Decision on GST Rate Cut on Health and Life Insurance Premiums Postponed to November

Moneylife Digital Team 10 September 2024

Economy & Nation

After reaching a broad consensus on reducing taxes on health and life insurance premiums, the goods and services tax (GST) council will take a final decision on this during its meeting in November.

Briefing reporters after the 54th meeting of the GST council, Union finance minister (FM) Nirmala Sitharaman says, "The GST Council recommended to constitute a group of ministers (GoM) to look into the issues pertaining to GST on the life insurance and health insurance. The GoM members are Bihar, UP, West Bengal, Karnataka, Kerala, Rajasthan, Andhra Pradesh, Meghalaya, Goa, Telangana, Tamil Nadu, Punjab, and Gujarat. The GoM is to submit the report by end of October 2024."

The Council has decided to set up two new GoMs—one for medical and health insurance and the other for compensation cess.

The council, chaired by Ms Sitharaman and comprising state counterparts, decided to cut GST to 5% from 12% on cancer drugs, namely, trastuzumab deruxtecan, osimertinib and durvalumab.

The GST rate of extruded or expanded products, savoury or salted (other than un-fried or un-cooked snack pellets, by whatever name called, manufactured through the process of extrusion), falling under HS 1905 90 30 to be reduced from 18% to 12% at par with namkeens, bhujia, mixture, chabena (pre-packaged and labelled) and similar edible preparations in ready for consumption form which are classifiable under HS 2106 90. The GST rate of 5% will continue on un-fried or uncooked snack pellets, by whatever name called, manufactured through the process of extrusion.

The council also exempted from GST grants or funds received for research & development (R&D) by Central or state-affiliated universities or institutions with income-tax (I-T) exemptions.

The GST council decided to exempt the supply of services such as application fees for providing electricity connection, rental charges against electricity meters, testing fees for meters, transformers and capacitors, labour charges from customers for shifting of meters or service lines and charges for duplicate bills, which are incidental, ancillary or integral to the supply of transmission and distribution of electricity by transmission and distribution utilities to their consumers when provided as a composite supply. GST for the past period will be regularised on the basis of 'as is where is'.

The council also decided to regularise the GST liability for the past period before 1 October 2021 on 'as is where is' basis, where the film distributor or sub-distributor acts on a principal basis to acquire and distribute films.

Following successful implementation of e-invoicing in the business-to-business (B2B) sector, the GST council decided to roll out a pilot for business-to-customer (B2C) e-invoicing. The council says it recognised the potential benefits of e-invoicing in retail, such as improved business efficiency, being environmentally friendly, and cost efficiency.

"It would also provide an opportunity for retail customers to verify the reporting of the invoice in the GST return. The pilot will be rolled out on a voluntary basis in selected sectors and states," the Council says.

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