The GST Council is set to decide on lowering the tax rate for health and life insurance premiums at its next meeting in November. This topic was highlighted by Opposition parties during the last Parliament session.
In a briefing about the 54th GST Council meeting held on Monday, Union Finance Minister Nirmala Sitharaman announced that a Group of Ministers will be formed to review the GST on insurance premiums.
There is broad agreement among states on reducing the current 18% tax on these policies. The newly formed Group of Ministers, led by Bihar Deputy Chief Minister Samrat Choudhary, will deliver a report by the end of next month. This report will address issues like GST on policies purchased by resident welfare associations.
GST Council Delays Decision on Reducing GST for Life and Health Insurance Premiums
In its latest meeting on Monday, the GST Council decided to delay the decision on lowering or eliminating GST on life and health insurance premiums.
While there is broad agreement within the council to reduce the GST rates on these insurance premiums, the specifics will be addressed in the next council meeting.
The finance minister, along with several state finance ministers and senior officials, convened for this meeting. Finance Minister Nirmala Sitharaman announced that a final decision on reducing GST rates for health insurance will be made in the November meeting.
Additionally, a new Group of Ministers (GoM) is being established to review the rate reduction for medical insurance and will present its report by October.
This potential GST rate cut has been a significant request from the insurance industry.
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GST Council Announces New Tax Changes
The GST Council will make a decision on the issue after reviewing the GoM report, according to Finance Minister Nirmala Sitharaman.
A separate GoM will evaluate how to handle collections from the cess on luxury and sin goods after it expires on March 31, 2026.
In a recent meeting, the Council decided to lower the GST rate on certain cancer drugs, helicopter rides to Kedarnath, and namkeens. Specifically, GST on passenger helicopter transport will be reduced to 5% when seats are shared, and past GST will be regularized on an ‘as is where is’ basis.
However, charter helicopter services will continue to be taxed at 18% GST.
GST Rate Changes
The Goods and Services Tax (GST) rates are being updated as follows:
Cancer Drugs: The tax on cancer medications will be reduced from 12% to 5%. This means that cancer drugs will become cheaper for patients and healthcare providers.
Namkeens: The GST on certain types of namkeens (a popular Indian snack) will increase from 18% to 12%. This will make these snacks slightly more expensive.
During a recent meeting, the Council also discussed the Group of Ministers’ (GoM) report on adjusting tax rates and the issue of online gaming.
Previous GST Rate Changes
Starting October 1, 2023, online gaming and casino platforms must pay a 28% GST on entry-level bets. Before this date, many of these platforms were not paying this rate, citing differences in tax rates for skill-based and chance-based games.
In August 2023, the GST Council clarified that a 28% tax was mandatory for all online gaming platforms. This led to an update in the Central GST law to enforce this tax clearly. Additionally, offshore gaming sites were required to register with GST authorities and pay taxes; otherwise, the government would block these sites.
The GST Council also decided to review the taxation policy for the online gaming sector six months after its implementation.
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FAQs
Q.1. What will the GST Council decide about health and life insurance premiums?
Ans. The GST Council will review and potentially lower the 18% GST on health and life insurance premiums in its next meeting in November.
Q.2. What is the role of the Group of Ministers (GoM) in the GST review?
Ans. The GoM, led by Bihar’s Deputy Chief Minister, will assess GST on insurance premiums and deliver a report by October, addressing issues including policies purchased by resident welfare associations.
Q.3. How will the GST rate changes affect cancer drugs?
Ans. The GST on cancer drugs will be reduced from 12% to 5%, making these medications more affordable for patients and healthcare providers.
Q.4. What are the new GST rates for namkeens and helicopter services?
Ans. GST on certain namkeens will increase from 18% to 12%, while passenger helicopter transport will see a reduction to 5% for shared seats. Charter helicopter services remain at 18%.
Q.5. When did the 28% GST on online gaming start?
Ans. The 28% GST on online gaming and casino bets started on October 1, 2023, following a clarification from the GST Council in August 2023.
