New Delhi

The 54th Goods and Services Tax Council meeting, chaired by Finance Minister Nirmala Sitharaman, concluded on Monday in New Delhi. Key agenda items included reducing Goods and Services Tax (GST) on health insurance premiums, taxing online payments above Rs 2,000, and addressing Infosys' tax notice of Rs 32,400 crore.

This meeting was chaired by the Finance Minister of India. State finance ministers and senior officials were also in attendance as detailed in a report by The Economic Times. Further, the meeting concluded at the Sushma Swaraj Bhawan, New Delhi.

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Several important decisions were taken up by the panel for consideration including the slashing of GST on health insurance premiums, and a proposal to tax online payments above Rs 2,000 among other issues. The primary goal of the meeting was to ensure that collection efficiency could be improved and the process could be further streamlined for citizens.

Below are some important takeaways

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Formation of a new Group of Ministers (GoM) on medical insurance premium

The FM announced that the council has decided to form new Group of Ministers (GoM) on GST rate reduction on medical health insurance set up. It will be headed by the Deputy Chief Minister of Bihar but with newer members added for this limited purpose. It will submit its report by October-end. "The GST council which will meet in November will finalize based on this report which will come from the GoM," Sitharaman said.

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GST on Online Gaming and Casinos

Nirmala Sitharaman, Finance Minister of India stated that following the announcement of GST on online gaming, there has been a 412 per cent jump in revenue, as per a status report submitted to the respective fitment committee.

GST on Cancer drugs has been reduced

Finance Minister Nirmala Sitharaman stated that the reduction in GST on cancer drugs from 12 per cent to 5 per cent is aimed at further reducing the overall cost of cancer treatment. This step is crucial as it is aimed to help citizens.

Group of Ministers on Cess

During the meeting, it was stated that primarily the total cess collection projected until March 2026 stands at Rs 8.66 lakh crore. Further, after settling the loan payments, a projected surplus of around Rs 40,000 crore is expected.

Select snacks are set to get cheaper

The GST council has decided to slash tax on selected snacks from 18 per cent to 12 per cent. This has been done to benefit the common citizens.

Govt Universities and research centers are exempted from paying GST

Universities and research centers established by central or state government laws, or those granted income tax exemptions, will now be exempt from paying Goods and Services Tax (GST) on research funding. The government also clarified that these institutions can receive research funds from both public and private sources without being liable for GST. This is a very important step that is aimed at boosting the research capabilities of the country.

FM confirmed that the position on compensation cess was thoroughly discussed in the meeting. She said that a Group of Ministers (GoM) will be formed to decide on the purpose of the cess and the way forward after March 2026, if the cess has to be collected after the said period as it cannot be called compensation cess. More deliberations will be done to find solutions to this particular issue.

On Integrated Goods and Services tax

In the meeting, key issues related to the Integrated Goods and Services Tax (IGST) balance were also discussed. The GST panel decided to set up a committee headed by the Additional Secretary of Revenue, who will address the negative IGST balance, focusing on retrieving excess IGST disbursed to states.

On rate rationalisation and renting of property

The Group of Ministers (GoM) presented their status report on rate rationalisation during the GST Council Meeting. FM Sitharaman stated that the GoM will convene on September 23 to discuss the same. Further, the GST panel has also decided to bring renting of commercial property by unregistered person to a registered person under Reverse Charge Mechanism (RCM), in order to prevent revenue leakage.

Expert views on the 54th GST council meeting

Shivam Mehta, Executive Partner, Lakshmikumaran and Sridharan, shared his insights on the 54th GST council meeting.

He stated, "The 54th GST council has maintained the pattern of addressing the recent issues and in turn attending to the representations of the industry. The recent exemptions proposed in the context of Government and Private grants received for research and development services seems to tackle the issue of taxability of grants received by research institutions. On the top of that, the decision to regularise the past demands will probably bring an end to the notices issued lately to institutions such as IIT-Delhi."

He further elaborated that, "The exemption given to foreign airlines with respect to import of services, without consideration from a related person or an establishment is a welcome move which will settle the ongoing disputes faced by foreign airlines. The exemption seems to have been carved out, specifically for the airlines industry, keeping in mind the status that airline industry enjoys in other countries. It is a customary practice to reimburse the expenses to the branches or related parties outside India and is not limited to the airline industry. Thus, the clarity on taxability in this domain is still awaited."

"While the insurance sector and countrymen (policy holders) at large, was eagerly waiting for some rate reduction in this council meeting, their hopes are not entirely lost since a Group of Ministers (GOM) has been constituted to look into the rate change. The cutoff date of October end shows the intent of the Government to cater to the demand of GST rate reduction/ exemption for health and life insurance premiums. The Government has also attempted to resolve the persistent request of the industry to provide for the mechanism to deal with ITC mismatch. It is a sound decision in light of the taxpayer’s struggling day and night with the ITC mismatch notices."

"Though the rate rationalization decision seems to have taken back seat as of now, the council has recommended various rate changes including rates on extruded or expanded products (namkeen), transportation of passengers by helicopters and other exemptions pertaining to services, ancillary to electricity distribution etc., which are clearly aimed at benefiting the end consumers."

Other crucial decisions

The GST panel decided to introduce Business-to-Customer (B2C) GST invoicing. This system for GST invoice management will take effect from October 1. It was also announced to surge GST on car seats from 18 per cent to 28 per cent in the meeting. Further, the panel also clarified that Roof Mounted Package Unit (RMPU) Air Conditioning Machines for Railways would be classified under HSN 8415 attracting a GST rate of 28 per cent. Further, helicopter services for religious purposes like Kedarnath, and Badrinath have been reduced to 5 per cent from 18 per cent, more clarity and details of this decision are awaited.