The 54th meeting of the Goods and Services Tax (GST) Council, chaired by Union Finance Minister Nirmala Sitharaman, concluded in New Delhi on Monday with several crucial decisions aimed at enhancing the efficiency of the tax system while offering targeted relief across industries.
The meeting, held at the Sushma Swaraj Bhawan, was attended by key officials from the finance ministry and state finance ministers, and resulted in a mix of rate cuts, new tax measures, and reforms aimed at streamlining GST operations.
One of the most significant outcomes of the meeting was the announcement of a 412 per cent rise in revenue from the GST imposed on online gaming and casinos, which brought in Rs 6,909 crore over the last six months. This follows the recent tax changes that have expanded the scope of GST in these sectors.
Additionally, the GST Council has decided to set up a new Group of Ministers (GoM) to examine the possibility of reducing the GST rate on medical health insurance premiums. The report from this GoM, to be headed by the Deputy Chief Minister of Bihar, is expected by October-end, with final decisions anticipated in the November Council meeting.
In a major move to make healthcare more affordable, the GST rate on cancer drugs has been slashed from 12 per cent to 5 per cent, further reducing the burden of treatment for patients. This was accompanied by a tax cut on certain snacks, with the rate dropping from 18 per cent to 12 per cent, providing consumers with relief from rising food costs.
The Council also offered relief to foreign airlines by exempting them from GST on the import of services, a decision expected to ease operational costs for international carriers flying into India. Similarly, universities and research centers established by the central or state governments, or those with income tax exemptions, will now be free from GST on research funding. This exemption applies to research grants received from both public and private sources, removing a layer of taxation that had previously affected academic institutions.
Another key highlight was the discussion on the cess collection, with the Council projecting total collections of Rs 8.66 lakh crore by March 2026. After settling loans, a surplus of Rs 40,000 crore is expected. A GoM will be formed to decide on the future of the cess beyond March 2026, particularly on whether it should continue to be collected, as it can no longer be termed "compensation cess."
To address technical imbalances, a committee headed by the Additional Secretary of Revenue will focus on resolving issues related to the negative Integrated Goods and Services Tax (IGST) balance and retrieving excess funds disbursed to states. The Council also revisited the issue of rate rationalisation, with a GoM scheduled to meet on 23 September to further discuss streamlining GST rates across various goods and services.
In a move aimed at preventing tax leakage, the Council decided that the renting of commercial property by an unregistered person to a registered one will now fall under the Reverse Charge Mechanism (RCM). This is intended to close loopholes in GST collections from property rentals. Other decisions include the implementation of Business-to-Customer (B2C) GST invoicing from October 1, an increase in GST on car seats from 18 per cent to 28 per cent, and the clarification that Roof Mounted Package Unit (RMPU) Air Conditioning Machines for Railways will attract a 28 per cent GST rate.
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