The GST Council on Monday is expected to deliberate on a host of issues, including taxation of insurance premium
54th GST Council Meeting Agenda: The GST Council on Monday is expected to deliberate on a host of issues, including taxation of insurance premiums, GoM’s suggestions on rate rationalisation, and a status report on online gaming, sources said.
Sources said the fitment committee, comprising Centre and state tax officials, will present a report on GST levied on life, health and reinsurance premiums and the revenue implications.
The GST Council, chaired by Finance Minister Nirmala Sitharaman and comprising state ministers, will decide on whether to reduce the tax burden on health insurance from the current 18% or exempt certain categories of individuals, like senior citizens.
The deliberations will also happen about the goods and services tax (GST) cut on life insurance premiums.
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Reduction of GST rates on Life and medical insurance
Shivashish Karnani, Head of GST at Dewan P.N Chopra & Co., said, “Despite being the world’s most populous country, India ranks among the lowest in terms of life and medical insurance coverage per capita. Also, the percentage of the Indian population with insurance coverage is substantially lower than that of many developed nations like the United Kingdom and the United States.”
“The current GST rate on life and medical insurance premiums is 18% which further accelerates the affordability issue. Consequently, one of the key expectations from the 54th GST Council meeting is a reduction in tax rates or, ideally, the complete exemption of GST on life and health insurance premiums,” Karnani highlighted.
Karnani pointed out that while a complete exemption of GST on insurance premiums might lead to challenges for the insurance industry due to potential ITC reversals under Rules 42 and 43 of the Central Goods and Services Tax Rules, 2017, the industry is hopeful that the 54th GST Council meeting will result in a significant reduction of the GST rate from 18% to a lower rate such as 5% or even 0.1%. This reduction would alleviate the tax burden on both insurers and policyholders, he added.
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In 2023-24, the Centre and states collected Rs 8,262.94 crore through GST on health insurance premiums, while Rs 1,484.36 crore was collected on account of GST on health reinsurance premiums.
The issue of taxation on insurance premiums figured in Parliament discussions with opposition members demanding that health and life insurance premiums be exempt from GST. Even Transport Minister Nitin Gadkari wrote to Sitharaman on the issue.
Finance Minister Nirmala Sitharaman in her reply to the discussion on the Finance Bill had said 75% of the GST collected goes to states and opposition members should ask their state finance ministers to bring the proposal to the GST Council.
West Bengal Finance Minister Chandrima Bhattacharya had raised the issue in the meeting of the Group of Ministers (GoM) on rate rationalisation last month and the matter was referred to the fitment committee for further data analysis.
The GoM had opined against any tinkering with the four-tier GST slab of 5, 12, 18, and 28% for the time being. The panel, however, had asked the fitment committee to look into any scope for rationalisation of rates of goods and services.
Regarding online gaming, Centre and state tax officers will present a “status report” before the GST Council. The report would include GST revenue collection from the online gaming sector before and after October 1, 2023.
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From October 1, 2023, entry-level bets placed on online gaming platforms and casinos were subject to 28% GST. Prior to that, many online gaming companies were not paying 28% GST, arguing that there were differential tax rates for games of skill and games of chance.
The GST Council in its meeting in August 2023 had clarified that online gaming platforms were required to pay 28% tax and subsequently, 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.
Sources said the Council would deliberate on the status of taxation on the sector and any change in tax rates is unlikely.
Besides, the Council is likely to be apprised about the ongoing drive against fake registration, the success of the drive and action taken against such entities. The total amount of suspected GST evasion would also be presented before the Council.
The drive, from August 16, 2024, to October 15, 2024, is aimed at detecting suspicious/fake GSTINs and conducting requisite verification and further remedial action to weed out these fake billers.
In the first drive between May 16, 2023 to July 15, 2023, against fake registration, 21,791 entities (11,392 pertaining to state tax jurisdiction and 10,399 pertaining to CBIC jurisdiction) having GST registration were discovered to be non-existent.
An amount of Rs 24,010 crore (state – Rs 8,805 crore + Centre – Rs 15,205 crore) of suspected tax evasion was detected during the special drive.
Also, the Council would approve notifications, including that of the amnesty scheme, announced in the last council meeting. The various amendments to GST law decided by the council in its previous meeting on June 22 were passed by Parliament last month vide Finance Act, 2024.
The council in the June meeting took a host of taxpayer-friendly measures, including waiver of interest and penalty for demand notices issued in the first three years of GST — 2017-18, 2018-19 and 2019-20 — if the full tax demanded is paid by March 31, 2025.
To reduce litigation, a monetary limit for tax officers, to file appeals before the GST Appellate Tribunal, the High Court and the Supreme Court was fixed at Rs 20 lakh, Rs 1 crore and Rs 2 crore, respectively, by the Council.
It also recommended a reduction of the quantum of pre-deposit required to be paid by taxpayers for filing appeals under goods and services tax (GST).
(With agency inputs)
