GST panel puts off call on lower rates for insurance

JAISALMER: The GST Council on Saturday decided to waive tax on gene therapy used to treat cancer and reduced the levy on fortified rice kernels used in PDS to 5%, but deferred a call on lower rates for health and term assurance and food delivery services as more consultations were required.The all-powerful panel led by the union finance minister, with states as members, also rejected calls for including ATF (aviation turbine fuel) under GST, as was proposed by airlines and the civil aviation ministry.

It has sought to ease life for businesses by deciding in-principle to move towards a simpler registration regime for small businesses and also permit temporary registration of taxpayers to make certain payments. Both the registration-related changes will require amendments to the law. Finance minister Nirmala Sitharaman told reporters that the much-awaited decision on term and health insurance required further consultation and insurance regulator IRDAI's inputs had also been sought.

The issue is expected to be discussed within the group of ministers led by Bihar deputy CM Samrat Chaudhary. The other GoMs - on rate rationalisation and compensation cess - will also undertake further deliberations.

"The issue of whether charges collected by municipalities for granting FSI, including additional FSI, chargeable to GST on reverse charge basis was brought up in the Council. The matter was deferred for further examination on the behest of the central govt on the grounds that this amount relates to municipalities or local authority," an official release said.

Further, Sitharaman said, based on Andhra Pradesh's request for additional 1% cess for a limited period to deal with floods in the state, a new GoM has been set up to look at the legal and structural issues, and recommend a uniform policy on imposition of levy in case of a natural disaster in a state. A few years ago, a mechanism like this was put in place for Kerala, but a uniform system may be put in place for the future.

The council decided that all used cars will face 18% GST, including electric vehicles, on the margin of suppliers. While there will be no tax transactions involving individuals, the levy will be applicable in case of deals involving companies or used-car sellers. The Centre, Sitharaman said, had proposed 5% tax on EVs, but states wanted a higher levy. There was a spate of clarifications by the GST Council, which included one on ready-to-eat popcorns with the pre-packed ones with salt and spices going to attract 12%, in line with the tax on namkeens. Those with sugar, which are caramelised will face 18% tax.

Similarly, the council said transaction of vouchers will not attract tax as they were neither supply of goods nor services. Further, it clarified that small businesses covered by the reverse charge mechanism will not have to pay GST if they paid rent to unregistered landlords. Besides, no GST has to be paid on 'penal charges' levied and collected by banks and NBFCs from borrowers for non-compliance with loan terms.