The 54th GST Council meeting, headed by Finance Minister Nirmala Sitharaman and featuring state ministers, commenced on Monday.

According to PTI sources, the Council is set to discuss various matters, including the taxation of insurance premiums, Group of Ministers’ (GoM’s) recommendations on rate rationalisation, and an update on online gaming.

Sources mentioned that the fitment committee, consisting of central and state tax officials, will present a report on different GST rates. It will be applied to life, health, and reinsurance premiums and its revenue implications.

Key expectations from the GST Council meeting:

1) Expectations on GST on life and health insurance

The GST Council will decide to reduce the health insurance tax burden from the current 18% or exempt groups such as senior citizens.

Discussions will occur on reducing the goods and services tax (GST) on life insurance premiums.

In the 2023-24 fiscal year, the Centre and states collected Rs 8,262.94 crore through GST on health insurance premiums, while Rs 1,484.36 crore was collected for GST on health reinsurance premiums.

The taxation of insurance premiums was discussed in Parliament, with opposition members urging that health and life insurance premiums be exempt from GST.

2) Expectations on GST Rate rationalisation

Transport Minister Nitin Gadkari also corresponded with Sitharaman regarding this issue.

In response to the Finance Bill discussion, Finance Minister Nirmala Sitharaman stated that 75% of the GST collected is allocated to states, and opposition members should request their state finance ministers to propose changes at the GST Council.

West Bengal Finance Minister Chandrima Bhattacharya raised the rate rationalisation issue at the Group of Ministers (GoM) meeting last month, and the matter was then referred to the fitment committee for further analysis.

The GoM did not favour altering the current four-tier GST slab of 5%, 12%, 18%, and 28%. However, they tasked the fitment committee with exploring the potential rationalisation of goods and services rates.

3) GST Expectations regarding Online Gaming

Central and state tax officers will present a “status report” on online gaming to the GST Council. The report will cover GST revenue collection from the online gaming sector before and after October 1, 2023.

Starting October 1, 2023, entry-level bets on online gaming platforms and casinos became subject to 28% GST. Before this, many online gaming companies did not pay 28% GST, arguing that different tax rates were applicable for games of skill and chance.

In the August 2023 meeting, the GST Council clarified that online gaming platforms must pay 28% tax. Subsequently, the central GST law was amended to clarify taxation provisions. Offshore gaming platforms were also required to register with GST authorities and pay taxes, with the government threatening to block those sites if they failed to comply.

The Council then decided to review the taxation status of the online gaming sector six months after its implementation. PTI sources indicated that the Council would discuss the sector’s tax status, with any changes in tax rates being unlikely.

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