GST council slashes rates on cancer drugs, airlines, discusses health insurance premiums; All you need to know

The 54th meeting of the Goods and Services Tax (GST) Council, chaired by Finance Minister Nirmala Sitharaman, took place in New Delhi on Monday, with several key decisions announced. The council focused on addressing issues related to health insurance, online gaming, cancer drugs, and more.

Here are 10 key takeaways:

1. Formation of New GoM for Health Insurance Premiums

The council decided to set up a new Group of Ministers (GoM) to review the GST rate on health insurance premiums. The GoM will be led by the Deputy Chief Minister of Bihar and is expected to submit its report by the end of October. The findings will be considered in the November GST Council meeting.

2. Revenue Surge from Online Gaming GST

Finance Minister Sitharaman reported a dramatic 412% increase in revenue from the GST imposed on online gaming. This substantial rise underscores the effectiveness of the new tax regulation in generating additional revenue.

3. Reduction in GST on Cancer Drugs

A major decision from the meeting was the reduction of GST on cancer drugs from 12% to 5%. This move aims to lower the cost of cancer treatment and make essential medications more affordable for patients.

4. Tax Relief on Namkeen Snacks

The GST Council approved a reduction in the tax rate on selected snacks, including namkeen, from 18% to 12%. This change is expected to make these popular snacks more affordable for consumers.

5. GST Exemption for Foreign Airlines

The council granted GST relief to foreign airlines, exempting them from GST on imported services. This decision is intended to reduce the financial burden on international carriers operating in India.

6. Universities and Research Centers Exempted

Universities and research centers established by central or state government laws will now be exempt from GST on research funding. This exemption applies to both public and private funding sources.

7. Review of IGST Balance

The GST Council discussed the Integrated Goods and Services Tax (IGST) balance and decided to set up a committee headed by the Additional Secretary of Revenue. The committee will address issues related to negative IGST balances and excess disbursement to states.

8. New GoM for Rate Rationalization

A Group of Ministers (GoM) will meet on September 23 to discuss rate rationalization. This group will present its status report to the GST Council, aiming to streamline tax rates and reduce complexities.

9. Introduction of Business-to-Customer (B2C) GST Invoicing

The council announced the introduction of a new GST invoicing system for Business-to-Customer (B2C) transactions. This system will come into effect from October 1, 2024, and is designed to improve GST invoice management.

10. Increased GST on Car Seats

A notable change is the increase in GST on car seats from 18% to 28%. This adjustment is part of the council's ongoing efforts to align tax rates with economic objectives and revenue needs.

The GST Council also discussed topics like Integrated Goods and Services Tax (IGST) balance, rate rationalization, and reverse charge mechanism for renting commercial properties. The council introduced a new system for Business-to-Customer (B2C) GST invoicing, which will be implemented starting October 1, 2024.