GST Council Recommends Tax Cuts on Fortified Rice and Gene Therapy

In a move that could significantly impact both nutrition and healthcare access, India’s GST Council recently recommended sweeping changes too the Goods and Services Tax (GST). Key among these recommendations are a reduced GST rate on fortified rice kernels (FRK) and a complete exemption for gene therapy.

The 55th GST Council meeting, chaired by Union Finance Minister Nirmala Sitharaman, took place in Jaisalmer, Rajasthan, on December 21, 2024.The council’s decisions aim to simplify the tax system and ease the financial burden on consumers and businesses.

Lower Costs for Fortified Rice

The council’s recommendation to lower the GST rate on fortified rice kernels (FRK), classified under HS Code 1904, to 5% is expected to make this crucial nutritional supplement more affordable and accessible to a wider population. “To reduce the GST rate on the Fortified Rice Kernel (FRK), classifiable under 1904, to 5%,” the council stated in it’s official recommendations.

Gene Therapy Receives GST Exemption

Perhaps the most critically importent announcement is the proposed complete exemption of GST on gene therapy. This groundbreaking decision recognizes the transformative potential of gene therapy in treating life-threatening diseases and underscores the government’s commitment to making advanced medical treatments more accessible. The council’s recommendation explicitly stated, “To exempt GST on gene therapy.”

While the specifics of implementation remain to be seen, this move could have a profound impact on the affordability and availability of gene therapy in India, perhaps paving the way for similar initiatives globally. The implications for the U.S. healthcare sector could include increased research collaboration and potential future policy adjustments.

Other recommendations from the GST Council included exemptions for contributions to the Motor Vehicle Accident Fund and clarifications regarding penal charges levied by banks and NBFCs. These measures aim to streamline processes and provide further relief to individuals and businesses.

GST Council Decisions: Ripple Effects on US Consumers

While the Goods and Services Tax (GST) is an Indian tax system, its recent council meeting resulted in changes that could indirectly impact US consumers. The decisions made affect the pricing of various goods and services, potentially influencing global supply chains and international trade. Hear’s a breakdown of the key changes and thier potential implications for the US market:

Goods Affected by GST Changes

Several categories of goods saw significant alterations in their GST rates. These changes, while originating in India, could affect the cost of imported goods or components used in US manufacturing.

• Used Vehicles: The GST rate on used vehicles,including electric vehicles (EVs),increased from 12% to 18%. This could potentially lead to higher prices for used car imports or parts sourced from India.
• Autoclaved Aerated Concrete (ACC) Blocks: Clarifications were made regarding the GST rate for ACC blocks with high fly ash content, potentially impacting the cost of construction materials if sourced internationally.
• Pepper and Raisins: Clarifications were issued regarding GST exemptions for pepper and raisins supplied directly by farmers. This could have a minor impact on the price of imported spices and dried fruits, depending on sourcing.
• Pre-packaged and Labelled Goods: The definition of “pre-packaged and labelled” goods was amended to include items under 25 kg or 25 liters. This could indirectly affect the pricing of imported retail goods.

Services impacted by GST Adjustments

Changes to GST rates on services also have the potential to indirectly affect US businesses and consumers. These changes primarily relate to the Indian market but could have downstream effects on international transactions.

• Hotel services: Amendments to the definition of hotel services could impact pricing structures,potentially affecting the cost of travel and tourism-related services involving Indian providers.
• Sponsorship Services: Changes to the taxation of sponsorship services could have implications for international business collaborations and marketing campaigns involving Indian entities.
• Insurance Contributions: GST exemptions on contributions to the Motor Vehicle Accident Fund could indirectly influence insurance premiums, though the affect on the US market is likely minimal.

Other Notable Changes

The GST Council also addressed several other issues, including:

• Exemptions for specific equipment: Exemptions were granted for imports of equipment for the LRSAM system and the International Atomic Energy Agency (IAEA), which could have limited, specialized impacts on international trade.
• Concessional GST rates on food inputs: Concessional rates were extended for food inputs used in government programs, which is unlikely to have a direct impact on the US market.
• Clarification on GST for penal charges: Clarifications were made regarding GST on penal charges levied by banks and NBFCs, which is primarily relevant to the Indian financial sector.

While the direct impact of these GST changes on US consumers might be subtle, it’s crucial to monitor these developments as they could influence global supply chains and ultimately affect the prices of goods and services in the US market over time.

India’s GST Changes: A Ripple effect Across Borders

India’s recent Goods and Services tax (GST) Council meeting sparked discussions about the potential impact of its decisions on global markets, notably the United States. While the primary focus is on India’s domestic economy, shifts in GST rates on various goods and services could indirectly influence pricing, supply chains, and eventually, the cost of goods for American consumers.

Interview with Dr. Priya Sharma, Economist Specializing in International trade

We sat down with Dr. Priya Sharma, a renowned economist specializing in international trade and its impact on global economies, to understand the potential implications of india’s latest GST adjustments for US consumers.

World Today News Senior Editor: Dr. Sharma,thank you for joining us. India’s GST Council recently made some notable changes. What are the main takeaways for our readers in the US?



Dr. Sharma:



It’s a pleasure to be here. While these changes are primarily focused on the Indian market, there are downstream effects that could impact international trade and, consequently, US consumers.



World Today News Senior Editor: Could you elaborate on the goods and services most likely to be affected?



Dr.Sharma: Several categories saw fluctuations.For instance, the increased GST on used vehicles, including electric vehicles, could lead to higher prices for imports or components used in US manufacturing.Changes to the taxation of services like hotel accommodation and sponsorship could also have indirect implications for US businesses involved in international collaborations.



World Today News Senior Editor: Are there any positive implications for US businesses or consumers from these changes?



Dr. Sharma: Its too early to say definitively, but the GST exemption on gene therapies is a notable development. This could potentially lead to more affordable and accessible gene therapies globally,including in the US,though the long-term impact on pricing and research collaboration remains to be seen.





World Today News Senior Editor: What about the broader economic landscape? How might these changes influence global supply chains?



Dr. Sharma:



It’s essential to remember that these are just one piece of the puzzle. Global supply chains are intricate and influenced by many factors. However, shifts in tax rates can incentivize companies to adjust their sourcing strategies, potentially leading to changes in the flow of goods and services.



World Today News Senior Editor: Dr.Sharma,thank you for your insights. While these changes may seem distant, they highlight the interconnectedness of the global economy and its impact on everyday consumers.



Dr. Sharma: My pleasure. It’s crucial to stay informed about these developments as they can have a ripple effect across international borders.