The 54th GST Council meeting chaired by Finance Minister Nirmala Sitharaman concluded today.
Discussion focused on several key issues, including:
Taxation of insurance premiums
Group of ministers' suggestions on tax rate rationalization
Status report on online gaming taxation.
Key Discussions
Taxation on Insurance Premiums
Current GST rates for insurance premiums: 18%.
Discussions on possible rationalization of rates for health and life insurance premiums.
Concerns raised about the burden of 18% GST on health and life insurance, especially for senior citizens.
Financial implications:
In 2023-24, approximately 8,262 CR collected from health insurance premiums and 1,484 CR from health reinsurance premiums.
A complete removal of the 18% GST would significantly impact government revenue.
Opposition members call for exemption from GST for health and life insurance premiums.
Online Gaming Taxation
Prior to October 1, 2023, online gaming companies argued for differential tax rates based on the nature of games (skill vs. chance).
From October 1, all online gaming is taxed at a flat rate of 28%, causing disputes with companies.
The industry is seeking relief from heavy tax notices exceeding their annual revenues.
The GST Council has deferred decisions regarding relief for past tax demands and may revisit in future meetings.
Ministerial Attendance
Attendees included Union Minister of State for Finance, Pankaj Choudhary, Chief Ministers from various states, and senior officials from the Union and state governments.
Future Expectations
No immediate changes to the current GST slab rates (5%, 12%, 18%, 28%) are anticipated.
Discussions about tax rationalization have not reached a consensus.
The proposal for 18% GST on small digital transactions via payment aggregators below 2,000 is deferred for further discussion.
Implications for Consumers and Industry
If tax rates on insurance premiums are reduced, it could encourage more people to invest in insurance.
Online gaming companies may continue to struggle with high tax burdens, affecting profitability and growth.
Summary
The GST Council continues to grapple with balancing revenue collection and making necessary financial products like insurance more accessible.
Future meetings may address issues deferred during the current meeting, particularly regarding online gaming and insurance premiums.