55th GST Council Meeting

• 25 Dec 2024

Why in News? 

Recently, the 55th Goods and Services Tax (GST) Council meeting was held under the Chairpersonship of the Union Minister for Finance & Corporate Affairs in Jaisalmer, Rajasthan. 

 Key Points 

• Chief Ministers of Goa, Haryana, Jammu & Kashmir, Meghalaya, Odisha; Deputy Chief Ministers of Arunachal Pradesh, Bihar, Madhya Pradesh, and Telangana also participated. 
• Recommendations by the GST Council: 
  • 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. 

 GST Council  

• About: The GST Council, a constitutional body under Article 279-A (101st 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.