The 55th Goods and Services Tax (GST) Council meeting, chaired by Union Finance Minister Nirmala Sitharaman on Saturday, introduced several key changes aimed at streamlining the tax process, providing relief, and aligning policies with emerging needs.

What's Getting Cheaper?

Several items and services will see a reduction in GST rates:

• Fortified Rice Kernels (FRK): GST on FRK, when supplied through the Public Distribution System (PDS), has been reduced to 5%. This measure is aimed at improving affordable nutrition for economically disadvantaged groups.

• Gene Therapy: In an effort to make advanced medical treatments more accessible, gene therapy has been fully exempted from GST.

• Food Preparations for Free Distribution: Inputs supplied for food distribution under government schemes will now be subject to a concessional 5% GST, benefiting the economically weaker sections.

• Defense Equipment: Systems and tools used in the manufacturing of Long Range Surface-to-Air Missile (LRSAM) assembly will be exempt from Integrated Goods and Services Tax (IGST), providing support to the defense sector.

• Inspection Equipment for IAEA: Imports of equipment for inspection by the International Atomic Energy Agency (IAEA) will now be exempt from IGST, ensuring compliance with international regulations.

• Pepper and Raisins (Direct Sales): Direct sales of pepper and raisins by agriculturists will not attract GST, offering relief to agricultural producers.

What's Getting More Expensive?

A few items and services will see an increase in GST rates:

• Old and Used Vehicles (Including EVs): The GST rate on the sale of old and used vehicles, except certain petrol and diesel variants, has been increased from 12% to 18%, impacting the resale automobile market.

• Ready-to-Eat Popcorn: Pre-packaged and labeled ready-to-eat popcorn will now be taxed at 12%, while caramelized popcorn will be taxed at 18%. Non-pre-packaged, "namkeen"-like popcorn will remain at 5% GST.

• Autoclaved Aerated Concrete (ACC) Blocks: ACC blocks with over 50% fly ash will now be taxed at 12%, potentially increasing construction costs.

• Corporate Sponsorship Services: These services will now be subject to the Forward Charge Mechanism, possibly increasing costs for corporate sponsors.

Other Policy Updates

• Vouchers: Transactions involving vouchers will be clarified as not falling under the category of goods or services, thus exempt from GST.

• Penal Charges: Banks and non-banking financial companies (NBFCs) will not have to charge GST on penalties collected for non-compliance with loan terms, benefiting borrowers.

• Pre-Packaged and Labelled Definition Update: The definition of “pre-packaged and labelled” goods has been revised to align with the Legal Metrology Act, covering retail sale commodities up to 25 kg or 25 liters, and requiring mandatory labeling.

These adjustments are expected to affect various sectors, such as healthcare, agriculture, defense, and construction. While some changes focus on making products more affordable, others seek to optimize revenue and improve compliance.