What are the recent changes in GST rates?

The GST Council, which governs tax rate revisions, has recently updated rates for various goods and services. These changes aim to promote specific economic sectors, streamline compliance, and address revenue concerns. Here’s a summary:

1. Key Changes in GST Rates

1. Reduced Rates:
   • Electric Vehicles (EVs): GST rate reduced from 12% to 5% to encourage green mobility​Future Tax News​.
   • Renewable Energy Products: Reduced rates for solar and wind energy components.
   • Health Insurance Premiums: Lowered from 18% to 12% to increase accessibility​Tax Management India.
2. Increased Rates:
   • Luxury Goods and Services: High-end cars, premium electronics, and services like casinos now taxed at 28%​.
   • Packaged and Labeled Foods: Revision for certain categories to align with taxation on processed items​Tax Management India​.
3. Uniform Taxation:
   • Milk cans, irrespective of material, now taxed uniformly at 12%​Tax Management India.
   • Enhanced clarity for composite supply involving job work and supply chain inputs.
4. Service Rate Updates:
   • Lowered rates for essential services like passenger transport by electric vehicles and increased taxes on luxury hotel stays​Future Tax News​.

2. Constitutional Provisions Governing GST

• Article 246A: Empowers both the Union and State legislatures to levy GST.
• Article 279A: Establishes the GST Council to recommend rates and policy changes.
• Article 265: Ensures no tax is levied without proper legislative authority.

3. Landmark Cases Related to GST Rates

1. Mohit Minerals vs. Union of India (2022):
   • Addressed the constitutionality of “reverse charge” on ocean freight under GST. It clarified GST applicability for services provided by foreign suppliers.
2. Bajaj Allianz General Insurance Co. Ltd. vs. Union of India (2023):
   • Focused on GST applicability on insurance policies and the distinction between taxable and exempt services.
3. Calcutta Club Limited vs. Union of India (2019):
   • Examined the GST applicability on services provided by members’ clubs and highlighted the concept of mutuality.

Implications of Recent Changes

• Economic Growth: Encourages green initiatives and boosts renewable energy sectors.
• Consumer Impact: Increases affordability for essential items while taxing luxury goods more heavily.
• Compliance Simplification: Unified rates for similar goods reduce ambiguity for taxpayers.

For additional details, visit the GST Council’s website or consult the latest meeting summaries and circular