GST Council Set to Deliberate on Health Insurance Tax Relief and Online Gaming Revenues

The GST Council is set to meet on Monday, September 9, 2024, to discuss a range of important issues, including the taxation of insurance premiums, recommendations on rate changes, and updates on the online gaming sector, according to sources.

One of the key topics on the agenda is the GST on life, health, and reinsurance premiums. A report will be presented by the fitment committee, which includes tax officials from the Centre and States. This report will focus on the GST implications for these insurance categories, particularly health insurance. Currently, health insurance premiums are taxed at 18%, and the council will decide whether to lower this rate or offer exemptions for specific groups, like senior citizens. The idea of reducing GST on life insurance premiums will also be up for discussion.

To put it in perspective, the Centre and States collected over ₹8,200 crore from GST on health insurance premiums in the financial year 2023-24. An additional ₹1,484 crore came from reinsurance premiums. There has been growing pressure in Parliament, with opposition members and even Transport Minister Nitin Gadkari calling for health and life insurance premiums to be exempt from GST. Finance Minister Nirmala Sitharaman responded by noting that most of the GST collected goes to the States and encouraged opposition members to bring this proposal to the GST Council.

Another hot topic will be the ongoing debate about the four-tier GST slab system (5%, 12%, 18%, and 28%). The Group of Ministers (GoM) on rate rationalization recently decided not to make any changes to these slabs, but they did ask for a detailed analysis to see if there’s room to tweak the rates for certain goods and services.

The Council will also review the taxation of online gaming. Since October 2023, a 28% GST has been levied on entry-level bets on gaming platforms and casinos. Before this, some online gaming companies avoided paying the full 28%, citing differences between games of skill and games of chance. The Council had clarified that all online gaming platforms must pay 28% GST, and the law was updated to reflect this.

The Council is now expected to receive a report on the impact of the new tax rates and how much revenue has been collected since the changes. It’s unlikely that any further changes will be made to the tax rate for online gaming at this point.

In addition, the Council will hear updates on the government’s ongoing crackdown on fake GST registrations. Since mid-August, authorities have been identifying and verifying suspicious GST Identification Numbers (GSTINs) to eliminate fraudulent activity. A previous drive in 2023 uncovered over 21,000 non-existent entities, leading to the detection of ₹24,000 crore in suspected tax evasion.

Finally, the Council is expected to approve notifications related to the amnesty scheme that was announced earlier, as well as other taxpayer-friendly measures that were decided in June. These include waiving penalties for certain older tax demands and setting limits on the monetary value of cases that tax officials can appeal.

Overall, the upcoming GST Council meeting is packed with significant decisions that could affect businesses, taxpayers, and various sectors across the country.