From Popcorn to Used Cars: GST Hike Hits the Middle Class Again

GST hikes announced in the 55th Council meeting will affect middle-class consumers, with higher taxes on used cars (now 18%) and packaged popcorn. Proposals to raise taxes on luxury goods and reduce rates for food delivery platforms like Swiggy are also under consideration.

By Rahul Kumar Shukla Dec 21, 2024, 14:31 IST

The 55th GST Council meeting, chaired by Finance Minister Nirmala Sitharaman in Jaisalmer, has been a game-changer, bringing in many changes to tax rates, most of which are likely to touch the middle class. Let's break down the key decisions:

Popcorn Gets Costlier

The Council revised GST rates on popcorn. Unpackaged and unlabeled popcorn will now attract 5% GST, whereas packaged and labeled popcorn will be taxed at 12%. Popcorn prepared with caramel or sugar falls in the "sugar confectionery" category and attracts an 18% GST.

GST Hike on Used Cars

The GST rate on the sale of used and pre-owned cars, including electric vehicles, has been increased from 12% to 18%. This hike is bound to increase the price of second-hand vehicles, pushing them beyond the affordability for middle-class buyers.

Other Major Decisions

AAC Blocks: GST on Autoclaved Aerated Concrete (AAC) blocks with over 50% fly ash has been reduced from 18% to 12%.
Fortified Rice: The Council has now levied a flat 5% GST on fortified rice, without any discrimination based on the usage.
Proposal for Luxury Goods Tax: The GST rates on luxury goods, such as watches, pens, shoes, and clothing, are to be hiked by the Council.
Food Delivery Services: A reduction in GST for food delivery services like Swiggy and Zomato from 18% to 5% is under consideration.

The Council had put off insurance-related matters pending decisions, which was again deferred on account of the Group of Ministers (GoM) not coming to a consensus. The tax amendments, in themselves, reflect a continued attempt to simplify GST rates but have attracted controversy on their middle-class impact, particularly with respect to increased taxes on everyday items that most people consume.