GST Council meet

IN its outcomes, the 54th meeting of the Goods and Services Tax (GST) Council has been a mixed bag. The wait for relief on 18 per cent GST on health insurance and life cover premiums has got longer. The council has chosen the standard response to the growing clamour to reduce the levy. A Group of Ministers has been asked to review the demand. That said, the stiff 50-day deadline for a relook at the tax structure indicates a sense of urgency. There is little to justify the high GST on insurance policies. A political consensus on rationalisation of the tax slabs will help in the quick resolution of the matter, hopefully in the November meeting of the council. A rate cut could significantly lower insurance costs for policyholders.

A welcome course correction is the exemption of GST on research and development grants from the private and public sectors to recognised educational institutions. Several institutions across India had received show-cause notices last month, demanding unpaid taxes. Allegations of tax terrorism had put a question mark on the Centre’s R&D policy push. The relief is expected to boost research programmes and achieve global tax parity. The decision to lower the GST on some cancer drugs from 12 to 5 per cent is in line with the Budget announcement on lower customs duty.

GST collections have risen steadily after the Covid-led dip. There’s a perception, and not without reason, that both the Centre and the states are averse to changing the taxation structure when revenues are healthy. The multiplicity of slabs runs contrary to the aim of streamlining the complex taxation system. An organic tax readjustment based on positive or negative end results is essential.