In a significant move towards providing relief to patients and businesses, the Goods and Services Tax (GST) Council has announced a reduction in tax rates on cancer drugs and popular food items like namkeen. This decision came after the 54th GST Council meeting, chaired by Union Finance Minister Nirmala Sitharaman, and is aimed at easing the financial burden on consumers and enhancing affordability.
Key Announcements from the 54th GST Council Meeting
1. Reduced GST Rates on Cancer Drugs
The GST Council has lowered the tax rates on essential cancer medications, slashing them from 12% to 5%. This decision is expected to significantly reduce the cost of life-saving treatments, benefiting thousands of patients across the country. The drugs that will see this reduction include Trastuzumab Deruxtecan, Osimertinib, and Durvalumab, which are crucial in the treatment of various types of cancer.
2. GST Relief on Namkeens and Savory Snacks
Another major decision was the reduction of GST on namkeens and savory food items. The tax rate on these popular snacks has been reduced from 18% to 12%, which will likely bring down prices and make them more affordable for consumers. This change is set to be implemented prospectively, meaning it will apply to future sales rather than past transactions.
3. Formation of GoM for Health Insurance Rate Rationalization
The GST Council also announced the formation of a Group of Ministers (GoM) to explore the possibility of reducing GST rates on medical and health insurance premiums. This GoM, headed by the Deputy Chief Minister of Bihar, will present its recommendations by the end of October 2024. The council will meet again in November to deliberate on these recommendations and make a final decision.
4. Extension of Compensation Cess Collection
The council discussed the future of the compensation cess, which is currently set to expire by March 2026. The cess, which was extended to repay back-to-back loans taken by states during the pandemic, will continue to be collected until all outstanding loans and interest are cleared. The council expects to settle the loan repayments by January 2026, leaving two additional months for cess collection before it concludes.
5. GST Exemption for Government-Affiliated Educational Institutions
In a move to encourage research and development, the council has exempted government-affiliated universities and research institutions from paying GST on the supply of research and development services. This exemption applies to institutions established by central or state laws, as well as those that have obtained income tax exemptions. This decision is expected to boost research activities across the country by reducing the financial burden on educational institutions.
Impact and Implication
The decisions made during the 54th GST Council meeting reflect the government's focus on reducing the financial burden on key sectors like healthcare and food. The reduction in GST rates on cancer drugs is a significant step towards making critical treatments more affordable, while the relief on namkeens is expected to benefit both consumers and manufacturers in the food industry.
The formation of the GoM to address GST rates on health insurance premiums is a crucial move, as rising healthcare costs have been a growing concern for many. If the council approves a reduction in GST on health insurance, it could lead to lower premiums and improved access to medical coverage for a larger section of the population.
Additionally, the GST exemption for government-affiliated educational institutions will likely encourage more research activities, as these institutions can now receive research funds without the added burden of GST.
With these major decisions, the GST Council has shown a clear intent to address the financial challenges faced by consumers and businesses alike. The coming months will see further developments, especially with the GoM's recommendations on health insurance and the future of the compensation cess.
Overall, the 54th GST Council meeting has laid the groundwork for important changes that could have a lasting impact on key sectors of the Indian economy.