New GST Clarifications from the 55th Council Meeting: Key Updates on Goods Classification & Tax Rates
Understanding the Latest GST Clarifications: Key Takeaways from Circular No. 247/04/2025
The latest GST Council meeting has brought some much-needed clarity on various taxation aspects, especially concerning agricultural produce, food items, and construction materials. If you’ve ever been confused about whether an agriculturist needs GST registration for selling dried pepper or if your favorite caramel popcorn has a different tax rate than salted popcorn, this update is for you!
In this article, we’ll break down the key points of Circular No. 247/04/2025 in a simple, relatable manner—so whether you’re a business owner, tax consultant, or just someone who loves keeping up with tax policies, you’ll walk away with a clear understanding of the latest GST changes.
1. Pepper of Genus Piper: What’s the GST Impact?
Imagine you’re a farmer growing black pepper. You harvest and sell your produce—do you need GST registration? The answer is no, thanks to the clarification in this circular.
What’s clarified?
- Pepper of the genus Piper (whether fresh, white, or black) falls under HS 0904 and attracts 5% GST.
- If an agriculturist (as defined in Section 2(7) of the CGST Act) supplies dried pepper directly from their plantation, they are exempt from GST registration as per Section 23(1)(b) of the CGST Act.
💡 Practical Insight: If you’re a trader buying dried pepper from an agriculturist and reselling it, you will need to charge and pay GST. However, the farmer selling directly from their land is free from this burden.
2. Are Raisins Taxable for Farmers?
Much like the case of dried pepper, agriculturists selling raisins have also been exempted from GST registration.
What’s clarified?
- Farmers supplying raisins directly are not liable for GST registration under Section 23(1)(b).
💡 Industry Perspective: This move supports farmers by reducing their compliance burden and ensures that taxation applies primarily at the processing or retail stage.
3. The Popcorn Puzzle: Tax Rates on Ready-to-Eat Popcorn
We’ve all grabbed a bag of popcorn at the movies or the grocery store. But did you know the GST rate varies based on what’s in it and how it’s sold?
Key Clarifications:
- Plain or salted popcorn (not pre-packaged and labeled) → 5% GST (HS 2106 90 99).
- Pre-packaged & labeled salted popcorn → 12% GST (HS 2106 90 99).
- Caramel popcorn (or other sugar-coated varieties) → 18% GST (HS 1704 90 90).
💡 Real-World Example: If you buy a sealed pack of salted popcorn at the supermarket, you’ll be paying 12% GST. However, if you buy loose popcorn at a roadside vendor, it falls under the 5% slab.
What About Past Tax Disputes?
The circular also provides relief by regularizing past GST rates for popcorn with salt and spices until February 14, 2025—meaning businesses won’t face penalties for misclassification before this date.
4. Fly Ash-Based AAC Blocks: What’s the Right Classification?
Autoclaved Aerated Concrete (AAC) blocks have been widely used in construction. But what happens if they contain over 50% fly ash? This circular resolves the confusion.
What’s clarified?
- Fly ash bricks, blocks, and aggregates (HS 6815) → 12% GST.
- Other cement-based articles (HS 6810) → 18% GST.
- AAC blocks with more than 50% fly ash content → fall under HS 6815 (12% GST).
💡 Why This Matters: Builders and manufacturers now have a clear tax rate, preventing unnecessary disputes with tax authorities.
5. Compensation Cess on SUVs and Utility Vehicles
SUV buyers, take note! If you’re purchasing a vehicle with an engine above 1500cc, length over 4000mm, and ground clearance of 170mm (unladen condition), you’re now subject to 22% Compensation Cess.
Key Takeaways:
- Before July 26, 2023, only SUVs exceeding 1500cc capacity attracted 22% Compensation Cess.
- After July 26, 2023, the definition was expanded to include all utility vehicles meeting the engine, length, and ground clearance criteria.
💡 Buyer’s Tip: If you're planning to buy an SUV, factor in the Compensation Cess when calculating the total cost.
Final Thoughts: Why These Clarifications Matter
Tax policies should never feel like a puzzle. The 55th GST Council meeting has done a commendable job in clearing doubts surrounding agriculture, processed foods, and construction materials. Whether you’re a farmer, retailer, manufacturer, or consumer, these clarifications ensure better compliance and reduce unnecessary litigation.
📌 Key Takeaways at a Glance:
|
Item |
GST Rate |
Notes |
|
Dried Pepper (by Agriculturist) |
Exempt |
No GST registration needed |
|
Raisins (by Agriculturist) |
Exempt |
No GST registration needed |
|
Loose salted/spiced popcorn |
5% |
Not pre-packaged |
|
Pre-packaged salted popcorn |
12% |
Falls under HS 2106 90 99 |
|
Caramel/Coated Popcorn |
18% |
Treated as sugar confectionery |
|
AAC Blocks (with >50% Fly Ash) |
12% |
Classified under HS 6815 |
|
SUVs & Utility Vehicles |
22% Compensation Cess |
If >1500cc, >4000mm, & 170mm ground clearance |
Frequently Asked Questions (FAQs)
1. Do farmers need to register under GST for selling dried pepper?
No, farmers selling dried pepper directly from their plantations are exempt from GST registration under Section 23(1)(b) of the CGST Act.
2. Is GST applicable on the sale of raisins by agriculturists?
No, agriculturists selling raisins directly are not required to register under GST and are exempt from taxation on their supply.
3. What is the GST rate on ready-to-eat popcorn?
- Loose salted/spiced popcorn → 5% GST
- Pre-packaged & labeled salted popcorn → 12% GST
- Caramel/sugar-coated popcorn → 18% GST
4. Has the GST Council provided relief for past taxation on popcorn?
Yes, the Council has regularized past tax discrepancies on salted/spiced popcorn up to February 14, 2025, meaning businesses won’t face penalties for misclassification before this date.
5. What is the GST rate for autoclaved aerated concrete (AAC) blocks?
- If AAC blocks contain more than 50% fly ash, they fall under HS 6815 and attract 12% GST.
- Other cement-based blocks fall under HS 6810 and attract 18% GST.
6. What is the Compensation Cess rate on SUVs and utility vehicles?
SUVs and utility vehicles meeting the following criteria attract 22% Compensation Cess:
- Engine capacity exceeding 1500cc
- Length over 4000mm
- Ground clearance of 170mm or more (unladen condition)
7. From when is the new SUV cess rule applicable?
The amended Compensation Cess rule applies from July 26, 2023, based on the clarification in this circular.
8. Do traders need to charge GST if they purchase dried pepper from farmers?
Yes, while farmers are exempt, traders purchasing dried pepper from them must charge GST when reselling the product.
9. How does GST apply to different types of popcorn?
- If salt & spices are added, it's 5% (loose) or 12% (packaged).
- If sugar is added (like caramel popcorn), it's considered a confectionery item and taxed at 18%.
10. Where can businesses report difficulties regarding these GST changes?
Any difficulties in implementation can be reported to the GST Board as mentioned in the circular.