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

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.