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Published 19:09 IST, December 21st 2024

GST Council Meeting: Rate Reduced On Rice Kernels, What all Sitharaman Said?

The 55th GST Council Meeting, chaired by Nirmala Sitharaman, announced key tax changes, including a GST rate cut on rice kernels and IGST exemption on missiles.

Reported by: Business Desk
GST Council Meeting | Image: Republic

GST Council Meet: The 55th meeting of the GST Council, chaired by Union Finance Minister Nirmala Sitharaman, convened in Jaisalmer on December 21, bringing significant changes to India’s indirect tax structure. The meeting saw the extension of the Integrated Goods and Services Tax (IGST) exemption on surface-to-air missiles, a reduction in the GST rate on fortified rice kernels, and several other clarifications on tax matters.

Extension of IGST Exemption on Surface-to-Air Missiles

Sitharaman announced that the IGST exemption on surface-to-air missiles would be extended, a move that is expected to bolster the defense sector by easing the tax burden on vital defense imports.

GST Rate Reduction on Fortified Rice Kernels

In a bid to combat malnutrition, the GST Council decided to reduce the tax rate on fortified rice kernels to 5 per cent. This reduction is part of the government’s ongoing efforts to promote nutrition-rich fortified rice across the country.
The Finance Minister also clarified that ACC blocks containing 50 per cent fly ash will attract a 12 per cent GST rate, providing much-needed clarity to the construction industry regarding tax liabilities on these blocks.

Reduction of Compensation Cess for Merchant Exporters

To assist exporters, the GST Council approved a reduction in the compensation cess on supplies to merchant exporters. This change is aimed at improving working capital for exporters, helping them stay competitive in international markets.

While the inclusion of Aviation Turbine Fuel (ATF) under GST remains a contentious issue, Sitharaman noted that no consensus had been reached among states to bring ATF under the GST regime, as states consider it part of the fuel basket.

 The matter remains unresolved, and no decision was made on forming a Group of Ministers (GoM) for further deliberation on ATF.

On health insurance, Sitharaman informed that the GoM, which is tasked with discussing tax rates on life and health insurance premiums, requires more time, as inputs from the Insurance Regulatory and Development Authority of India (IRDAI) are still pending.

Other Key Clarifications

The GST Council also clarified that penal charges levied by banks and non-banking financial companies (NBFCs) for loan defaults will not attract GST. In addition, it was announced that payment aggregators handling transactions below Rs 2,000 will be eligible for an exemption, though this exemption does not extend to payment gateways and fintech services.

Ongoing Rate Rationalisation Discussions

The meeting also touched upon rate rationalization for various categories, including luxury goods and essential commodities. While some changes are expected, the Council indicated that more time is needed for finalizing reports on rate revisions.

Updated 19:09 IST, December 21st 2024

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