GST Council postpones decision to cut tax on insurance
New Delhi: The 55th meeting of the goods and services tax or GST Council, led by Union finance minister Nirmala Sitharaman, on Saturday, took several key decisions on tax rate, but deferred the much-talked about decisions on both life and health insurance premium and food delivery platforms like Swiggy and Zomato due to differences of opinions. Hence, the council decided that it would take a final decision on these issues in the next meeting as the group of ministers (GoM) reported a lack of consensus on the matter.
Ms Sitharaman, along with her state counterparts, began the meeting at Jaisalmer in Rajasthan and deliberated extensively on key rate revisions for categories including life and health insurance, luxury goods, aviation turbine fuel (ATF), food delivery platforms, Andhra's demand for calamity cess, penal charges levied on borrowers by banks or NBFCs, tax on fortified rice kernels and tax on electric vehicles (EVs) among others. During the GST Council meeting, there was no discussion or mention of the much-awaited online gaming-related issues. Briefing the media after the GST Council meeting, Ms Sitharaman announced some approvals by the Council and also clarified a host of issues involving tax rates therein. On life insurance premium, she said GST council deferred the decision to cut tax on insurance premiums as many inputs including insurance regulator IRDAI comments on the matter are still awaited. On ATF, she said that states did not agree on bringing aviation turbine fuel under the ambit of GST. "States did not feel comfortable. They didn't want the ATF because they saw it as part of the crude petroleum diesel basket, and therefore they said that it alone cannot be taken out, and therefore that continues to remain where it is today," she said . The finance minister further said that the Council clarified that penal charges levied and collected by banks and NBFCs from borrowers for non-compliance with loan terms will not attract GST. "Besides, payment aggregators handling transactions below Rs 2,000 are eligible for exemption; however, this does not extend to payment gateways," she clarified. The finance minister also said that the Council approved an amendment to the definition of prepackaged and labeled items intended for retail sale. "The concessional 5 per cent GST rate has been extended for inputs used in food preparations intended for free distribution to economically weaker sections under government programmes," she said. Clarifying the taxation of popcorn, she further said that pre-packed and labelled ready-to-eat snacks will attract a 12 per cent tax while an 18 per cent GST will be levied if it is caramelized. "There is no change in the tax rate of popcorn and the GST Council has only agreed that the Central Board of Indirect Taxes and Customs (CBIC) will issue a circular clarifying the current taxation regime of popcorn. Ready-to-eat popcorn", which is mixed with salt and spices, and has the essential character of Namkeen's currently attracts a 5 per cent GST if it is not pre-packaged and labelled," she said. The Council also approved increase in rate on sale of old and used cars including EV to 18 from 12 percent. On the tax on EVs, the FM clarified that new EVs are at 5 per cent GST and old EV cars when sold amongst individuals there is no GST. "But if a company sells used EVs, petrol, diesel vehicles, the Council increased the rate to 18 per cent GST on the margin," she said. The Council, she further said, clarified that autoclaved aerated concrete (AAC) blocks with over 50 per cent fly ash content will attract a 12 per cent GST rate. "ACC blocks containing more than 50 percent fly ash will attract 12 per cent GST," the finance minister said.
