Your gift vouchers will now be exempted from GST
What's the story
The 55th Goods and Services Tax (GST) Council meeting, chaired by Finance Minister Nirmala Sitharaman, was held in Jaisalmer today. The Council discussed a number of issues including possible tax relief on insurance and gift vouchers. The meeting also discussed raising the tax rate on used electric vehicles (EVs), clarified the levy on food delivery apps, and recommended exempting gift vouchers from GST.
Tax adjustments
GST rate revision on used EVs, flavored popcorn
The Council has approved an increase in the GST rate on used cars and EVs from 12% to 18%. Further, ready-to-eat popcorn will now attract a 5% GST while packaged and labeled ones will be charged a 12% GST. The meeting also mulled reducing the current 18% GST rate on food delivery platforms to 5%, without input tax credit (ITC).
Voucher exemption
Gift vouchers may be exempted from GST
The Council's law panel has recommended that gift vouchers should be treated as prepaid instruments as defined by the Reserve Bank of India (RBI), used to discharge an obligation. This would put them in a category exempt from GST. "The clarification that transaction in vouchers is not liable to GST will put to rest all disputes regarding the nature of vouchers," said Bipin Sapra, partner at EY.
Tax reforms
GST Council mulls tax rate rationalization, luxury item levy
The Council also talked about rationalizing the tax rate for around 148 items, including possibly increasing the levy on luxury watches, pens, shoes and apparel. There were discussions about a separate 35% tax slab for so-called sin goods. However, states have different opinions on these proposals with some even opposing exemption or reduction in tax on certain products.