The 55th GST Council Meeting (December 21, 2024, Jaisalmer) covered insurance GST, rate rationalization, EV component reductions, popcorn classification, and used car GST changes. Key theme: incremental reforms over sweeping slab mergers.
The Council discussed reducing GST on health and life insurance premiums. Group of Ministers (GoM) on insurance presented recommendations. Key proposals: reduce GST on term life insurance premiums from 18% to 5%, reduce GST on health insurance for senior citizens, maintain 18% on ULIP and investment-linked insurance. Final decision: referred back to GoM for further deliberation with specific modifications. Expected implementation: Budget 2025 or subsequent notification.
The GoM on rate rationalization (headed by Bihar Deputy CM Samrat Choudhary) presented interim findings. Key discussion: merging 12% and 18% slabs into a single 15% slab. Revenue impact analysis: potential short-term loss of ₹1.5-2 lakh crore. Council decided: phased approach — start with select items moving between slabs rather than full merger. Next steps: GoM to present final report with specific item-wise recommendations.
Reduced GST rate on electric vehicle (EV) batteries and components. Lithium-ion battery packs: from 18% to 5% (when sold separately for EV use). EV charging infrastructure equipment: 12% (rationalized from mixed rates). Key condition: reduced rate applies only to EV-specific use — industrial lithium-ion batteries remain at 18%. Expected impact: reduce EV cost by ₹30,000-50,000 per vehicle.
Council clarified GST on popcorn based on preparation and packaging: plain salted popcorn (loose/non-branded): 5%, pre-packed and labelled popcorn: 12%, caramel popcorn (sugar-coated): 18% (classified as sugar confectionery). This clarification came after confusion about whether ready-to-eat popcorn is 'namkeen' (5%) or 'prepared food' (12%/18%). No rate change — only classification clarification.
GST on sale of old/used vehicles by registered dealers: increased from 12% to 18% for vehicles with engine capacity > 1200cc, length > 4000mm, or EVs. Margin scheme continues to apply (GST only on profit margin, not full sale price). Example: dealer buys used car for ₹8L, sells for ₹10L — GST on ₹2L margin at 18% = ₹36,000. Impact: primarily affects organized used car dealers (Cars24, Spinny, etc.).
Council confirmed: penal charges levied by banks and NBFCs on loan accounts are NOT subject to GST. Reasoning: penal charges are not consideration for any service — they are penalties for non-compliance of loan terms. This was a contentious issue after RBI's 2023 circular converting 'penal interest' to 'penal charges'. Impact: relief for borrowers and banks (no 18% GST on penal charges).
GST on ACC (Autoclaved Aerated Concrete) blocks with >50% fly ash content: reduced from 18% to 12%. Rationale: promote use of fly ash (industrial waste) in construction, align with green building initiatives, and parity with other building materials. Impact: benefit for affordable housing segment.
Reaffirmed that food delivery platforms (Zomato, Swiggy) are liable to collect and pay GST under Section 9(5) at the point of delivery. No change from 45th Council meeting decision. New clarification: delivery charges shown separately on invoice are part of composite supply and taxed at the restaurant rate (5% without ITC).
| Month | Collection | YoY Growth |
|---|---|---|
| October 2024 | ₹1.87 lakh crore | +8.9% |
| November 2024 | ₹1.82 lakh crore | +8.5% |
| December 2024 (est.) | ₹1.78 lakh crore | +7.3% |
| FY25 Average (Apr-Nov) | ₹1.84 lakh crore/month | +9.2% vs FY24 |
GoM to submit final recommendations on insurance GST rates with revenue impact assessment.
Item-wise recommendations for slab merger/movement. Revenue-neutral rate to be calculated.
CGST/SGST notifications for reduced EV component rates.
Follow-up on insurance and rate rationalization. Budget 2025 integration.
The 55th GST Council Meeting was held on December 21, 2024, in Jaisalmer, Rajasthan, chaired by Union Finance Minister Nirmala Sitharaman. It was a one-day meeting that covered multiple agenda items including insurance GST, rate rationalization, EV components, popcorn classification, and used car GST. Key theme: careful balancing between revenue protection and consumer relief.
No, insurance GST was NOT reduced in the 55th meeting. The GoM on insurance presented recommendations, but the Council referred the matter back to GoM for further deliberation with specific modifications. Key proposals discussed: reducing term life insurance GST from 18% to 5%, and reducing health insurance GST for senior citizens. Final decision is expected in subsequent meetings (possibly after Budget 2025).
The 55th meeting clarified (not changed) popcorn GST rates: (1) Plain salted popcorn (loose): 5%, (2) Pre-packed and labelled popcorn: 12%, (3) Caramel popcorn (sugar-coated): 18% (classified as sugar confectionery under HSN 1704). This was a classification clarification — rates were already applicable but there was confusion in the trade about correct classification.
The used car GST increase from 12% to 18% affects ONLY registered dealers (businesses). Individual-to-individual sales of used cars are NOT subject to GST — they remain outside GST scope as private sales. The margin scheme continues: GST is charged only on the dealer's profit margin (sale price minus purchase price), not on the full sale value. So the effective GST increase is only on the margin amount.
The GoM on rate rationalization is exploring merging the 12% and 18% GST slabs into a single revenue-neutral rate (estimated around 15%). This would simplify GST compliance (fewer slabs = less confusion) but involves complex trade-offs: revenue impact (~₹1.5-2 lakh crore potential loss), political considerations (some items would increase from 12% to 15%), and technical challenges (HSN reclassification). The 55th meeting decided on a phased approach — moving select items between slabs first rather than full merger.
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