GST panel puts off call on lower rates for insurance
The Goods and Services Tax (GST) Council convened recently in Jaisalmer, where it made significant decisions that will impact various sectors. The council, led by Union Finance Minister Nirmala Sitharaman, focused on easing tax burdens and simplifying processes for businesses. Among the notable decisions was the waiver of tax on gene therapy for cancer treatment and a reduction in the tax rate on fortified rice kernels used in the Public Distribution System (PDS). However, discussions on lowering rates for health and term insurance, as well as food delivery services, were deferred for further consultation.
Waiver on Gene Therapy and Tax Reduction on Rice Kernels
One of the most impactful decisions from the GST Council was the waiver of tax on gene therapy used for cancer treatment. This move aims to make advanced medical treatments more accessible to patients. Additionally, the council reduced the tax on fortified rice kernels from a higher rate to 5%. This change is expected to benefit the Public Distribution System, ensuring that essential food items remain affordable for the population.
The council’s decision reflects a growing recognition of the importance of healthcare and nutrition in the country. By waiving taxes on life-saving treatments and reducing the tax burden on essential food items, the GST Council is taking steps to support public health initiatives. However, the council deferred discussions on health and term insurance rates, indicating that more consultations are necessary to reach a consensus. The involvement of the Insurance Regulatory and Development Authority of India (IRDAI) will be crucial in shaping future policies in this area.
Simplifying Registration for Small Businesses
In an effort to ease the operational challenges faced by small businesses, the GST Council proposed a simpler registration regime. This initiative aims to streamline the registration process, making it easier for small enterprises to comply with tax regulations. The council also discussed allowing temporary registration for taxpayers, enabling them to make specific payments without the burden of a full registration process.
These changes are significant for small businesses, which often struggle with complex tax regulations. By simplifying the registration process, the council hopes to encourage more businesses to formalize their operations. However, these proposed changes will require amendments to existing laws, indicating that implementation may take time. The council’s commitment to supporting small businesses is a positive step toward fostering a more inclusive economic environment.
Clarifications on Taxation of Used Cars and Other Goods
The GST Council also addressed various clarifications regarding the taxation of used cars and other goods. It was decided that all used cars, including electric vehicles, will be subject to an 18% GST on the margin of suppliers. This means that while individual transactions between private parties will not incur tax, sales involving companies or used-car dealers will be taxed. This decision aims to create a level playing field in the used car market.
Additionally, the council clarified that ready-to-eat popcorns will attract different tax rates based on their ingredients. Popcorn with salt and spices will incur a 12% tax, while caramelized popcorn will face an 18% tax. The council also ruled that transaction vouchers will not be taxed, as they do not qualify as goods or services. Furthermore, small businesses that pay rent to unregistered landlords will not be subject to GST under the reverse charge mechanism. These clarifications are essential for businesses to understand their tax obligations clearly.
Addressing Natural Disasters and Future Tax Policies
In response to Andhra Pradesh’s request for an additional 1% cess to address flood-related issues, the GST Council established a new Group of Ministers (GoM). This group will explore legal and structural issues related to imposing levies during natural disasters. The goal is to create a uniform policy that can be applied across states in times of crisis. A similar mechanism was previously established for Kerala, and the council aims to build on that experience.
This proactive approach demonstrates the council’s commitment to addressing the challenges posed by natural disasters. By creating a framework for taxation during emergencies, the council can ensure that states have the necessary resources to respond effectively. As climate change continues to impact weather patterns, such measures will be crucial for disaster preparedness and response in the future.
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