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Informist, Monday, Sep 9, 2024

--Sitharaman: 54th GST Council meeting today took several decisions 
--Sitharaman:Real estate panel report submitted to GST Council 
--Sitharaman:Report on online gaming, casinos submitted to GST Council 
--Sitharaman:GST Council decided to set up 2 new panels 
--Sitharaman:Decided to form GoM panel for health insurance GST 
--Sitharaman:GoM on health insurance GST to submit report end Oct 
--Sitharaman:Decided to cut GST on cancer drugs to 5% from 12% 
--Sitharaman:Decided to cut GST on 'namkeens' to 12% from 18% 
--Revenue secy: Decided to introduce business to customer GST invoicing 
--Revenue secy: To introduce new system for GST invoice mgmt Oct 1

--Delhi Minister: Rationalisation panel to mull health insurance GST 
--Delhi Minister: Deferred decision on lowering health insurance GST 
--Delhi Minister: Need further talks on health insurance GST 
--Delhi Minister: Consensus among states to cut health insurance GST 
--CONTEXT: Delhi Minister's comments after 54th GST Council meeting 
--Delhi Minister Atishi:Opposition sought lower health insurance GST

 

NEW DELHI – The GST Council today decided to form a group of ministers to look into issues related to 18% goods and services tax on life insurance and health insurance premiums. The panel will submit its report by October-end, Finance Minister Nirmala Sitharaman said, while addressing the media after the meeting.

 

This group of ministers will be an extension of the rate rationalisation panel and will include representatives from Bihar, Uttar Pradesh, West Bengal, Karnataka, Kerala, Rajasthan, Andhra Pradesh, Meghalaya, Goa, Telangana, Tamil Nadu, Punjab, and Gujarat.

 

"A lot of issues regarding GST on health insurance were brought up for further discussions, and that is where we thought it is better that it goes through a rigorous looking into by the group of ministers, and then they come forward. The group of ministers will study all these life insurance, group insurance, resident welfare association-related insurance, and will give their recommendations by October," Sitharaman said.

 

Earlier in the day, Atishi Marlena, Delhi's finance minister, told reporters that there was consensus among states to lower GST on health insurance premiums as it was a move favouring public security. However, there are some details that need to be worked out, which is why lowering the tax is being deferred for now. 

 

There were demands for withdrawal of GST on health and life insurance premiums after a letter written by Road, Transport and Highways Minister Nitin Gadkari to Sitharaman about this leaked into the public domain.

 

The opposition was quick to pick up the issue in the Budget session of Parliament. Members of the Congress, the Trinamool Congress, and other opposition parties raised the demand in both the Houses of Parliament. Opposition parties had also protested in Parliament premises.

 

However, Sitharaman had slammed the opposition for politicising the issue in Parliament and asked if the members had written to the finance ministers of opposition-ruled states to withdraw the tax. Subsequently, the matter was taken up for discussion at the GST Council, which is a constitutional body.

 

According to media reports, the Council was to discuss a wide range of options to address the issue.

 

Besides forming this group of ministers, the apex body also accepted a status report by the panel on online gaming, casinos, and horse racing. "A status on online gaming and casinos was also presented to the Council. The revenue from online gaming has increased by 412% and has reached 69.09 bln rupees (from the date of implementation), just for six months," she said.

 

At its 50th meeting, the Council had decided to tax casinos, horse racing, and online gaming at a uniform GST rate of 28% on face value. Later, Sitharaman had said that after the implementation of the tax tweak, it would be reviewed in six months.

 

The status report from the panel on real estate was also submitted to the Council, Sitharaman said.

 

She added that the GST rate on savoury or salted, other than unfried or un-cooked snack pellets, would be reduced from 18% to 12%, at par with namkeens, bhujia, and mixture. The GST rate of 5% will continue on un-fried or un-cooked snack pellets. The reduced rate will be applicable prospectively.

 

Similarly, the GST rate on certain cancer drugs has been reduced from 12% to 5%. In the Budget for 2024-25, the government had removed the customs duty on these drugs. It also said a GST rate of 5% would be notified for transportation of passengers by helicopter on a seat share basis while charter of helicopter will continue at 18% GST rate.

 

The GST Council today decided to introduce a reverse-charge mechanism on the supply of metal scrap from unregistered person to registered person, provided the supplier takes registration as and when it crosses the threshold limit and the recipient who is liable to pay under the mechanism pays tax even if the supplier is under the threshold. Further, tax deduction at source of 2% will be applicable on supply of metal scrap by a registered person in business-to-business supply.

 

Informist had exclusively reported on Apr 2, citing a senior finance ministry official, that after the crackdown on the online gaming and gambling industry in 2023-24 (Apr-Mar), the scrap metal industry will be under the scanner of the government to curb evasion of GST.

 

At the meeting, it was decided that any public or private grant to research and development services provided by specified educational institutions will be exempted from GST.

 

A pilot for business-to-consumer e-invoicing will be started soon, as the Council sees merit in the potential benefits of e-invoicing in retail, such as improved business efficiency and cost efficiency for businesses. The pilot will be rolled out on a voluntary basis in select states.

 

Revenue Secretary Sanjay Malhotra said a new system for GST invoice management would be introduced from Oct 1. This invoice management mechanism will contain the flood of GST notices that have kept companies on their toes for almost a year now.   

 

Since last September, state and central GST authorities have issued several notices to some of the biggest public and private sector companies, including Life Insurance Corp of India, State Bank of India, Maruti Suzuki India, ICICI Bank, Hindustan Unilever, UltraTech Cement, and Bharti Airtel.

 

GST authorities are issuing system-generated tax notices, flagging cases where there are discrepancies in the details filled by companies in their GSTR form 1 and 3B. Some of these notices involve large sums, especially for insurance companies. The New India Assurance Co Ltd, for instance, has received a GST demand for 23.8 bln rupees, while LIC has got notices for over 8 bln rupees.

 

The revenue secretary said that a new penalty waiver form would be rolled out between Oct 1 and Mar 31 to provide relief to companies.  End

 

Reported by Sagar Sen and Priyasmita Dutta

Edited by Avishek Dutta

 

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