GST Council Forms GoM to Review Insurance Tax Rates, Cuts GST on Cancer Drugs and Namkeens
New Delhi, Sep : During its 54th meeting, the GST Council, chaired by Union Finance Minister Nirmala Sitharaman, decided to establish a Group of Ministers (GoM) to review tax rates on life and health insurance policies. The council also announced a reduction in the Goods and Services Tax (GST) rates for cancer drugs and namkeens.
The GoM, which will be headed by Bihar Deputy Chief Minister Samrat Choudhary, is tasked with analyzing the GST rate structure on insurance premiums. Choudhary currently leads the panel on GST rate rationalization. Sitharaman mentioned that the GoM will have new members joining the team and is expected to submit its report by the end of October 2024.
Push for Lower Tax on Insurance Premiums
The issue of high taxation on life and health insurance premiums has been a point of contention in recent parliamentary debates. Opposition parties have called for the complete exemption of health and life insurance premiums from GST. Notably, Transport Minister Nitin Gadkari also expressed his concerns in a letter to the Finance Minister, advocating for reduced taxes on these essential services.
Responding to these demands, Sitharaman reminded the Opposition that 75% of GST revenues are allocated to state governments, urging them to work with their respective state finance ministers to bring up such proposals in the GST Council.
GST Reductions on Cancer Drugs and Namkeens
Apart from insurance, the council also approved a reduction in the GST rate for cancer drugs, lowering it from 12% to 5%. Additionally, the tax on namkeens, which are popular Indian snacks, was reduced from 18% to 12%. These changes are expected to provide relief to both consumers and industries impacted by high taxation.
upcoming GoM on Compensation Cess
A new GoM will also be established to address concerns surrounding the compensation cess, which is set to expire after March 2026. The cess is currently levied to compensate states for revenue losses post-GST implementation.
Deliberations on Rate Rationalization and Online Gaming
The Council further deliberated on the status report presented by the GoM on rate rationalization and ongoing issues related to online gaming. Additionally, a committee of secretaries, led by an Additional Secretary (Revenue), will be formed to tackle the negative balance in the Integrated Goods and Services Tax (IGST) and explore mechanisms to reclaim funds from states.
The decisions made at the 54th GST Council meeting mark important steps in addressing taxation concerns across a range of sectors while ensuring continued financial collaboration between the Centre and the states.
