54th GST Council Meeting: Agendas and Expectations

The 53rd GST Council meeting was conducted on June 22nd. The 54th GST Council meeting has been scheduled to take place on Monday, 9th of September, 2024. Many people are eager to know what will happen in the next session.

Article 279A of the Indian Constitution deals with the Goods and Service Tax Council. There is no reference to how many GST Council meetings are to be conducted in a year, and it is conducted periodically according to the needs.

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The  Key Expectations And Agendas Of The Meeting Are As Follows:

• Foreign airlines are expected to receive tax relief on specific services, which may lead to lower operational costs for them.
• Discussions have been going around the rationalization of the GST rates. Talks have been ongoing about reducing the current four main GST rates (5%, 12%, 18%, and 28%) to just three. This change could make the tax system simpler and easier to comply with, but it might also lead to inflation.
•  Tax reforms have been proposed for tobacco products.  The GST Council has taken measures to explore capacity-based taxation for products such as pan masala and gutka. These items have been prone to tax evasion, forcing the Council to consider a more effective tax framework. One proposal is to implement taxation based on the maximum retail price (MRP) of these goods, shifting the tax liability to the manufacturing stage. This approach aims to curb evasion and ensure a more transparent and controlled tax process for tobacco and related products.
• The government’s decision to impose a 28% GST on online gaming has sparked significant concern within the industry.  It appears likely that this matter will be settled at the upcoming council meeting. Online gaming companies have raised concerns with the Finance Ministry, noting that their total tax liabilities have surged to ₹1.5 lakh crore, with some casino operators facing taxes exceeding ten times their annual revenue.

To fully address the concerns of stakeholders, further industry consultations and legal discussions are expected to be necessary.

• There could be discontinuance of compensation cess. There has been ongoing debate over the continuation of the Compensation Cess mechanism, which has already been extended multiple times. And this may be addressed at the upcoming GST Council meeting. This cess, currently applied to items in the 28% GST slabs like aerated drinks, cigarettes, and motor vehicles (referred to as “sin goods”) could be discontinued.
• There is an ongoing debate over the GST applied to health insurance premiums. The discussion is on whether the current tax structure needs adjustments to make health insurance more affordable.
• GST on life insurance premiums, which is 18%, maybe changed in the upcoming GST Council meeting.

Thus, the GST Council Meeting, which will be conducted in New Delhi this coming Monday, is supposed to bring significant changes and additions to the present scheme.

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Businesses and industry groups are optimistic that the meeting will address major concerns and provide clarity on tax regulations.

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