GST Council Exempts Gene Therapy, Cuts Tax Rate For Rice Kernels

Jaisalmer (Rajasthan):

Union Finance Minister Nirmala Sitharaman on Saturday announced that the Goods and Services Tax Council has approved the reduction of GST on rice kernels to 5 per cent, exempted life-saving gene therapy from tax, and extended the GST exemption for parts used in manufacturing surface-to-air missiles (SAM).

Addressing the media here after the 55th GST Council meeting, the Finance Minister said the decision to cut GST on rice kernels from 18 per cent to 5 per cent has been taken as the commodity is supplied to the weaker sections of society through the public distribution system.

“Similarly, the concessional 5 per cent GST is applicable on inputs of food preparations that are supplied for free distribution to economically weaker sections under government programs subject to existing conditions; so this is also an extension of the 5 per cent rate that prevails,” she said.

Explaining the rationale for increasing the tax on caramelised popcorn to 18 per cent, the Finance Minister said that these included added sugar which constituted a separate category just like carbonated drinks that are harmful to health and hence, are put under a higher tax slab.

She pointed out that salted and plain popcorn were also being sold in the market and the GST on them had not been increased.

She further stated that black pepper, whether fresh green or black pepper or dried black pepper, and raisins, when supplied by an agriculturist, are not liable to GST. However, if these commodities are sold by merchants, then they would be liable to pay tax.

She also said that all parts used for the manufacture of SAM missiles including software will continue to be exempt from GST.

The Finance Minister also said that while payment aggregators handling transactions below Rs 2,000 are eligible for exemptions, this does not apply to payment gateways and fintech services.

She said that no GST is payable on penal charges or levies collected by banks and NBFCs for non-compliance with loan terms by borrowers. This step would go a long way to help small businesses.

The Finance Minister further stated that the issue of whether there should be a separate GST on delivery charges of food provided by quick commerce companies and e-commerce apps was discussed at the meeting but no decision has been taken in the matter. It was felt by the Council that more detailed discussions were required on the issue, she added.

The Finance Minister also said that ACC blocks containing more than 50 per cent fly ash will attract 12 per cent GST.

Ms Sitharaman disclosed that no decision has been made regarding the inclusion of Aviation Turbine Fuel (ATF) under the GST framework as several states were opposed to the move. Further discussions are expected on the issue in future meetings.

She further stated that the GoM on health insurance has not received inputs from the insurance regulator IRDAI as yet so more time is required to take a decision on the issue.

The GoM on rate rationalisation also needs additional time as the report is yet to be finalised, she added.

The Finance Minister further said that the Council discussed whether the GST on floor space index (FSI) for construction should be on the reverse charge or forward charge. No decision was taken on the issue as it has implications for the revenue of municipalities and besides, land is a state subject.

She also disclosed that a concept note has been given in-principle approval by the GST Council to bring amendments in GST to make registration easier for small companies who avail low input tax credit. These companies are facing problems in registrations and it has been decided to simplify the system to make the process smoother for them.

The Council has approved an amendment to the definition of prepackaged and labelled items intended for retail sale. The step is aimed at clarifying the definition for all goods as currently there is a lot of confusion on the issue, Ms Sitharaman added.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)