GST Council To Deliberate On Insurance Premium Tax And Online Gaming Accountability

GST Council To Deliberate On Insurance Premium Tax And Online Gaming Accountability

Chaired by Finance Minister Nirmala Sitharaman, it will comprise state ministers

The Goods and Services Tax (GST) Council is set to deliberate on issues, including taxation of insurance premiums and suggestions by the Group of Ministers (GoM's) on rate rationalization, and a status report on online gaming.

The fitment committee, comprising the Centre and state tax officials, will present a report on the GST levied on life, health and reinsurance premiums and the revenue implications.

Chaired by Finance Minister Nirmala Sitharaman and comprising state ministers, the Council will decide whether to reduce the tax burden on health insurance from the current 18 percent or exempt certain categories of individuals, including senior citizens.

The deliberations will also comprise the GST cut on life insurance premiums.

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

The taxation on insurance premiums issue arose in Parliament with opposition members demanding that health and life insurance premiums be exempt from GST. Transport Minister Nitin Gadkari also mentioned this to Sitharaman.

In her response to a discussion on the Finance Bill, the finance minister stated that 75 percent of the GST collected went to the states. Therefore, opposition members should ask their state finance ministers to bring the proposal to the Council.

Recently, West Bengal Finance Minister Chandrima Bhattacharya raised the issue on rate rationalization in the meeting of the GoM. Thereafter, it was referred to the fitment committee for data analysis.

However, for the time being, the GoM was against any tinkering of the four-tier GST slab of 5, 12, 18, and 28 percent. But the panel asked the fitment committee to look into any scope for rationalization of goods and services rates.

Meanwhile, on online gaming, the Centre and state tax officers will present a ‘status report’ before the GST Council. It will include GST revenue collection from the online gaming sector before and after 01 October 2023, as from this date, the entry-level bets placed on online gaming platforms and casinos were subject to 28 percent GST.

Earlier, many online gaming companies were not paying 28 percent GST, arguing that there were differential tax rates for games of skill and games of chance.

In its August 2023 meeting, the Council clarified that online gaming platforms had to pay 28 percent tax. Subsequently, the Central GST law was amended to make the taxation provision.

Offshore gaming platforms were also mandated to register with GST authorities and pay taxes, failing which the government would block those sites.

The Council had stated that the taxation on the online gaming sector would be reviewed after six months of its implementation. It is unlikely that any change is forthcoming in this matter.

Besides, the Council will be apprised about the ongoing drive against fake registration, the success of the drive and action taken against the entities. The total amount of suspected GST evasion would also be presented before the Council.

The drive (from 16 August 2024 to 15 October 2024) is to detect suspicious GSTINs to conduct requisite verification and take remedial action to weed out fake billers.

During the first drive (16 May 2023 to 15 July 2023) against fake registration, 21,791 entities (11,392 in the state tax jurisdiction and 10,399 in the CBIC jurisdiction) having GST registration, were found non-existent.

A Rs.24,010 crore (Centre Rs.15,205 crore and state Rs.8,805 crore) of suspected tax evasion was detected during the special drive.

The Council is also expected to approve notifications, including the amnesty scheme, announced in the 22 June meeting. The amendments to the GST law decided by the Council were passed by the Parliament in August vide the Finance Act, 2024.

The Council had taken a host of taxpayer-friendly measures, including waiver of interest and penalty for demand notices issued in the first three years of GST - 2017-18, 2018-19 and 2019-20, if the full tax demanded was paid by 31 March 2025.

To reduce litigation, the Council fixed a monetary limit for tax officers to file appeals before the Supreme Court, the high courts, and the GST Appellate Tribunal at Rs.2 crore, Rs.1 crore and Rs.20 lakh, respectively.

The Council also recommended a reduction of the quantum of pre-deposit to be paid by taxpayers for filing appeals under the GST.