reduce the ‘Current Account Deficit’ of India and will enable it to increase its foreign exchange reserves.
3. It will enormously increase the growth and size of the economy of India and will enable it to overtake China in the near future.

Select the correct answer using the code given below: 

(a) 1 only  

(b) 2 and 3 only 

(c) 1 and 3 only  

(d) 1, 2 and 3 

Ans: (a)