The 54th meeting of the GST Council, chaired by Union Finance Minister Nirmala Sitharaman, brought forward significant decisions and updates on key tax matters, directly impacting sectors like healthcare, insurance, online gaming, and everyday goods.
Key Outcomes from the Meeting:
- Reduction in GST for Cancer Drugs and Namkeen: One of the most significant decisions made during the meeting was the reduction in GST rates for essential items. The tax on cancer drugs has been slashed, providing much-needed relief to patients and healthcare providers. Additionally, the GST rate on namkeen (snacks) has been reduced prospectively, offering relief to small businesses and consumers alike.
- Renting of Commercial Properties Under Reverse Charge Mechanism: The Council has brought the renting of commercial properties under the reverse charge mechanism, simplifying the process of GST compliance for property owners.
- GST Exemption for Educational Institutions: Government-affiliated educational institutions, universities, and establishments set up by the central or state law or those benefiting from income tax exemptions, have been fully exempted from GST. This decision is likely to provide a financial boost to such institutions.
- Formation of GoM on Compensation Cess: A Group of Ministers (GoM) has been formed to study the extension of the compensation cess, which will cease post-March 2026. The report on this matter will be crucial for states relying on GST compensation for revenue.
- Health Insurance and Medical Sector Relief: The Council established a GoM to examine GST rate reductions for medical and health insurance. The GoM will submit a report by the end of October 2024, and a final decision is expected in the November meeting.
- Growth in Online Gaming and Casinos Sector: Finance Minister Nirmala Sitharaman revealed a massive 412% increase in revenue from the online gaming sector, which contributed ₹6,909 crore over six months. Additionally, casino revenues have surged by 30%. The Council presented a status report on GST collection from both these sectors, reflecting the growing taxation focus on these industries.
- Chopper Services for Religious Travel: Pilgrims can now avail themselves of cheaper helicopter services to religious sites, as the GST Council reduced the tax on such services from 18% to 5%. This move is expected to benefit tourists visiting religious destinations, especially in states like Uttarakhand.
- No GST Discussion on Online Payments: Contrary to expectations, the Council did not discuss taxing online payments made through payment gateways, a proposal which is being closely watched by the fintech industry.
- E-invoice for B2C: B2C e invoicing coming up on voluntary basis for selected sectors and states
- GST amnesty scheme for waiver of interest and penalty will be starts from 1 November and section 16(5) and section 16(6) notification will be released soon
- RCM applicable on Metal scrap
Other Key Developments:
- Two status reports were presented: one by the GoM on real estate and the other on rate rationalization.
- The import of services by foreign airline companies will now be exempt from GST, providing a boost to the aviation industry.
- The Council referred the issue of GST on research grants for educational institutions to the fitment committee, with decisions expected in upcoming meetings.
Looking Ahead:
The GST Council will convene again in November 2024, where more critical decisions, including those related to health insurance and the extension of compensation cess, will be discussed.
The 54th GST Council Meeting has laid the groundwork for crucial reforms, tax reliefs, and better GST compliance for various sectors, signaling a positive shift towards tax rationalization and consumer benefit.
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