From 7% Cut on Cancer Drugs To 10% Hike on Automotive Seating 15 GST Council Meeting Highlights To Know

The 54th GST Council meeting, chaired by Finance Minister Nirmala Sitharaman, concluded with significant decisions. From rate reductions on cancer drugs to new exemptions for foreign airlines, the council took steps to streamline the GST system and benefit taxpayers. But what were the most impactful changes? Let’s break down the key takeaways from this crucial meeting.

15 Major Takeaways from the GST Council Meeting

1. New GoMs Formed

• Medical and Health Insurance GoM: This GoM will focus on identifying areas where GST rates can be rationalized on medical and life insurance. This could include exemptions or reduced rates for specific categories of individuals or insurance policies. The GoM will also explore ways to simplify claiming GST refunds for medical insurance expenses.
• Compensation Cess GoM: The primary objective of this GoM is to determine the future course of the compensation cess after March 2026. It includes considering whether the cess should continue to be collected and, if so, how the funds should be utilized. The GoM will also explore alternative revenue sources or mechanisms to replace the compensation cess if it is discontinued.

2. GST Rate Reduction on Cancer Drugs

The reduction in GST rate from 12% to 5% on cancer drugs is a significant step towards alleviating the financial burden cancer patients and their families face. This reduction will make essential medicines more affordable, improving access to treatment.

3. Compensation Cess Status

The government has estimated a surplus of around Rs 40,000 crore after settling loan payments using the compensation cess collected until March 2026. The newly formed GoM will explore various options for utilizing this surplus, such as investing in public infrastructure projects, reducing the fiscal deficit, or providing additional relief to states.

4. Online Gaming and Casinos

The introduction of GST on online gaming and casinos has led to a substantial increase in government revenue. It indicates the growing popularity and profitability of these sectors. The GST Council will closely monitor the revenue generated from these sectors and consider any necessary adjustments to the GST rates or regulations.

5. GST Exemption for Foreign Airlines

The exemption applies to services imported by foreign airlines from related parties outside India when provided without consideration. This means that if a foreign airline receives services from its subsidiary or affiliate outside India without a fee, these services will be exempt from GST.

The Council has recommended regularizing past transactions that may have been incorrectly taxed under the previous GST regime. This will provide clarity for foreign airlines and reduce compliance burdens.

6. Reduced GST on Namkeens

The reduction in GST rate from 18% to 12% on namkeens will benefit consumers and businesses involved in the production and distribution of namkeens.

7. GST Exemption for Research Institutions

The GST Council meeting extended the GST exemption to universities and research centers established by central and state governments and those with income tax exemptions. This broader coverage will benefit a more comprehensive range of research institutions across India.

The exemption will provide financial relief to research institutions, allowing them to allocate more resources toward research projects and initiatives. This will foster innovation and contribute to India’s knowledge and technology growth.

8. IGST Committee Formation

The GST Council appointed a committee to identify the root causes of the Rs 14,000 crore deficit in IGST and develop strategies to address it. These strategies may involve reviewing the current IGST formula, identifying inefficiencies, and exploring ways to improve revenue collection.

 The committee will also work to streamline the processes involved in collecting, distributing, and reconciling IGST among the central and state governments. This will help ensure that IGST is collected and distributed fairly and efficiently.

9. RCM on Commercial Property Renting

The introduction of the Reverse Charge Mechanism (RCM) for commercial property renting aims to prevent tax evasion by unregistered landlords. Under RCM, the registered tenant is responsible for paying the GST on the rental amount.

This measure will help to ensure that all commercial property rentals are subject to GST, thereby preventing revenue leakage and promoting fair competition.

10. B2C E-Invoicing

B2C e-invoicing will digitize the issuing and tracking of invoices for business-to-consumer transactions. This will help reduce paperwork, improve efficiency, and enhance compliance.

For foreign tourists purchasing goods in India, e-invoicing will facilitate the verification of exports and the subsequent refund of any applicable taxes. This will simplify the process for foreign tourists and encourage more shopping.

11. GST Rate on Air Conditioning Machines

The GST rate on Roof-Mounted Package Units (RMPU) Air Conditioning Machines for Railways was clarified to be 28%.

12. Increased GST on Car and Motorcycle Seats

The GST rate on car and motorcycle seats was increased from 18% to 28%.

13. GST on Helicopter Services

The GST rate on helicopter services for pilgrims and tourists was reduced from 18% to 5%.

14. RCM on Metal Scrap

A reverse charge mechanism was introduced for metal scrap transactions, applicable above a certain threshold. A 2% TDS will be applied to B2B transactions involving the supply of metal scrap by registered persons.

15. Invoice Management System

Implementing an invoice management system aims to address mismatches in input tax credits and curb tax evasion.

Conclusion
The GST Council meeting announced several important decisions to streamline the GST system and benefit taxpayers. The council’s decisions have the potential to impact businesses and consumers across India positively. However, it all depends on the implementation and any subsequent changes that may arise.

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