GST Rate: The 55th meeting of the GST Council was held on Saturday under the chairmanship of Finance Minister Nirmala Sitharaman. In this, it was decided to impose 18% GST on old and used electric vehicles.
This increased tax will be applicable only on vehicles sold for commercial purposes. Finance Minister Nirmala Sitharaman clarified that this rate will be applicable only on the margin value (difference between purchase and selling price). It will not have any effect on vehicles bought and sold for personal use.
Current GST on second-hand vehicles: For non-electric vehicles: 12% on normal vehicles. 18% on large engines (≥1200cc petrol, ≥1500cc diesel) and SUVs.
Electric vehicles: Till now 12% GST was applicable, which has now been increased to 18% for commercial sales.
The GST Council has also clarified the tax rates on popcorn. For caramelized popcorn, it will be 18% and 12% for pre-packed and spicy popcorn. Besides, 5% GST will be applicable on unpacked and unlabeled popcorn.
The GST Council has not yet taken any decision on issues like reducing GST rates on insurance products and imposing tax on app-based food delivery platforms. Whereas, to provide relief to the common people in health and other essential insurance, Union Minister Nitin Gadkari and West Bengal Chief Minister Mamata Banerjee have demanded removal of GST from health insurance.
Other key recommendations: GST Council recommended reduction in GST rate on Fortified Rice Kernel (FRK), classifiable under 1904, to 5%.
GST council also recommended to fully exempt GST on gene therapy.
GST Council recommended exemption of GST on contributions by general insurance companies from third-party motor vehicle premiums for Motor Vehicle Accident Fund.
GST Council clarifieed that no GST is payable on ‘penal charges’ levied and collected by banks and NBFCs from borrowers for non-compliance with loan terms.
Opposition parties like Aam Aadmi Party (AAP) and Samajwadi Party (SP) strongly criticized hike in GST on old electric vehicles.
Former Delhi CM Arvind Kejriwal targeted the Centre and said, “Buying a car is a big deal for the middle class, but the central government is crushing their dreams. The BJP government is working only for the rich and industrialists. It is putting the burden of inflation and tax on the common man and the poor.”
SP supremo Akhilesh Yadav said, “BJP has made GST a game of snakes and ladders. Sometimes they increase GST on something, sometimes they reduce it. Its purpose is to benefit its supporters. This creates confusion among traders and small shopkeepers, which is taken advantage of by corrupt people.”
