• Notification Date: 23-12-2024
• Notification No: N/A

GST Council 55th Meeting: Key Tax Rate Changes and Compliance Reforms Announced

The 55th meeting of the GST Council, headed by Union Finance Minister Nirmala Sitharaman, was held on Saturday in Jaisalmer, Rajasthan, in order to bring several major updates aimed at streamlining tax rates and increasing compliance under the Goods and Services Tax (GST) framework.

The reduction in GST on Fortified Rice Kernel to 5% is one of the key announcements. On the other hand, the GST council has increased the tax on the sale of old and used vehicles, including electric vehicles (EVs), from 12% to 18%. However, this is on the margin, which is the difference between the price at which the vehicle was purchased and the price at which it is being sold, as clarified by the Finance Minister.

The GST Council also exempted gene therapy along with contributions made by general insurance companies to the Motor Vehicle Accident Fund in a major move toward encouraging advancements in healthcare. At the same time, the rate on caramelized popcorn has been increased from 5% to 18% as when mixed with sugar, it qualifies as sugar confectionery.

The Council extended the 5% GST rate to food inputs supplied for government programs distributing food to economically weaker sections. It also reduced the Compensation Cess to 0.1% on supplies to merchant exporters, thereby aligning it with the GST rate on such supplies.

Other clarifications included a ruling that banks and NBFCs are exempted from paying GST on penal charges imposed for non-compliance with loan terms. Moreover, the taxation of vouchers has been clarified, and if vouchers are issued on a principal-to-principal basis, then GST will not be applicable. On the other hand, distribution on a principal-to-agent basis will attract tax on any commission or fees charged.

These changes are expected to bring more clarity and ease to businesses and consumers alike, thereby improving the overall GST compliance landscape.