GST Council’s 55th Meeting: What Got Cheaper and What Became Costlier? Key Highlights

Jaisalmer, Rajasthan:
The 55th GST Council meeting, chaired by Union Finance Minister Nirmala Sitharaman, concluded on Saturday, December 21, 2024, in Jaisalmer. The meeting brought significant changes to GST rates on various goods and services, impacting everyday essentials and luxury items alike. Here’s a detailed look at what becomes cheaper and what gets costlier after the meeting.

What Got Cheaper?

1. Gene Therapy and Surface-to-Air Missiles
   • The GST Council has granted complete GST exemption to gene therapy, marking a boost for advanced healthcare treatments.
   • The exemption of IGST on surface-to-air missiles has also been extended.
2. Rice Kernels, AAC Blocks, Raisins, Pepper
   • Fortified rice kernels for public distribution will now attract only 5% GST, reduced from the earlier 18%.
   • AAC blocks (Autoclaved Aerated Concrete) containing 50% fly ash are set to attract 12% GST, promoting sustainable construction materials.
   • Raisins and black pepper supplied directly by farmers are now exempt from GST.
3. Bank Penal Charges
   • Penal charges imposed by banks or NBFCs on borrowers for non-compliance with loan terms will no longer attract GST, offering relief to borrowers.
4. Payment Aggregators
   • Payments below ₹2,000 handled by payment aggregators are now GST-exempt. However, this exemption does not extend to payment gateways or fintech companies.
5. Compensation Cess for Merchant Exporters
   • The compensation cess rate on supplies to merchant exporters has been slashed to 0.1%, aligning it with the GST rate on such exports.
6. Simplification of Small Business Registration
   • In-principle approval has been given to amendments aimed at simplifying GST registration for small businesses.

What Got Costlier?

1. Used Cars and Used EVs
   • To promote the sale of new electric vehicles (EVs), GST on used cars and EVs sold by businesses has been hiked from 12% to 18%. Private individuals selling used cars remain exempt from GST.
2. Caramelised Popcorn
   • Caramelised popcorn will attract 18% GST, while pre-packaged ready-to-eat popcorns with salt and spices will have a reduced 12% GST.
3. Health and Life Insurance Premiums
   • Health and life insurance premiums, including unit-linked insurance plans (ULIPs), continue to attract 18% GST, with no reduction announced. Endowment plans attract 4.5% GST in the first year and 2.25% in subsequent years.
4. Luxury Items
   • The Council is considering increasing GST rates on luxury items like watches, pens, expensive clothing, footwear, and shoes.
5. Tobacco Products
   • A new 35% tax slab is under discussion for certain tobacco products, increasing the overall cost for consumers.

Other Key Decisions

• The GST Council announced a plan to reconsider rates on 148 items, including food delivery services like Swiggy and Zomato, where GST may be reduced from 18% to 5%.

These decisions reflect the GST Council’s dual focus on promoting healthcare and sustainable materials while targeting higher taxes on luxury and discretionary goods.