The Goods and Services Tax Council meeting on Saturday postponed a decision on reducing taxes on health and life insurance, while the much talked- about GoM recommendation of rate rejig in 148 items was not tabled before the Council. Meanwhile, the GST Council agreed to issue a clarification on taxation of popcorn, saying that pre-packed and labelled ready-to-eat snacks will attract a 12 per cent tax while an 18 per cent GST will be levied if it is caramelised.

There is no change in the tax rate of popcorn and the GST Council has only agreed that the Central Board of Indirect Taxes and Customs (CBIC) will issue a circular clarifying the current taxation regime of popcorn.  “Ready-to-eat popcorn”, which is mixed with salt and spices, and has the essential character of namkeens currently attracts a 5 per cent GST if it is not pre-packaged and labelled.

If it is supplied as pre-packaged and labelled, a 12 per cent GST is levied. However, when popcorn is mixed with sugar (caramel popcorn), its essential character changes to that of a sugar confectionary, and would therefore be classifiable under HS 1704 90 90 and attract an 18 per cent GST, as per the clarification.

Some members of the Council, chaired by Union Finance Minister Nirmala Sitharaman and comprising her state counterparts, felt that more deliberations were required before a final decision could be arrived at with regard to insurance taxation.

Bihar Deputy Chief Minister Samrat Chaudhary, who heads the panel on GoM on insurance, said one more meeting is required to take a call on taxation of group, individual, senior citizen’s policies.

Later talking to the media, Union Finance Minister Nirmala Sitarama said that the GST Council deferred the decision to cut tax on insurance premium as many inputs including IRDAI comments awaited.

“Some (Council) members said more discussions required. We (GoM) will meet in January again,” Chaudhary told reporters here.  Besides, the report of the GoM on rate rationalisation, which had recommended tweaks in 148 items, was not tabled before the Council.  “We will submit the GoM report on rate rationalisation in the next meeting of Council,” said Chaudhary who is the convenor of the panel.

The Group of Ministers (GoM) on insurance had recommended exempting insurance premiums paid for term life insurance policies from GST. Also premium paid by senior citizens towards health insurance cover has been proposed to be exempted from the tax. The GoM earlier this month had arrived at a consensus to hike tax on sin goods, like aerated beverages, cigarettes, tobacco and related products, to 35 per cent from the present 28 per cent.

Finance Minister Nirmala Sitharaman said that States did not agree on bringing aviation turbine fuel under the ambit of Goods and Services Tax. “States did not feel comfortable. They didn’t want the ATF because they saw it as part of the crude petroleum diesel basket, and therefore they said that it alone cannot be taken out, and therefore that continues to remain where it is today,” she said.      

Currently, GST is a four-tier tax structure with slabs at 5, 12, 18 and 28 per cent. Luxury and demerit goods are taxed at the highest bracket of 28 per cent, while packed food and essential items are at the lowest 5 per cent slab.