GST panel sets up ministers' group to study cut in insurance premiums

The Goods and Services Tax (GST) Council on Monday decided to give tax relief to foreign airlines in India, certain helicopter services, and research institutions, cut tax on cancer drugs and certain snacks and tasked a panel of ministers to study the demands for tax relief on insurance premiums.

The central indirect taxes body also formed a group of ministers to look into the future of the GST compensation cess levied on automobiles, aerated drinks, and tobacco, as it cannot be collected once the Centre fully pays off the market loans taken to give liquidity support to States during the pandemic or beyond March 2026, whichever is earlier. However, given the revenue requirement of the Centre and States for various development activities, this levy may continue in some other form.

Next meeting in November

Union Finance Minister Nirmala Sitharaman, who chaired the council meeting, said the ministerial group on tax rate rationalisation, led by Bihar Deputy Chief Minister Samrat Chaudhary, would have new members to study the issue of rate reduction on health insurance premiums. This group would give its report in October and subsequently, the GST Council will consider its proposals at its November meeting. 

“There was a good discussion, but the details of the discussion made us feel that there is more to understand," Ms Sitharaman told a press conference. "The November GST Council meeting could take a call on that.” 

Relief for airlines' import of services

Revenue Secretary Sanjay Malhotra said the council had decided to exempt the import of services by foreign airlines from a related person or any of its arms outside India from GST, when such service was availed of without any payment. The council also recommended dropping tax notices issued to some airlines for such services imported from their overseas arms. This regularisation for the past period was done on an ‘as is where is’ basis, which suggests that if a business that received a tax notice has paid the tax, there will be no refund, but if it has not been paid, it will be condoned. 

According to Rajat Bose of the law firm Shardul Amarchand Mangaldas & Co, the relief for airlines will put to rest the recent GST show-cause notices involving a demand of about ₹39,000 crore raised by the Directorate General of GST Intelligence (DGGI) on foreign airlines operating through their branch offices in India.

Cancer drug rates to come down to 5%

The council decided to reduce the tax rate on cancer drugs Trastuzumab Deruxtecan, Osimertinib, and Durvalumab from 12% to 5%. The tax rates on certain snacks--ready-to-eat extruded or expanded products--have been reduced from 18% to 12%. However, the tax on car seats has been increased from 18% to 28%.

The council also decided to notify 5% GST on the transport of passengers by helicopters on a seat-share basis and to regularise the GST for the past period on an ‘as is where is’ basis. Charter of helicopters will continue to attract 18% GST.

The council also recommended exempting the supply of research and development services by certain notified government entities or a research association, university, college, or other institutions exempt from the GST whether they use government or private grants. Tax notices issued to seven such entities will be dropped. 

e-invoicing for retail trade

The council also decided to introduce e-invoicing at the retail level voluntarily. E-invoicing which involves real-time reporting of transactions to a designated government portal now applies only to wholesale transactions above a specified threshold.  

The council discussed the GoM's status report on taxing gaming platforms. From 1 October 2023, entry-level bets placed on online gaming platforms and casinos were subject to 28% GST. Before that, many online gaming companies were not paying 28% GST, claiming there were differential tax rates for games of skill and games of chance.

Online gaming tax

The GST Council, in its meeting in August 2023, clarified that online gaming platforms needed to pay 28% tax, and subsequently, the Central GST law was amended to make the taxation provision clear.

Offshore gaming platforms were also mandated to register with GST authorities and pay taxes, failing which the government would block those sites. The council had then decided that the taxation on the online gaming sector would be reviewed after six months of its implementation. 

(By arrangement with livemint.com)