GST Council postpones major decisions, key issues left for further deliberation
Key Highlights from the 55th GST Council Meeting
Introduction
The 55th meeting of the Goods and Services Tax (GST) Council took place in Jaisalmer, Rajasthan. Union Finance Minister Nirmala Sitharaman shared the outcomes of the meeting, focusing on various tax-related issues.
Decisions and Clarifications
The GST Council decided to reduce the compensation cess rate to 0.1% for supplies to merchant exporters. The rate on fortified rice kernels was reduced to 5%. ACC blocks with 50% fly ash will have a 12% GST rate. Black pepper and raisins directly from farmers are exempt from GST. Payment aggregators handling transactions under Rs 2,000 are exempt, but this does not apply to payment gateways or fintech companies. No GST will be charged on penal charges by banks and NBFCs for loan non-compliance.
Deferred Decisions
The inclusion of Aviation Turbine Fuel (ATF) under GST was deferred due to state concerns. The Group of Ministers (GoM) on compensation cess was given an extension. The GST Council also deferred decisions on quick commerce services, e-commerce, and food delivery platforms.
Taxation on Specific Items
Salted popcorn will be taxed at 5%, while popcorn with added sugar will be categorized differently. Electric vehicles (EVs) will be taxed at 5%, with used EVs sold between individuals exempt. However, if a company modifies and resells an EV, it will be taxed at 18% on the margin value.
Future Considerations
The GoM will review the implementation of a cess for disaster management funding and health and insurance-related issues. The taxation of Floor Space Index (FSI) remains under consideration.
Conclusion
While several important decisions were made, many issues were deferred for further analysis and discussion.
Doubts Revealed
GST Council
The GST Council is a group in India that makes important decisions about the Goods and Services Tax (GST), which is a tax on goods and services people buy.
Nirmala Sitharaman
Nirmala Sitharaman is the Finance Minister of India, which means she is responsible for managing the country's money and economic policies.
Compensation cess
Compensation cess is an extra tax collected on certain goods to help states in India make up for any loss of revenue due to the GST.
Merchant exporters
Merchant exporters are businesses that buy goods in India and sell them to other countries.
Fortified rice kernels
Fortified rice kernels are rice grains that have been enriched with extra nutrients to make them healthier.
ACC blocks
ACC blocks are building materials made from a mixture of cement, fly ash, and other ingredients, used in construction.
Fly ash
Fly ash is a fine powder that is a byproduct of burning coal in power plants, often used in making building materials.
Exemptions
Exemptions mean that certain goods or services do not have to pay a specific tax, making them cheaper for consumers.
Payment aggregators
Payment aggregators are companies that help process payments for businesses, especially online transactions.
Aviation Turbine Fuel
Aviation Turbine Fuel is a special type of fuel used in airplanes to help them fly.
Quick commerce
Quick commerce refers to fast delivery services that bring goods to customers very quickly, often within a few hours.
E-commerce
E-commerce is buying and selling goods or services over the internet, like shopping online.
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