GST Council Announces Rate Cut On Fortified Rice Kernels To 5% From 18%

The GST council chaired by Union Finance Minister Nirmala Sitharaman decided to lower the tax rate on fortified rice kernels from 18 per cent to 5 per cent.

The council also agreed to impose a uniform 18 per cent tax rate on used cars, including electric vehicles, purchased by businesses

Source : Okcredit

The 55th Goods and Services Tax (GST) Council, chaired by Union Finance Minister Nirmala Sitharaman, made multiple key announcements on Saturday. Among other measures, it announced an exemption for payment aggregators handling transactions below Rs 2,000, a reduction in the compensation cess rate to 0.1 per cent on supplies to merchandise exporters, and an extension of the exemption on missile parts.

It also decided to exempt gift vouchers, commonly offered by various sectors like retail, from the tax purview. The council also agreed to impose a uniform 18 per cent tax rate on used cars, including electric vehicles, purchased by businesses. However, it deferred a decision to reduce the insurance product tax rate. Notably, the new tax rate for electric vehicles will not affect individual sellers.

Additionally, the council decided to lower the tax rate on fortified rice kernels from 18 per cent to 5 per cent. The council also decided to extend the exemption on certain missile parts. Nirmala Sitharaman also announced that the states could not agree on including Aviation Turbine Fuel (ATF) under the Goods and Services Tax.

Key Outcomes Of The 55th GST Council Meeting:

• The GST Council has reduced the tax rate on fortified rice kernels to 5 per cent.
• Gene therapy is now exempt from GST.
• The Council recommended amending the definition of pre-packaged and labelled items.
• No GST will be levied on penal charges imposed on borrowers by banks or financial institutions.
• The GST Council did not agree to include Aviation Turbine Fuel (ATF) under the Goods and Services Tax.
• The decision to reduce tax on insurance premiums has been deferred, as several inputs, including comments from the IRDAI, are still awaited.

The Finance Minister said during the media briefing, "There is a reduction in the rate of compensation cess to 0.1 per cent on supplies to merchant exporters at par with the GST rate on such supplies. So, this was particularly important request which had come from traders and exporters.”

Sitharaman also confirmed that the decision on the GST rate for food delivery platforms like Swiggy and Zomato (currently 18 per cent with input tax credit) will be deferred, with a potential reduction to 5 per cent (without input tax credit).

Regarding health insurance, the Finance Minister announced that additional time will be given to the Group of Ministers (GoM) to decide on the taxation of health insurance.