New Delhi: With an aim to ensure less burden on taxpayers, the 54th GST Council meeting on Monday is likely to deliberate on a host of issues, including rate rationalisation, taxation of insurance premiums, online gaming and more.
According to industry sources, the GST Council meeting, chaired by Finance Minister Nirmala Sitharaman, is also likely to discuss operationalization of the GST Appellate Tribunal mechanism, which is a key step towards streamlining dispute resolution under GST.
The meeting will discuss whether the tax burden on health insurance should be reduced from the current 18 per cent or exempt certain categories of people, such as senior citizens. In the last fiscal year, the central government and states collected Rs 8,262.94 crore through GST on health insurance premiums and Rs 1,484.36 crore on account of GST on health reinsurance premiums.
The meeting is also likely to discuss reducing the current four main GST slabs (5%, 12%, 18% and 28%) to possibly three slabs, as per discussions that have been going on for some time. According to industry experts, the move could simplify the tax structure and reduce compliance burdens.
Shivashish Karnani, head of GST at Dewan PN Chopra and Co, said the current rate of GST on life and health insurance premiums is 18 per cent, which further accelerates the affordability issue. Hence, one of the key expectations from the 54th GST Council meeting is a reduction in tax rates or ideally a complete exemption from GST on life and health insurance premiums, he said.
The life and health insurance sector is hoping that the meeting will result in a significant reduction in the GST rate from 18 per cent to a lower rate such as 5 per cent or even 0.1 per cent. This reduction would ease the tax burden for both insurers and policyholders.
Finance Minister Sitharaman last week said that the GST rate is much lower than the revenue neutral rate (RNR), originally suggested at 15.3 per cent, which means less burden on taxpayers. The current average GST rate has been brought down to 12.2 per cent from 2023, much lower than the revenue neutral rate of GST, the Finance Minister said.
The government needs to raise revenue, “but first it needs to simplify, facilitate and ensure compliance by taxpayers,” he added. A revenue-neutral tax rate is one at which the government collects the same amount of revenue even after changes in tax laws.
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