GST Council Meeting Highlights: FM Sitharaman levies 18% tax on used EVs, clarifies popcorn GST

GST Council Meeting Live Updates: GST Council on Saturday agreed to issue a clarification on taxation of popcorn, saying 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 caramelised.

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 namkeens currently attracts a 5 per cent GST if it is not pre-packaged and labelled. If it is supplied as pre-packaged and labelled, a 12 per cent GST is levied.

However, when popcorn is mixed with sugar (caramel popcorn), its essential character changes to that of a sugar confectionary, and would therefore be classifiable under HS 1704 90 90 and attract an 18 per cent GST, as per the clarification.

GST Council Meeting Live Updates: Finance Minister Nirmala Sitharaman on Saturday said the GST Council decided to form a group of ministers (GoM) to consider allowing states to levy cess under Goods and Services Tax to overcome financial distress after natural calamities.

Briefing media after the 55th GST Council meeting here, she said, "Everybody agreed, even Andhra Pradesh's minister agreed that a Group of Ministers be formed and Uttar Pradesh, West Bengal, Telangana, volunteered (to be a part of it)."

The Group of Ministers will decide what this cess should be named, whether every disaster can be given a consideration. "So the Group of Ministers will decide on all these details and then the council will decide," Sitharaman said.

Earlier in the day, Andhra Pradesh Finance Minister Payyavula Keshav said that there was a consensus that a GoM be formed to look into the demand for a 1 per cent calamity cess on certain luxury goods.

"The cess will be on luxury items and state specific levy," Keshav said. In September-October, Andhra Pradesh was hit by floods. "To give us a leverage to come back to normalcy, we have suggested a 1 per cent cess. There was a general consensus to set up GoM," Keshav said. The GST law provides for levy of special taxes for a specified period to raise additional resources during any natural calamity or disaster.

Earlier in 2018, the GST Council had decided to set up a GoM to look into similar demand made by Kerala. The GoM in January 2019 decided to approve the levy of 1 per cent 'calamity cess' by Kerala for a period of two years to fund rehabilitation work in the state hit by floods. The goods and services that faced the 1 per cent cess were decided by Kerala.

GST Council Meeting Live Updates: The finance minister said the council decided to raise the rate of tax to 18 per cent from 12 per cent on all used EV sales, just as in case of non-electric vehicles, and it will be applicable only on the value that represents margin - the difference between the purchase price and selling price (depreciated value if depreciation is claimed) - by businesses. Sale and purchase of used vehicles by individuals will continue to be exempt from GST.

When the GST subsumed more than a dozen central and state levies into GST in July 2017, five products - crude oil, petrol, diesel, ATF and natural gas - were kept out of its purview. The central government levies excise duty on them and states levy VAT. The panel, headed by Union Finance Minister Nirmala Sitharaman and comprising representatives of all states and UTs, deferred decisions on reducing tax rate on insurance products as also on levy of the tax on food delivery by aap-based platforms.

The panel cut the tax rate on fortified rice kernels used for public distribution to 5 per cent from 18 per cent, Sitharaman told reporters after the meeting of the Council here. The Council also decided that no GST will be payable on penal charges levied and collected by banks and NBFCs from borrowers for non-compliance with loan terms.

GST Council Meeting Live Updates: Finance Minister Nirmala Sitharaman on Saturday said that states did not agree on bringing aviation turbine fuel under the ambit of Goods and Services Tax. 

"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 while briefing media. 

Currently, state governments choose how to tax aviation turbine fuel (ATF). Airlines have been lobbying to include it in the GST regime so the levy is the same nationwide, but state authorities have opposed that, fearing they could lose revenue. 

GST Council Meeting Live Updates: The GST Council on Saturday postponed a decision on cutting tax rate on life and health insurance premiums. The 55th meeting of the GST Council, chaired by Union Finance Minister Nirmala Sitharaman and comprising state counterparts, decided that some more technicalities needed to be ironed out and tasked the GoM for further deliberations.

Bihar Deputy Chief Minister Samrat Chaudhary said one more meeting of the GoM on insurance is required to take a call on taxation of group, individual, senior citizens' policies. “Some members said more discussions required. We (GoM) will meet in January again,” Chaudhary told reporters.

A Group of Ministers (GOM) set up by the Council under Chaudhary, in its meeting in November had agreed on exempting insurance premiums paid for term life insurance policies from GST. Also premium paid by senior citizens towards health insurance cover has been proposed to be exempted from the tax.

A group of ministers examining the issue had recommended exempting insurance premiums paid for term life insurance policies from GST and premium paid by senior citizens for health insurance cover. It had also suggested GST exemption on premium paid by individuals, other than senior citizens, for health insurance with coverage of up to ₹5 lakh.

GST Council Meeting Live Updates: Finance Minister Nirmala Sitharaman chaired the 55th GST Council Meeting in Jaisalmer on Saturday, December 21