54th GST Council meet outcome: GST reduced on cancer drugs, namkeen; check top highlights

The 54th GST Council, headed by Union Finance Minister Nirmala Sitharaman on Monday, September 9, announced the formation of a Group of Ministers (GoM) to look into the GST rate on health and life insurance premiums.

“We have told them to come up with a report by the end of October, and the GST Council will meet in November and finalise the decision based on the GoM’s recommendation,” the FM said.

Currently, there is an 18% GST rate on health and life insurance premiums.

The GoM will be headed by Bihar Deputy Chief Minister Samrat Choudhary, who is currently heading the panel on GST rate rationalisation.

Sitharaman said new members would be joining the GoM to look into GST on health insurance.

The issue of taxation of insurance premiums had figured in Parliament discussions with opposition members demanding that health and life insurance premiums be exempt from the GST. Even Transport Minister Nitin Gadkari wrote to Sitharaman on the issue.

Sitharaman, in her reply to a discussion on the Finance Bill, had said that 75% of the GST collected goes to states, and the opposition members should ask their state finance ministers to bring the proposal to the GST Council.

Besides, the GST Council also decided to cut tax rates on cancer drugs to 5% from 12% and namkeens from 18% to 12%.

Further, the Council also decided to increase the GST rate on car seats from 18% to 28%. "This uniform rate of 28% will be applicable prospectively for car seats of motor cars in order to bring parity with seats of motorcycles, which already attract a GST rate of 28%," it said. 

It also announced 5% GST on the transport of passengers by helicopters on a seat-share basis. It also said that the charter of helicopters will continue to attract 18% GST.

Sitharaman further said that a GoM will also be constituted to deal with the issue concerning compensation cess, which will cease after March 2026.

The Council also deliberated on the GoM's status report on rate rationalisation and online gaming.

The minister further said that a committee of secretaries headed by the Additional Secretary (Revenue) will be formed on the IGST, which is currently facing a negative balance. It will look into ways to retrieve the money from states.