The Goods and Services Tax (GST) Council has announced a reduction in tax rates on essential items. The 54th GST Council meeting, chaired by Union Finance Minister Nirmala Sitharaman, concluded with decisions that are expected to have a positive impact on the economy.
Reduced GST Rates on Cancer Drugs and Namkeen
One of the major highlights of the meeting was the reduction in GST rates on cancer drugs. The tax rate on these life-saving medications has been slashed from 12% to 5%. This decision is expected to make cancer treatment more affordable for patients across the country.
In addition, the GST rate on namkeens and other savory food items has been reduced from 18% to 12%. This move is likely to benefit both consumers and small businesses in the food industry.
Formation of Group of Ministers (GoM) on Health Insurance
The Council also decided to form a Group of Ministers (GoM) to examine the possibility of reducing GST rates on medical and health insurance. The GoM is expected to submit its recommendations by the end of October 2024, with the Council set to review and finalize the decision in its November meeting.
Compensation Cess Collection to End by March 2026
Another important decision taken during the meeting was regarding the compensation cess. The Council confirmed that the collection of the compensation cess will continue until March 2026. This extension is aimed at repaying the back-to-back loans taken by the government and servicing the interest on them1.
Future Meetings and Decisions
The GST Council is scheduled to meet again in November to discuss the recommendations of the GoM on pending issues. The Council’s decisions are expected to bring significant changes to the tax structure, benefiting various sectors of the economy.
These decisions reflect the Council’s commitment to making essential goods and services more affordable for the public while ensuring the financial stability of the government.
