GST Council Meet: Key takeaways

The 54th GST Council meeting, chaired by Finance Minister Nirmala Sitharaman, was held at Sushma Swaraj Bhawan in New Delhi on Monday. The meeting, attended by officials from the Ministry of Finance and state finance ministers, addressed several key issues and made notable decisions. Here’s a look at the major outcomes announced at the post-meeting press conference.

Key decisions taken by the GST Council

Online Gaming and Casino taxes are here to stay!

Finance Minister Nirmala Sitharaman said that since the implementation of GST on online gaming and casinos in October last year, revenues from e-gaming have surged by 412%, while casino revenues have increased by 30%. This was revealed in a status report submitted to the fitment committee, highlighting the positive impact of these taxes on government revenue.

GST issue on medical insurance premiums to be decided later

At the press conference, FM Sitharaman announced that the GST Council has agreed to form a new Group of Ministers (GoM) within the existing GoM on rate rationalisation. This new GoM will focus exclusively on GST rate reduction for health insurance premiums, considering the wide range of insurance products available for both individuals and businesses. It will be headed by the Deputy Chief Minister of Bihar, with additional members added specifically for this task.

The new GoM has been instructed to submit its report by the end of October. The GST Council will review the findings in its November meeting and finalise decisions accordingly.

“While the decision on a lower rate or exemption for health insurance is expected by November, it is expected that the decision would consider all forms of health/ medical insurance including family floaters, group policies, optional add-on coverages etc. so that insurance companies have clarity on the changes they need to incorporate,” says MS Mani, Partner at Deloitte India.

GST on cancer drugs reduced

Additionally, the council decided to reduce the GST rates on cancer drugs from 12% to 5% to make cancer treatment more affordable.

“With the increasing burden of chronic diseases in India, this is a move toward making life-saving drugs accessible and improving health outcomes,” said Sudarshan Jain, Secretary General of Indian Pharmaceutical Alliance on the council decision of GST reduction on cancer drugs.

“This is further to the import exemption of customs duty on cancer drugs announced during the recent budget and a step in the right direction,” Jain added.

Foreign Airlines get a breather

The council has also decided to exempt the import of services by foreign airline companies from GST.

“In a major relief to the airline industry, GST has been exempted on import of services by foreign airline companies operating in India through branch offices, from their head offices or other establishments outside the country. Further, it appears that past-period issues will be regularised as well. This will put to rest the recent show cause notices where a GST demand of approx. ₹39,000 crores was raised by the DGGI on foreign airlines operating through branch offices in India,” said Bose.

“Coterminus to the exemption given to foreign airlines, it is necessary to examine similar situations that exist in other service businesses where the India office works on a mere cost recharge model,” added Mani.

Snack Time Just Got a Price Crunch

The finance minister also announced that the GST on selected namkeen snacks or savoury items has been reduced from 18% to 12%.

“There was considerable confusion on the applicable GST rate for extruded and non-extruded namkeen (within the Namkeen industry) following which, most companies had received demand notices from GST authorities,” said Rajat Bose, Partner, Shardul Amarchand Mangaldas & Co, noting that the reduction in rates will help resolve the existing uncertainty within the industry.

Research grants to be exempted from GST

Sitharaman also announced that the government has exempted universities and research centres established by central or state laws, or those with income tax exemptions, from paying GST on research funding. This allows these institutions to receive research funds from both public and private sources without incurring GST liabilities.

“Exemption given to research grants will ensure that more money flows into the R&D activity and regularisation of past demands on an as-is-where-is basis is a good move,” added Jain.

GoM on Cess Collection

During the post-GST Council meeting press conference, the finance minister disclosed that the total projected cess collection until March 2026 is ₹8.66 lakh crore. After settling outstanding loans, a surplus of approximately ₹40,000 crore is expected. Sitharaman confirmed that the Council thoroughly discussed the future of the compensation cess, with plans to form a Group of Ministers (GoM) to determine the purpose and way forward for the cess post-March 2026, including whether it should continue to be collected under a new name.

And everything else

The GST Council also introduced the Business-to-Customer (B2C) GST invoicing system effective October 1 and increased the GST on car seats from 18% to 28%. Additionally, a new committee, led by the Additional Secretary of Revenue, will tackle the negative IGST balance and work on recovering excess IGST disbursed to states.

While discussions on reducing GST for health insurance premiums, taxing online payments over ₹2,000, and providing GST relief to foreign airlines were anticipated, Finance Minister Nirmala Sitharaman clarified the outcomes of the meeting at the press conference. She noted that no decisions were made on taxing online payments, as initial feedback from payment aggregators is still pending.