GST Council meet on key issues today

A meeting of the Goods and Services Tax (GST) Council will be held on Monday. It is expected to have a discussion on rates rationalisation, compensation cess, rate reduction for hybrid vehicles, taxation on life insurance premium and addressing inverted duty structure in textiles and pharmaceuticals, said sources privy to the development.

It is expected clarity regarding GST on foreign branch office (related party) transactions, including for airlines, shipping lines and IT giants, will be provided. Also, a review of the taxation regime introduced in October 2023 for the online gaming sector is overdue.

The council will discuss rates rationalisation, although insiders feel this may not find any conclusion. “While businesses are anticipating changes on this front, there is little possibility of any recommendations in the meeting. Tinkering with rates requires a deeper analysis, study and report from the GST Rate Rationalization Committee constituted in June, which is still in the works,” said Ranjeet Mahtani, Partner, Dhruva Advisors.

Also, there has been tremendous clamour for a reduction on GST rate on insurance premium. Both the Centre and states stand to lose revenue if the rate is reduced. A compromise formula is being discussed to lower the rate.