The GST Council will decide on reducing the 18 per cent tax on health and life insurance premiums at its next meeting in November.

The Council, led by Union finance minister Nirmala Sitharaman, has tasked a group of ministers (GoM) to study the matter, alongside discussions on the future of the compensation cess levied on luxury and sin goods, which is set to expire on March 31, 2026.

The GoM, chaired by Bihar deputy chief minister Samrat Choudhary, will examine whether the GST rates on health and life insurance can be reduced.

This decision follows persistent calls from Opposition members to exempt these insurance premiums from GST, a demand that gained traction in recent parliamentary debates. Transport minister Nitin Gadkari also supported the reduction in writing to Sitharaman.

Sitharaman said the GoM is expected to submit its findings by the end of October, with the Council set to take a final decision in its November meeting.

“The GoM on rate rationalisation will now include new members specifically to address GST on health insurance. Their report is due by the end of October 2024, and the GST Council will finalise the decision in its November meeting based on this report,” she said.

Beyond insurance, the Council has tasked another GoM to determine the treatment of collections from the compensation cess after its expiry.

Initially introduced to compensate states for revenue losses under the GST regime, the cess has generated a surplus, with an estimated ₹40,000 crore expected to remain after the repayment of loans.

“Compensation cess was extended solely for repaying loans. Once the payment is cleared by March 2026, there can be no further collection of cess for compensation purposes. A decision on this will be taken before the March 2026 deadline,” Sitharaman said.

In other key decisions, the Council agreed to reduce the tax rate on several cancer drugs to 5 per cent from 12 per cent.

These drugs, including Trastuzumab Deruxtecan, Osimertinib and Durvalumab, are crucial for patients, and the rate cut is expected to make them more affordable.

The Council also approved a tax reduction on pre-packaged and labeled snack foods, such as namkeens, bhujia, and mixtures, lowering the GST rate to 12 per cent from 18 per cent.
Additionally, the Council decided to cut the GST on helicopter rides such as for pilgrimage to Kedarnath, setting the rate at 5 per cent for passenger transport on a seat-share basis. However, the charter for helicopters will continue to attract 18 per cent GST.

KPMG’s indirect tax head and partner, Abhishek Jain, remarked on “the significance of the GoM’s upcoming recommendations on health and life insurance, noting that these decisions could have broad implications across sectors, including the automobile industry, which is closely watching the discussions on compensation cess”.

The Council also addressed the booming online gaming sector, which has seen a dramatic increase in revenue, rising by 412 per cent to ₹6,909 crore over the past six months.

This surge follows the Council’s August 2023 decision to impose a 28 per cent GST on entry-level bets placed on online gaming platforms and casinos, effectively removing the differential tax rates that previously applied to games of skill versus games of chance.

The Council clarified that offshore gaming platforms are required to register with GST authorities and pay taxes, with non-compliance resulting in the blocking of their websites.

The Council also made several other key decisions, including exempting the import of services by foreign airline companies from related entities abroad, provided the transaction is without consideration. It also approved a pilot project for B2C e-invoicing, following the successful rollout of e-invoicing in the B2B sector.

This pilot, to be implemented on a voluntary basis in selected sectors and states, aims to enhance business efficiency.