ECONOMY
Two GoMs to decide on lower GST on health, life premiums, Compensation Cess
- IBJ Bureau
- Sep 10, 2024
The Goods and Services Tax (GST) Council on Monday reached a broad consensus on reducing taxes on health and life insurance premiums, and a final decision on this would be taken in the November meeting.
Currently, 18 per cent GST is levied on health and life insurance premiums.
The GST Council, chaired by Union Finance Minister Nirmala Sitharaman and comprising State counterparts, exempted from GST grants or funds received for R&D by Central or State-affiliated universities or those institutions which have Income Tax exemptions.
Briefing reporters after the 54th meeting of the GST Council, Ms Sitharaman said that the GST Council had decided to set up two new Groups of Ministers (GoMs) – one on medical and health insurance and the other on Compensation Cess.
The GoM on Compensation Cess would suggest to the GST Council how to go about the GST Compensation Cess, which is levied on luxury, sin and demerit goods, once the loans taken to meet the shortfall in revenue of States during COVID-affected years are repaid.
The government had borrowed Rs 2.69 lakh crore in FY21 and FY22 to make good States’ revenue loss, and the GST Council had then decided to extend the Compensation Cess levy till March 2026 to repay the loan and interest.
Ms Sitharaman said that the loan and interest were expected to be repaid as early as December 2025 or January 2026. The GoM will decide on the future of the levy, how it would be apportioned between the Centre and States and changes required in law as it cannot be called Compensation Cess any more.
The GST Council decided to reduce tax rate on cancer drugs – Trastuzumab Deruxtecan, Osimertinib and Durvalumab – from 12 to 5 per cent, certain categories of namkeens (snacks) from 18 to 12 per cent.
However, GST rate on car seats has been increased from 18 to 28 per cent. This uniform rate of 28 per cent will be applicable prospectively for car seats of motor cars in order to bring parity with seats of motorcycles which already attract a GST rate of 28 per cent.
The GST Council also decided that there would be 5 per cent GST on transport of passengers by helicopters on a seat-share basis and 18 per cent on the charter of a helicopter.
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