[Music] hello and welcome you're watching in your interest I am scha kotari the GST council meeting 54th GST council meeting has just concluded Finance Minister Nima sitaraman on Monday which is today chaired the 54th meeting of the GST Council and this comprises remember of State ministers and it just finished it's just over we are told and a press conference is likely to start anytime soon the GST council is expected to deliberate and has in fact deliberated on a host of issues including taxation of insurance premium the group of ministers suggestion on tax rate rationalization and a status report on online gaming sources say the fitment committee comprising Center and state tax officials have presented a report on GST Levi on life and health insurance premium and the revenue implication on the GST rate rationalization the group grou of ministers have resisted so far changing the fourthe GST slab rate which is the 5% 12% 18% and 28% uh but has directed the fitment committee to review the scope for rationalization whether any change has been made or announcement will be made we'll get to know very very shortly but remember the GST Council has also discussed a status report uh comparing the GST Revenue collected through online gaming before and after 1st of October 2023 which is when the new rules kicked into place now prior to the date most of the online gaming companies did not really pay GST and argued for differential tax rates for games of varied skills versus chance so game of skills versus games of chances now those were of course some of the key areas that are likely to have been discussed the meeting is just over uh present in the meeting uh were the Union minister of State for finance pank Chri Chief Ministers of Goa meal deputy chief Ministers of arunachal Pradesh Bihar madhi Pradesh Telangana uh besides of course the finance Ministers of states and UT senior officials from Union government and States also attended the meeting now as I mentioned the key area the key area of discussion uh is expected to be around taxation on insurance premium Now the group of ministers suggested a rate rationalization on insurance premium whether that rate rationalization will happen or insurance premium will continue to be taxed at 18% we'll get to know that uh very very short but that was of course one of the key areas that GST Council discussed on the GST Council was to discuss uh the burden of health insurance and that of exemption uh if an exemption can be made in for special cases such as senior citizens or whether the 18% GST should go away completely well if a decision has been taken we'll get to know that uh there was of course a deliberation with regards to goods and services tax on life insurance premiums as well now currently in 2324 the center and state collected about 8,262 CR rupees through GST on health insurance premium while 1,484 th000 CR rupees were collected on account of GST on health reinsurance premium Now if the 18% GST is to go away completely the government will have to forego this Revenue but if the GST stays and if there is some special exempt categories made available there could just be some tinkering with respect to that Vue that comes by the way of both health insurance as well as life insurance now the insurance on taxation on premiums also figured remember in parliamentary discussions and after parliamentary discussions opposition members demanded that health and life insurance premium be Exempted from GST we also know that uh Road Transport Minister nithan gatari wrote a letter to Finance Minister asking health and life insurance premium be Exempted from GST completely uh whether a decision will be made with respect to that we don't know but government of course expected to take that very very seriously a conversation happened and my colleague Krishna Kumar joining us here in the studio uh conversation really happened on GST like no time before was of course Krishna on whether you and I people who have to pay our premiums for our health and life insurance should pay an exorbitant 18% GST or not and perhaps GST Council uh today will clarify on whether it has accepted recommendations of the group of councils uh whether it will exempt that 18% GST or will perhaps you know make some sort of differential categorization some relief some relief for elderly perhaps or for individuals like you and me yeah absolutely that's one of the biggest issues facing the 54th uh uh GST council meeting and you know one because you know it affects a a very important uh you know uh industry in this country that's the insurance uh industry uh penetration of which is still nowhere close to where should ID Le be so the decision that this GST council meeting will take on insurance premiums the taxation on insurance premiums health and life insurance premiums will go a long way in in in helping people uh decide whether to invest in insurance or not because at that rate at which they're being taxed you know it is not attractive it is not attractive enough you want more people to buy insurance products if you want more people in this country to be insured then you have to make the insur insurance as a financial product attractive enough to invest at least not exorbitantly taxed reasonably taxed so any reduction from the current 18% will be will be appreciated of course a complete exemption would be an absolute dream for the insurance sector and for those looking to invest in uh Insurance products so this is definitely one of those headline items as far as the this particular G council meeting is concerned and another headline item will also be the taxation on online gaming companies now we remember that prior to 1 of October 2023 online gaming companies had to pay differential taxes on uh you know games of chance versus games of skill and now that was brought under one Ambit which is the Ambit of 28% tax lab that did not make online gaming companies very happy and they had to pay up uh and and you know some of them and most of them in the in in this case were faced with those draft those notices to pay a huge amount of GST taxes and in revenues that they did not think of that they did not dream of and they happen to challenge it in court right but then they were faced with the Eternal dilemma are they games of chance or games of skill that's where the entire debate lies and and also the question of morality you know it this is a industry that's you know that is at Sunrise stage at this point in time it will grow multifold in the in the coming years provided you know you sort of take a call on how to regulate it in terms of Taxation in the country at the rate at which it is taxed right now online gaming companies are finding going to find it extremely difficult to uh to be profitable uh you know to start with and then you leave alone expanding absolutely let's take that question from Shiva mea executive partner lakmi kumaran and Saran Shivam I think first question first since we are discussing this online gaming companies some of which have faced heavy tax notices uh to pay up GST amounting to thousands of croses of rupees far greater than their annual revenue uh we'll get perhaps get to know today for a fact on whether GST council is going to relook at it or not but what we know so far Council was clear last time around as well that 28% GST tax rate will stay that's right that's right so I think the news is uh at least what I'm seeing from the media reports is that for this online gaming there is no relief whatsoever in the meeting they have deferred the decision the demand of online gaming was to if not give a relief for what they have done in October 23 but at least give relief for the past period for which the matter is pending before supreme court because as your colleague was mentioning correctly that the dispute is on the whether it is a game of skill or game of chance and they have made the Amendments from October 23 onwards to take care of that problem saying there will be a tax rate of 28% and tax will be on the entire receipts whenever online gaming receipts any receive any amount they will tax the entire receipts those issues the at least the what I understand is the industry was not uh they were pushing on that but they were more curious about pass demands because pass demand is more than 1 lakh KES and uh the that decision has not been taken by GST Council uh in this meeting it looks like that they have defered it for future uh but if I look at the overall scenario the these companies have a good case for the past but a release from a government will would have mean to put an end to the dispute which is there in the courts that's what they were looking at second I feel is so with respect to retrospective taxes that they have to pay or they were made to pay perhaps there could be some sort of relief there whether they they will have to pay retrospective tax or whether uh the 28% GST Levy will start from 1st of October 2023 onward that's right that's right because the past period the issue is already before Supreme Court so Supreme Court has to decide on that but for the uh for the period October 23 there has been no relief whatsoever it look like that the reason could be because there is a huge jump in the Rue that's be very clear this uh in fact if the reports from Ministry of Finance has to be relied upon there is going there is a increase of six time Revenue increase only from online gaming sector which means a very very big jump in Revenue because of this amendment some of the states uh have made a observation that they can still survive there is no problem what which is not correct few states have made that statement because definitely this increase in tax rate will definitely impact these industries but they are more worried for the past than for the future they they still feel they can tackle it in some way or the other but as on date for the past no relief for future no discussion whatsoever that's all right all right another another big thing that will come out of perhaps GST council meeting let me quickly get in ratesh kodia partner artist legal joining us on the show ratesh one of the big things that one is expecting of course whether there is going to be some sort of relief on health and life insurance premium there is an understanding here that there was a broad consensus in the meeting that yes there should be some relief but it looked looks like uh this matter has been deerred to the next meeting are you expecting something big when it comes to life and health insurance premium given that there's been a lot of conversation in the past couple of weeks yes with the fact that uh they have already arrived at some broad consensus which clearly means that they would want to rationalize the rates now whether they go to 12% or 5% or let's say whether they exempt it only for senior citizens or let's say whether they keep policies out Etc are I think the modalities which have been left out to be discussed okay so let's discuss those modalities in your assessment should it be because I think there is a broad consensus here that an exemption would be too much of a burden on government's Pockets so perhaps we could look at some sort of tinkering some exemption for some certain individuals like you rightly mentioned senior citizens what is your expectation so my my view is that exemption is no never advisable because it Blocks Your or entire credit flow so rather than giving an exemption it would always be advantageous to reduce the rate right now let's say if they they do it for senior citizens effectively means that insurance company would have to reverse credits while the rate may not go up to effective rate may not go up to 18 it may go up to some tax rate so it is never completely so yes you right that the because this is this issue has become sort of a a social cause issue right so they would have to tackle it in some form of manner and maybe the way to do it is to say that you know senior citizens are out individuals are out and maybe the group of insurance policies are covered because those are taken by corporates who can bear the bur of tax so that is how that is what I think the modalities are going to be uh they are not going to let go of the revenue easily so I'm pretty sure so I was just reading somewhere that the revenue on GST is around, 1400 cres or it's a big number absolutely uh do you agree with that the the modalities will of course have to will know them in a while from now perhaps 5 to 10 minutes from now uh when Finance Minister finally comes out and tells us what has been uh you know what has come out of that GST council meeting but what is your expectation as far as that insurance premium is concerned it's an emotive issue it affects every last man standing out there uh in your assessment do you think it makes more sense to have perhaps group policies covered but uh let individuals and senior citizens be exempt no I think uh what R was saying is in principle correct but let's understand what is the problem here the problem is that what at least the council uh why they were not able to take a decision was that 75% of this Revenue goes to the state now states have to agree to give up the revenue and the numbers are pretty large in on health insurance alone the GST collection in a year is 9,000 CR which are very big number now one to get these states on board is itself a huge task which I I feel Council has taken a decision in principle to give some relief which means states are on boot so that's a very very positive move move from the council and for the industry at large so far as exemption is concerned complete exemption like he was pointing out is correct we should not have a complete exemption but this is something wherein no ITC is admissible to the B to the policy holders these are individual policies we are talking about so maybe senior citizen can be uh brought under a lower tax rate let's say five and others maybe 12 depending upon how this chain works or we can have zero for senior citizens uh and for rest five because right now everything is taxed at 18% which is a huge cost so far as the individual policy holders are concerned we have seen in the budget not no big relief so far as middleman is concerned you know there there was a lot of discussion in the last budget that man there was nothing for the Common Man by giving some relief on insurance GST premium we can really think of giving some support to the common Bank in terms of because this is has now health insurance has become a necessity okay like like food uh you know house insurance also has become necessity every common man goes for a health insurance 18% tax on it was really not un was not called for it was a need to relook at it good that Council has taken States on board they have referred it to fitman committee my I have full hope that there will be an appropriate relief on this sector all right and you know another important topic of conversation and takeaway would be whether there will be some sort of tax rationalization the rate rationalization a conversation for which a g goom was formed and we are now given to understand based on sources Shivam uh that there is no Clarity and there is no consensus on rationalization so the current tax rates of 5% 12% 18% and 28% are likely to continue is that your expectation as well that's true only some relief has been given I think uh UT utak was one state which was pushing on giving a relief on helicopter services for pilgrimage which was 18% because I think most of the pilgrimage are in that part of the country they have reduced it from 18 to 5 that's one thing that they have done because these helicopter services are are are also kind of used by everyone almost everyone who is not a to uh do the uh they are not able to climb the hill and all so that's one relief which utarak has pushed for and I think that that has been considered another which uh which has been which there is a there was a debate was on the fmcg sector because there was always a confusion what will qualify as a num and what will not qualify as a num and there was huge sh uses given to almost every fmg which were into you know making of snacks item which were not clearly num but still they were sold in the bakery along with numin so that that seems to be some discussion with the fitment committe and the GST Council if those reliefs are given then apart from that there is I don't see any relief whatsoever given so far as rate tralization is concerned bringing the rate to 15% which was always a kind of discussion here I like to point one thing that today last time also in many discussions I have pointed out today the nation is in a position to afford it so should actually take those steps why I am saying is if you look at the GST collection numbers there is constant 10% increase is is 2013 23 collections if you look at collections of August 23 versus August 24 there is again a 10% increase in the GST collections we are having an average GST collection of one one I think 175 1 175 cres or something like that one 1.75 lakhs so it's a huge number which we are having it now at with this Revenue collections if Government you know shows their big heart and look for rate rate rationalization this is the time or it will never be because countries in the fa you know phase of growth we are looking on vixit bhat and other things this can be a big move from the government uh and the industry at large what the industry is looking at and of course let's don't forget these GST rate reductions are going to ultimately impact the common man again absolutely going no no doubt about that no doubt about that let me let me come to you another important conversation and which came by the way of utan Finance Minister R was that there's not been any decision taken with regards to taxation on small digital transactions so the proposal to implement 18% GST on payment aggregators for transactions below 2,000 that proposal has been sent to fitment committee what sort of impact are we looking as a result of this decision if it were to be implemented sooner the government's idea had always has been to you know keep credit card transactions per right so all the UPI transactions are anyways out of the tax net uh this is basically more to do with the larger uh discussion on digital coverage where people use credit card UPI as a method of payment rather than debit card rather than using cash and transactions below 2,000 were always exempt right from the service tax re and even under GST H now if let's say that is broughten obviously which means that the transaction charges would become a bit costly uh and end of the day it would get passed on to the end user so it would increase the transaction charges which are already applicable and therefore yes one one uh thought would be that why would people then want to use credit card if if because a 2% transaction charge for example is anyways a decent burden right so and an 18 % on that would be at 2.36 so that really impacts the digital transactions one just one facet I would like to highlight is that when you exempt anything right and this is about aggregators they also have to reverse credit so the net impact is always a bit higher not it's not entirely there is some tax burden yes of course 18% would be a much higher tax burden so it's more to do with digital inclusion and and I don't uh and I think that's the reason why they have sort of postponed to the next meeting to have a larger discussion on this even all right and and before I let you go and run out of time gentlemen I think my final question is as uh you know Shivam rightly pointed out looks like GST collections are healthy government has enough and more money in its coffers to perhaps Make Way for uh you know give more leverage to people perhaps make it uh easier on their pockets to buy some of these goods and services in your assessment any any further changes you're looking at apart from what has been announced so far and what we have got to know through sources any sort of tax change on any one certain product or service that come come could come by the way of 54th GST council meeting I'll start with you Rees no I think what everybody is also looking for is a couple of clarification on some of the most litigious issues that we've been seeing and I think the crucial ones which I've been hearing is on intermediary Services where for advertisement agencies there is a huge discussion on you know whether either advertisement agencies who render services to foreign principles are liable or not liable and it's more to do with sort of the media cost uh another one very quickly is the road construction so there were contradictory clarifications which were issued and the industry was not paying tax on an received in Le of toll charges because toll was always exempt there was a U-turn in one of the council meeting to say that no they are liable so again huge amounts of demand are outstanding on that and the industry would want that to be clarified at least for the past year going forward yes this a consensus has been arrived at and everybody's s of paying that tax but yes for the past period it would be important for the government to sort of bring some clarification everything into litigation all right and I just have under one minute Shivam to you uh any any major changes that you're expecting so I think there are two things which I'm looking at is one there were huge choke of notice demands which were maed against institutes like IIT and other education institutions which were otherwise a government entity uh because of the technicality of the exemption notification which is there they were receiving some grants from institutes from Association or government bodies like icmr Etc typically for the research purposes now these notices has become a big issue for these education institutions because they were doing the activity which is more like a favor for the public at large so they were grants from icmr drdo and so on and so forth so there were show off notices which is not only issued to IIT but other education institutions they have also approached GST Council for Relief on those notices I think Council should look at it as in whether there is a need to give a clarification or an appropriate amendment in the exemption notification because these grants the it looks like when the they introduced this exemption these grants were not ever intended to be taxed but because of the language of the notification there has been CH notice on on these uh institutes second I'm looking at again big numbers on foreign aines wherein notices have been slapped off around 10,000 CR which have branches in India now they are also hoping that something comes in their favor because that was never never at all the you know because of the technicality of the language of the provisions they have been slapped with the showall notices these are the two areas so I think though we have been focusing too much of online gaming because that has been elephant in the room these are the two areas which also some government informtion I'm hoping that today council meeting was also able to you know deliberate on these points and some relief as all right Shiva mea rites kodia thank you very much for taking time out for joining us on the takeaways from what is expected out of uh the 54th GST council meeting which we are given to understand has just concluded the chairperson of the meeting Finance Minister Nima sitaraman will be chairing that press conference will be starting very very shortly and we'll finally get to know what really uh transpired in the meeting and whether certain goods and services are going to be made cheaper or not but with that we have run out of time on the show thank you very much for watching [Music]