India's GST Council to discuss tax on insurance, gaming levy

New Delhi: The goods and services tax (GST) Council, chaired by Union finance minister Nirmala Sitharaman, on Monday is likely to discuss several key taxation issues, including levy on insurance premium, Group of Minister's or GoM's suggestions on rate rationalisation and online gaming among others, a source privy to development said on Sunday.

The move of the government aims at streamlining the seamless taxation facilities to the taxpayers in the country. “Nevertheless, the fitment committee, comprising Centre and state tax officials, is also expected to present a report on GST levied on life, health and reinsurance premiums and the revenue implications in the GST regime,” the source said.

The much-talked about issue of levy on insurance premium figured in Parliament discussions with opposition members demanding that health and life insurance premiums be exempt from the GST. Even Union transport minister Nitin Gadkari wrote to the finance minister to look into the issue on an urgent basis for the betterment of the people.

However, the GST Council will take a final call on whether to reduce the tax burden on health insurance from the current 18 per cent or exempt certain categories of individuals, like senior citizens. “The deliberations will also happen with regard to the GST reduction on life insurance premium,” the source added.

After Gadkari's letter, Sitharaman in her reply to discussion on the Finance Bill had said 75 per cent of the GST collected goes to states and opposition members should ask their state finance ministers to bring the proposal at the GST Council. Her West Bengal counterpart Chandrima Bhattacharya had also raised the issue in the GoM meeting on rate rationalisation last month and the matter was referred to the fitment committee for further data analysis.

The GoM had opined against any tinkering of four-tier GST slab of 5, 12, 18, and 28 per cent for the time being. The panel, however, had asked the fitment committee to look into any scope for rationalisation of rates of goods and services.

With regard to online gaming, the Centre and state tax officers will present a ‘status report’ before the GST Council. The report would include GST revenue collection from the online gaming sector before and after October 1, 2023. From October 1, 2023, entry-level bets placed on online gaming platforms and casinos were subject to 28 per cent GST. Prior to that, many online gaming companies were not paying 28 per cent GST, arguing that there were differential tax rates for games of skill and games of chance.

In 2023-24, the Centre and states collected Rs 8,262.94 crore through GST on health insurance premium, while Rs 1,484.36 crore was collected on account of GST on health reinsurance premium. The GST Council in its meeting in August 2023 had clarified that online gaming platforms were required to pay 28 per cent tax and subsequently Central GST law was amended to make the taxation provision clear.

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 then decided that the taxation on the online gaming sector would be reviewed after six months of its implementation.

However, the source said the Council would deliberate on the status of taxation on the sector and any change in tax rates is unlikely. “Besides, the Council is likely to be apprised about the ongoing drive against fake registration, the success of the drive and action taken against such entities. The total amount of suspected GST evasion would also be presented before the Council,” the source added.

The drive, from August 16, 2024, to October 15, 2024, is aimed at detecting suspicious/fake GSTINs and to conduct requisite verification and further remedial action to weed out these fake billers. In the first drive between May 16, 2023 to July 15, 2023, against fake registration, 21,791 entities (11,392 pertaining to state tax jurisdiction and 10,399 pertaining to CBIC jurisdiction) having GST registration were discovered to be non-existent.