48th GST Council meeting Updates: Clarity for cess levy on SUVs & more

The 48th GST Council meeting is set to take place on 17th December 2022, Saturday. As per the latest developments, the Council may clarify the eligible conditions for charging GST cess on the Sports Utility Vehicle (SUV) range of cars. 

Currently, the government levies a compensation cess of 22% on the sale of SUV cars over and above a GST rate on SUVs of 28%. However, the criteria that meet the definition of SUV under the GST law to levy the cess have been debated. The GST Council, in its upcoming Council meeting, may settle this matter.

The GST Council may clarify that if the vehicle meets all of the below conditions, then it is an SUV to levy a GST cess of 22%, currently lacking in the GST law-

  • Engine capacity is above 1500 cc, 
  • Length exceeds 4000 mm, and 
  • The ground clearance is 170mm or more. 

Earlier, at the 21st GST Council meeting, the GST Council had increased the cess from 15% to 22%. Yet, there was no particular definition given under the law for classifying vehicles as SUVs, especially the mention of ground clearance. There was confusion in the auto industry about whether or not all the conditions listed above must be satisfied in toto to levy the cess.

Apart from the above matter, the GST Council may also pick up vital tax-related issues and give clarifications on 17th December 2022. Carbonated fruit pulp or juice-based drinks may attract a 28% GST rate. Presently, all kinds of fruit pulp or juice-based drinks attract a GST rate of 12%.

Private petrol refiners may attract a 5% GST for petrol being blended with Ethanol. Further, the GST on health insurance will be slashed from 18% to 12%. Also, the authority may clarify that GST is not leviable on the No Claim Bonus (NCB), treating it as eligible for deduction from the insurance premium of any type.

The supply of Mentha may be classified as a reverse charge-based transaction. The GST Council may extend the duration of the Group of Ministers (GoM) formed for reviewing the valuation rules for GST on Pan masala and Gutkha. There are expectations of introducing a capacity-based GST levy on these sin goods.

GST may not be levied on incentives banks receive for RuPay debit cards and BHIM UPI transactions. Further, GST levy may be exempted on Viability Gap Funding (VGF) subsidy payment to Airlines for Regional Connectivity Scheme (RCS) flights.

The sale of brick kilns may be approved for a special composition scheme from April 2022 with 6% GST without tax credits. Whereas, if one wants to claim tax credits, the rate may be revised upwards to 12% from the present 5%.

For any clarifications/feedback on the topic, please contact the writer at annapoorna.m@clear.in

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