Express view on GST: Issues left unaddressed, council needs to provide resolutions

Indian express News: The 54th GST council meeting made some important tax changes. Some cancer drugs, including Trastuzumab Deruxtecan, Osimertinib, and Durvalumab, saw a decrease in their tax from 12% to 5%. Tax on expanded products was reduced from 18% to 12%. The Council also exempted research and development GST collection given to universities and institutions from income tax. It is believed the Council may also reduce taxes on health and life insurance. A team of ministers will discuss this later, and we should hear about their decision in October or November.

Union Minister Nitin Gadkari sees this good move, as an 18% GST on insurance is like taxing life's unpredictability. Some details, though, need clarification. The GST meet compensation cess was initially designed to help states if they lost income, promising to fill the gap. It was supposed to end in June 2022, but continued until March 2026 to pay off loans for the Covid shortfall. However, given the quick pace of collections, the repayment could happen sooner.

With the specific purpose of the cess completed, it's unclear if it will continue. If it does, how will that look? And how will the money be divided? This is something that the newly-formed minister team must figure out. Then there's the issue of changing rates. Some people believe the existing tax structure should stay. However, others feel the multi-slab structure and compensation cess add unnecessary complexity that hinders business. A GST council meet proposal has even been floated to merge the 12% and 18% slabs. This, along with reviewing the items in each slab to address criticisms, should be considered in the course the rate rationalization exercise. Revenue neutrality is one more thing that needs to be looked into. The Group of Ministers on rate rationalization will have their next meeting in September.