Caramel Popcorn Contains Added Sugar, Tax Rate Will Be Higher Than Namkeen, Clarifies GST Council

The GST Council in its 55^th Meeting chaired by Finance Minister Nirmala Sitharaman announced significant changes to the GST regime.

The changes introduced are as follows-

• Gene therapy has been exempted from the purview of the GST.
• Decision on whether restaurant services provided by electronic commerce operators should be taxed at 5% has been deferred. This decision will be taken by the fitment committee. Whatever decision is taken by the committee will be placed before the council for further actions.
• As far as the GST on online gaming is concerned, this issue did not feature in the deliberations of the committee despite being a topic of interest in previous discussions.
• States have rejected the proposal that the Aviation Turbine Fuel should be brought in the ambit of the GST.
• Group of Ministers discussed relief on health and insurance and the report will be finalised only after getting inputs from IRDAI. The GoM had allegedly recommended that health insurance for senior citizens and term life insurance should be exempted from the purview of the GST. It had also been recommended that the tax rate on health insurance policies with coverage up to Rs. 5 lakh should be reduced to 5%.
• The council in its deliberations has also agreed to form a Group of Ministers comprising representatives of different states to determine imposing 1% calamity cess on certain goods and services.
• It has been decided that new electronic vehicles will be taxed at the rate of 5%. Whereas, there shall be no GST on old EV cars when sold amongst individuals. However, if a company sells used EVs, petrol, diesel vehicles, the tax rate has been increased to 18% on the margin.
• While breaking silence on the Popcorn controversy, the minister said that salted, caramelised and plain popcorn is sold as Namkeen in certain states. Caramelised popcorn comes with added sugar therefore the tax rate for such a popcorn will be different from the Namkeen. It was further clarified that whether it is carbonated drink or juice with added sugar attracts a different tax rate.
• When it comes to the GST rate on Black Pepper and Raisins, it was decided that the Black Pepper when supplied by an agriculturalist shall not be liable for tax.
• It was further stated that only payment aggregators handling transactions below Rs. 2000 shall eligible to be exempted and this will not be applicable to payment gateways and fintech services.
• It was also announced that penal charges levied and collected by the banks and financial institutions for non-compliance by borrower with loan terms will not attract GST.
• It was further clarified that Autoclaved Aerated Concrete blocks with over 50% fly ash content will liable to be taxed at the rate of 12%.
• Concessional rate of 5% has been extended for inputs used in preparation of food which is intended to be distributed to economically weaker sections under government programs.
• GST exemption on surface-to-air missiles has been announced.
• GST rate on fortified rice kernels has been reduced to 5%.