The 54th meeting of the GST Council on Monday (September 9, 2024) chaired by Finance Minister Nirmala Sitharaman took several decisions, including two status reports that were submitted.

Ms. Sitharaman announced the formation of a Group of Ministers (GoM) to look into the 18% GST levy on insurance. “We have told them to come up with a report by the end of October and the GST Council will meet in November and finalise the decision based on the GoM’s recommendation,” she said. .

The GST Council, chaired by Ms. Sitharaman and comprising State Ministers, was expected to decide on whether to reduce the tax burden on health insurance from the current 18% or exempt certain categories of individuals, like senior citizens. However, the announcement has been deferred to the next meeting. Ms. Sitharaman said, “The Council felt it might be worth a GoM to look into these issues quickly and the November GST Council could take a call on it.”

Many Resident Welfare Associations have asked if they sign up for group coverage, and we need to deliberate on life insurance and term insurance, she said.

The rate rationalisation GoM presented details of what has happened till now and has called for a meeting on September 23. The GoM on real estate also submitted its status report. Then a status on the casinos, online gaming and horse racing GST levy, was also presented to the Council.

Ms. Sitharaman said the revenue from online gaming has increased by 412% and has reached ₹6,909 crore in just six months.

Similarly, revenues from casinos have increased 30% to ₹214 crore in the six months after the GST was notified, she added.

GST Compensation Cess

Ms. Sitharaman said we had discussed the GST Compensation Cess which can be levied till March 2026 as per the extended period. “Probably, by January 2026, we will be clearing the loan and interest dues on borrowings made to compensate the States during the COVID period.”

“To assess what to do after March 2026 with the Compensation Cess levy, we have agreed to form a GoM which will study every State’s claims of compensation dues. It will also decide what to do with the Cess after March 2026,” she said.

The Finance Minister said a Committee of Secretaries was also formed to decide on how to take the Integrated GST forward. “Today, we have a negative balance on IGST. To finalise the way forward, a committee chaired by the Additional Revenue Secretary will be set up with officers of the Centre and the States,” she told the Council.

A lot of balance has to be restored from States that had received excessive IGST, she said.

Ms. Sitharaman said there was a request from the Karnataka Finance Minister that the formulation and modus operandi of IGST calculations may be again explained to whoever wants it. The Revenue Secretary will have informal virtual meetings with whichever Ministers desire this.

Some of these committees have been given a very limited time span. The IGST panel also has to come back by the end of October, she added.

The Council decided that funds given for research to State-affiliated universities, those that have come about under State or Central laws, or those that have obtained Income Tax exemption, can receive research funds both from the public (govt.) and private sectors and will be exempt from paying GST, Ms. Sitharaman said.

Reduction in GST rate on specified cancer drugs

Ms. Sitharaman on Monday announced a reduction in the GST rate on specified cancer drugs. “You would recall that we had slashed customs duties on them and now the GST rate is being reduced from 12% to 5% to further reduce cancer treatment costs,” she said.

The GST rate is being reduced prospectively from 18% to 12% on namkeens, she said.

Revenue Secretary Sanjay Malhotra said that government school boards in States and those under the Centre are being exempted from GST.

There was a decision to bring in the renting of commercial property by unregistered persons to registered persons under the reverse charge mechanism. This is already the case for residential properties, so this anomaly has been corrected, the Revenue Secretary said.

There was a clarification on the place of supply relating to advertising services remitted by Indian entities to foreign firms. It is clarified that the foreign entity’s place will be considered the place of supply and hence, GST will be exempt, Mr. Malhotra said.

Mr. Malhotra said a clarification will also be issued for the availability of input tax credits for vehicle dealers for demo vehicles supplied to them by automobile manufacturers. E-invoicing will be introduced for B2C transactions to enable customers to assess if they have genuine products, but this will be voluntary in some States and sectors to begin with, he said.

The GST rate on car and motorcycle seats will be raised from 18% to 28% on a prospective basis. It has also been decided to notify a 5% GST for transport services using helicopter on a shared seat basis, as well as for air travel by economy class.

Mr. Malhotra said a decision has been taken to exempt the import of services by foreign airline companies. He told the Council that they had been served some notices.

The Council has also decided to regularise the past period (demands) on an ‘as is where is’ basis, he added.