GST Council increases tax on used cars, Popcorn tax to vary by flavour

The 55th GST Council meeting, chaired by Finance Minister Nirmala Sitharaman, brought significant tax changes across several categories, reflecting a mix of relief and increases. Meeting in Jaisalmer, the council addressed key issues, including rates on AAC blocks, used cars, and ready-to-eat popcorn.

In a much-awaited clarification, AAC blocks with more than 50% fly ash content will now attract a reduced GST rate of 12% instead of 18%. These blocks, categorized under HS code 6815, are widely used in construction, and the tax cut is expected to boost their adoption.

The council also approved an 18% GST rate on the sale of old and used cars, including electric vehicles (EVs). This marks an increase from the previous rate of 12%, potentially impacting the burgeoning second-hand automobile market.

Fortified rice kernels will attract a uniform GST rate of 5%, regardless of their use. This move simplifies the previous tax regime, which offered varying concessions based on end-use. The council hopes this change will encourage fortified rice consumption as a nutritional intervention.

Popcorn taxation took a flavorful turn, with the GST rate now dependent on the product's character. Popcorn mixed with salt and spices attracts 5% GST when unpackaged and 12% when pre-packaged and labelled. Caramel or sugar-coated popcorn, however, will face an 18% GST under sugar confectionery classification.

The council deferred decisions on several contentious issues, including insurance-related tax reforms and rationalization of rates on luxury goods. Discussions on extending the compensation cess timeline and creating a separate 35% tax slab for sin goods remain unresolved, indicating a packed agenda for the next meeting.