• Notification Date: 16-12-2022
• Notification No: N/A

48th GST Council meeting Updates: Clarity for cess levy on SUVs & more

The 48th GST Council meeting is scheduled to take place on 17th December 2022, Saturday. In the upcoming meeting, the Council is likely to clarify the eligible conditions for charging GST cess on the Sports Utility Vehicle (SUV) range of cars.  

At present, a compensation cess of 22% is levied by the government on the sale of SUV cars over and above a GST rate on SUVs of 28%. However, the criteria to meet the definition of SUV under the GST law to levy the cess is a matter of debate. The GST Council will try to resolve this matter in the upcoming meeting.  

The GST Council is likely to clarify that if the vehicle meets all of the below conditions, then it is an SUV to levy a GST cess of 22%, currently lacking in the GST law- 

1) Engine capacity is above 1500 cc,  

2) Length exceeds 4000 mm, and  

3) The ground clearance is 170mm or more.  

At the 21st GST Council meeting, the Council had increased the cess from 15% to 22%. But a particular definition for classifying vehicles as SUVs, especially the mention of ground clearance was lacking under the law. The auto industry was confused whether or not all the conditions listed above must be satisfied in toto to levy the cess. 

Added to that, the GST Council may also pick up vital tax-related issues and give clarifications on 17th December 2022. Carbonated fruit pulp or juice-based drinks may attract a 28% GST rate. Currently, a 12% rate of GST is applied on all kinds of fruit pulp or juice-based drinks. 

Private petrol refiners are likely to attract a 5% GST for petrol being blended with Ethanol. Moreover, the GST on health insurance will be reduced from 18% to 12%. Also, the authority may clarify that GST is not leviable on the No Claim Bonus (NCB), treating it as eligible for deduction from the insurance premium of any type.  

In the meeting, the supply of Mentha may be classified as a reverse charge-based transaction. The Council may also extend the duration of the Group of Ministers (GoM) that is formed for reviewing the valuation rules for GST on Pan masala and Gutkha. There are expectations of introducing a capacity-based GST levy on these sin goods. 

GST may not be levied on incentives banks receive for RuPay debit cards and BHIM UPI transactions. Further, GST levy may be exempted on Viability Gap Funding (VGF) subsidy payment to Airlines for Regional Connectivity Scheme (RCS) flights. The sale of brick kilns may be approved for a special composition scheme from April 2022. It will possibly be charged with a 6% GST without tax credits. In case, one wishes to claim tax credits, the rate of GST on the product may be revised upwards to 12% from the present 5%.