GST Council Meeting: Reduce Rates on Helicopter Travel, Massive Cancer Drugs, and Namkeens

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The latest tax reductions from the 54th GST Council meeting bring many developments, including lower rates on cancer drugs, helicopter services, and namkeens.

GST Council Meeting

The 54th GST Council meeting, led by Union Finance Minister Nirmala Sitharaman, introduced several important tax cuts on goods and services. These changes, announced on Monday, come with the goal of easing the financial burden on specific sectors, particularly healthcare, transportation, and food products. With rates now reduced on life-saving cancer drugs, helicopter travel for religious purposes, and popular snacks like namkeens, the decisions mark a significant update to India’s Goods and Services Tax (GST) structure.

54th GST Council Meeting Key Points

Lower GST on Life-Saving Cancer Drugs

One of the most impactful announcements from the meeting was the tax reduction on cancer drugs. The GST Council lowered the GST rate on several life-saving cancer medications, such as Trastuzumab Deruxtecan, Osimertinib, and Durvalumab, from 12% to 5%. This move aims to make these essential drugs more affordable for patients battling cancer, ensuring greater accessibility and improving health outcomes.

The decision has been praised by industry leaders, including Sudarshan Jain, secretary general of the Indian Pharmaceutical Alliance, who highlighted the importance of reducing costs on life-saving treatments amid rising healthcare needs in the country.

Reverse Charge Mechanism for Metal Scrap

A key structural change introduced during the meeting was the Reverse Charge Mechanism (RCM) for the supply of metal scrap. Under this mechanism, the recipient of metal scrap, if they are a registered person, will be liable to pay GST, even if the supplier is below the threshold for registration. Additionally, the Council imposed a 2% TDS (tax deducted at source) on B-to-B metal scrap supply when the supplier is registered.

This policy is aimed at bringing more clarity and compliance in the metal scrap industry, which has often been plagued by tax evasion. It will also ensure that the GST on metal scrap is properly accounted for, thereby reducing tax leakages.

GST Exemption on Research Funding for Educational Institutions

Another important decision made by the GST Council was the exemption of GST on research funding for higher educational institutions and research centers established by state or central government laws. This decision follows show cause notices that were recently issued to several prominent academic institutions for unpaid taxes on research grants dating back to 2017.

The exemption provides much-needed relief to research institutions and universities, allowing them to focus on innovation and academic growth without the burden of additional taxes on their funding.

Increased GST Rate on Car and Motorcycle Seats

In a move aimed at bringing uniformity to tax rates, the GST Council announced an increase in the GST rate on car seats. Previously taxed at 18%, the new rate will be 28%, aligning with the GST rate on motorcycle seats. This change ensures parity between different types of vehicle seating and simplifies the classification process under the GST framework.

While this may result in slightly higher costs for car manufacturers and consumers, it was introduced to standardize tax rates across similar categories, preventing discrepancies in the application of taxes.

Tax Cut on Helicopter Services for Religious Travel

One of the more consumer-focused changes is the reduction in GST on helicopter services for religious travel. The GST rate on these services, which includes popular pilgrimage destinations such as Kedarnath and Badrinath, has been slashed from 18% to 5%. This decision provides clarity and a significant financial relief for pilgrims who use these services for religious purposes.

Uttarakhand Finance Minister Prem Chand Agarwal expressed that the reduction in GST for helicopter services will make religious travel more affordable, benefiting thousands of pilgrims each year.

GST Rate Reduction on Namkeens and Savory Snacks

A notable reduction in the food sector came with the Council’s decision to lower the GST rate on namkeen and savory food products from 18% to 12%. This applies to a wide range of popular snacks, which are consumed regularly across India. The rate for unfried or uncooked snack pellets will continue to remain at 5%.

This move is expected to be welcomed by both consumers and manufacturers, particularly as the industry faces rising input costs. Experts have lauded the decision as a step towards making essential food items more affordable for the general public.

Deferred Decision on GST Reduction for Health Insurance Premiums

Although there was much anticipation around a potential reduction in GST for health insurance premiums, the Council decided to defer the decision. A detailed discussion took place, but the matter has been referred to a Group of Ministers (GoM) led by Bihar’s Deputy Chief Minister Samrat Choudhary, who will present their recommendations by the end of October.

The GoM will also convene on September 23 to address other issues related to rate rationalization. These decisions are crucial as they have far-reaching implications for the insurance sector and its consumers.

Other Key Decisions

The GST Council made several other important decisions during the meeting, including exempting the import of services by foreign airline companies from related entities abroad, provided the transaction is without consideration. Additionally, another GoM has been tasked with determining the treatment of collections from the compensation cess after its expiry.

Final Thoughts: A Balanced Approach to Tax Reductions

The 54th GST Council meeting introduced several tax reductions and structural reforms that will benefit key sectors, including healthcare, research, transportation, and food. The reduction in GST on cancer drugs and helicopter services for religious travel stands out as the most impactful decisions for the general public, while reforms in metal scrap taxation and research funding address industry-specific concerns.

As the Council continues to examine rate rationalization and deferred matters like health insurance premiums, it is clear that the GST Council’s approach is focused on both addressing immediate consumer needs and simplifying tax administration.

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