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The Group of Ministers (GoM) on life and health insurance has discussed four options regarding tax treatment on premiums paid towards both policies, at its meeting in New Delhi on Saturday. At present, 18% GST levied on life and health insurance premiums.

Most of the panel members of the GoM led by Bihar Deputy Chief Minister Samrat Chaudhary pitched for “full exemption” on both the policies premiums, according to people aware of the developments. While a few panel members suggested to reduce the rate to 5% from current 18% on life insurance without input tax credit.

The  ministerial panel to submit its recommendation to GST Council by October 31. Final call to be taken by the Council when it meet next.

The all-powerful Council has taken up the matter, in the Sep Council meeting, following the huge political debate over the 18% GST levied on life and health insurance premiums. Several political leaders, including Union Minister of Road Transport and Highways Nitin Gadkari, requested Finance Minister Nirmala Sitharaman to remove the GST.

The panel learnt to have discussed the revenue implication in various options suggested by Fitment Panel—comprising revenue officials of centre and states.

Some of the options including a full exemption for all health insurance premiums and reinsurance, or a reduction in the GST rate from 18 per cent to 5 per cent on health insurance services.

Other options discussed includes exempting premiums paid by senior citizens and premiums with coverage up to Rs 5 lakh, or alternatively, only exempting premiums paid by senior citizens from GST ambit.

These proposals could have different financial implications: Rs 3,495 crore, Rs 1,730 crore, Rs 2,110 crore, and Rs 645 crore, respectively.

On life insurance premium, the fitment panel has recommended limiting the exemption to pure-term individual life policies and reinsurers, which could cost Rs 210 crore to exchequer.

An internal estimates suggest that total health insurance premiums in India during FY23 were Rs 90,032 crore, with the individual health insurance segment accounting for Rs 35,300 crore. The government collected Rs 6,354 crore on individual health insurance premiums.

“Tax has been there on medical insurance even before the introduction of GST. There was already a pre-GST tax on medical insurance before GST was introduced. This is not a new issue; it was already there in all the states,” Union Finance Minister Nirmala Sitharaman stated in her reply to the amendments to the Finance Bill, 2024, on August 7.

The GST Portal now has a pre-filled GSTR-3B form, which automatically populates the tax liability from the declared supplies in GSTR-1/GSTR-1A/IFF, and the Input Tax Credit (ITC) from GSTR-2B.

GSTN has been continuously enhancing the GST return filing process to assist taxpayers in filing their returns accurately and reducing manual errors. Moreover, the system generates a detailed PDF for each taxpayer, containing the auto-filled GSTR-3B form, stated the Goods and Services Taxes website.

What is the new facility

Taxpayers now have the option to rectify their inaccurately reported outward supply in GSTR-1/IFF through GSTR-1A, giving them a chance to make necessary corrections before submitting their GSTR-3B. Additionally, taxpayers can use the newly accessible Invoice Management System (IMS) to handle inward supplies and guarantee suitable ITC claims in GSTR-3B. With this system, taxpayers can make informed choices about accepting, rejecting, or awaiting inward supplies.

“It may be noted that tentatively from January 2025 tax period, the GST Portal is going to restrict making changes in auto-populated values in pre-filled GSTR-3B from GSTR-1/1A/IFF or GSTR-2B to further enhance accuracy in return filing system. It is once again suggested hereby that in case any change is required in auto-populated values, the same may please be handled through GSTR-1A or IMS,” stated the GST website.

What is Form GSTR-3B?

Form GSTR-3B is a simplified summary return and the purpose of the return is for taxpayers to declare their summary GST liabilities for a particular tax period and discharge these liabilities, according to the FAQs on the GST website. A normal taxpayer is required to file Form GSTR-3B returns for every tax period.

Who needs to file Form GSTR-3B?

All normal taxpayers and casual taxpayers are required to file Form GSTR-3B.

Where can I file Form GSTR-3B?

Form GSTR-3B can be filed from the returns section of the GST Portal. In the post login mode, you can access it by going to Services > Returns > Returns Dashboard. After selecting the financial year and tax period, Form GSTR-3B, (if applicable), in the given period will be displayed.

By when do I need to file Form GSTR-3B?

For monthly filers, due date for filing of Form GSTR-3B is 20th day of the month following the month (tax period) for which the return pertains.

For quarterly filers, due date for filing of Form GSTR-3B, as notified for different States/UTs, is 22nd and 24th day of the month following the quarter for which the return pertains.

However, due date for filing of Form GSTR-3B can be extended by Government through notification.

How can I file nil Form GSTR-3B?

You can file nil Form GSTR-3B by navigating to Services > Returns > Returns Dashboard. Select the Financial Year and Returns Filing Period and click the GSTR3B tile.

Select Yes for option A ‘Do you want to file Nil return?’. You can file nil Form GSTR-3B by affixing the applicable signature.

Nil Form GSTR-3B can be filed via SMS too.

When will the system generated GSTR-3B be generated?

System generated Form GSTR-3B will be generated and will be available on their GSTR-3B dashboard page on the basis of Form GSTR-1 or Form GSTR-2B (monthly or quarterly frequency), after Form GSTR-1 has been filed by taxpayer and/or Form GSTR-2B has been generated.

Note: Values that are auto-drafted in the system generated GSTR-3B from Forms GSTR-1 and GSTR-2B and previous period GSTR-3B should are not final and are editable by the t ..

Can I edit the values auto-populated from Forms GSTR-1 & GSTR-2B in Form GSTR-3B?

Yes, as of now, the auto-populated values in GSTR-3B are kept editable. However, the tile with the edited field will be highlighted in RED, and a warning message will be displayed in case the values are edited in the following manner:

Goods & Services Tax (GST) on corporate-guarantee from overseas group entity payable only one-time, not periodically, Rajasthan’s Authority for Advance Ruling (RAAR) has held. Experts say though the ruling is in line with the Circular, it poses the challenge of paying the full tax upfront for the entire duration of the guarantee.

“GST under reverse charge mechanism (RCM) is required to be paid at one time and not periodically for guarantee has been issued only once and is valid for a specified period of time without requirement of any periodical renewal (until the final settlement date of loan contract with Bank/Financial Institution),” RAAR said in a recent ruling.

In this respect, AAR found section 13(3) of GST rules as essential to identify the time of supply. Further it elucidated that where no consideration is charged for CG by the service supplier (overseas related party in this case), the time of supply will be date of entry in the books of account of the service recipient i.e. Indian subsidiary and the GST liability is to be paid at one time basis at the time of supply under RCM. In this vein, it clarified that the question of paying GST periodically will not arise as GST is required to be paid at one time for import of service; Also, expounds on the value of supply.

According to Harpreet Singh, Partner (Indirect Taxes) with Deloitte, this advance ruling is in line with the Circular issued earlier where GST needs to be paid only once at the time of issuance of corporate guarantee. But “the challenge for the industry would be to pay full tax upfront for the entire duration of guarantee, that is, if the corporate guarantee is for five years, adopting the valuation rule, tax would need to be paid at 5 per cent, that is, one per cent for each year. This would become more challenging if the guarantee is withdrawn during the tenure of five years, post upfront payment of tax,” he said.

As recommended by the GST Council on October 7, 2023, the parent company’s corporate guarantee to its subsidiary for a bank loan will attract 18 per cent GST. Later, CBIC said in a notification, dated October 27, 2023, that the value of supply of services by a supplier to a recipient who is a related person, by way of providing a corporate guarantee to any banking company or financial institution on behalf of the said recipient, shall be deemed to be one per cent of the amount of such guarantee offered, or the actual consideration, whichever is higher.

This means if the corporate guarantee were ₹100 crore, then ₹18 lakh would be the GST liability. Change will be prospective and it shall have no bearing on transactions executed prior to October 26, 2023, consequently preserving the tax risk associated with past transactions.

Post GST Council meeting last October, it was said that when no consideration is paid by the company to the director in any form, directly or indirectly, for providing a personal guarantee to the bank/ financial institutions on their behalf, the open market value of the said transaction/ supply may be treated as zero. This means there will be no GST if a director provides a personal guarantee for a loan from a bank or any financial institution to their own company.

The GoM on GST discussed merging compensation cess with GST. States suggested no new items should be added during this transition. Compensation cess ends in March 2026. GoM will submit its report by Dec 31. The cess, which finances states’ revenue loss, needs restructuring for its future integration into GST.

The group of ministers (GoM) on GST compensation cess, under Minister of State for Finance Pankaj Chaudhary, on Wednesday discussed merger of compensation cess into GST. States suggested that during the transition of cess, once it is decided to merge with taxes no new goods should be added to the list of luxury, sin and demerit goods.

States were of the view that since the compensation cess ends in March 2026, the only way to restructure it is to merge the levy with the taxes and bring about separate tax rates for the items on which cess is levied currently.

“GST compensation cess is coming to an end. A discussion needed to be done on what will be the future of the cess. Every state has given their views. This was the first meeting,” Minister of State for Finance Pankaj Chaudhary said.

Should it continue as cess or be converted to tax and whether there would be changes in luxury, demerit and sin goods items, Chaudhary said, “Discussion is going on”.

The next meeting of the GoM on compensation cess is in the second week of November.

Sources said all states have suggested merger of taxes under GST, because compensation cess has expired.

“But no new goods will be added. Compensation period has ended and if it has to be brought under GST then it has to be restructured and brought in as taxes,” sources said.

The Group of Ministers (GoM), which includes members from Assam, Chhattisgarh, Gujarat, Karnataka, Madhya Pradesh, Punjab, Tamil Nadu, Uttar Pradesh and West Bengal, will submit its report to the GST Council by December 31.

In the GST regime, compensation cess at varied rates is levied on luxury, sin and demerit goods over and above the 28 per cent tax. The proceeds from the cess, which was originally planned for five years after GST roll-out or till June 2022, was used to compensate states for revenue loss incurred by them post the introduction of GST.

In 2022, the Council decided to extend the levy till March 2026 to repay the interest and the principle amount of the Rs 2.69 lakh crore worth loan taken in the 2021 and 2022 fiscal years to make good states’ revenue loss during Covid years.

With just one-and-a-half year remaining for the cess to end, the GST Council in its 54th meeting on September 9 decided to set up a GoM to decide the future course of the cess.

The Allahabad High Court has held that for initiating proceedings under Section 74 of the Goods and Service Tax Act, 2017, it is necessary for the adjudicating authority to record prima facie satisfaction regarding the assessee having wrongfully availed input tax credit (ITC) by fraud, willful misstatement or suppression of facts.

The Court held that once the proceedings under Section 73 have been closed regarding wrongful availment of ITC, proceedings for the same cannot be initiated under Section 74 without recording prima facie satisfaction regarding wrongful availment of ITC by either fraud or willful misstatement or suppression of facts.

Continue reading “[S.74 GST Act] Adjudicating Authority Must Record Prima Facie Satisfaction Regarding Assessee Wrongfully Obtaining Input Tax Credit: Allahabad HC”

The practice of the GST Department issuing a single Show Cause Notice (SCN) for multiple assessment years has raised significant legal concerns. While this practice may be convenient to the GST Department, it often creates challenges for both the GST Department as well as taxpayers.

In some instances, the GST Department conducts audits spanning for several years and issues a consolidated SCN for all the audit periods. In other cases, when the deadline to issue SCN for a certain year has expired, the GST Department combines that expired period with a valid period in one single SCN attempting to validate the expired period. According to the GST Department, a single SCN can be issued for multiple assessment years as there is no explicit prohibition under Section 73 of the Act 2017.
Continue reading “Legality of Issuing a Single Show Cause Notice for Covering Multiple GST Assessment Years”

Patna: The state commercial taxes department on Wednesday notified the reduction of GST on three medicines—Tratstuzumab Daruxtecan, Onimartinib and Durvalumab—used for the treatment of cancer, and also on extruded salty items. It also freed govt undertakings, research associations, colleges and institutions which conduct research and development with govt or private grant under Section 36 of the IT Act, from the GST.

With a view to preventing tax theft in the trade of scrap metal, the department has also notified the payment of tax by the non-registered and registered persons who deal in the sale and purchase of scrap metal.

Continue reading “Govt cuts GST on three cancer drugs”

The Group of Ministers (GoM) on Goods and Services Tax (GST) rate rationalisation is likely to push for phasing out the 12 percent tax slab by gradually shifting items to either the 5 percent or 18 percent slabs to simplify the tax framework and ease compliance for businesses, people familiar with the development said.

The gradual elimination of the 12 percent slab will consolidate the GST system into a three-tiered structure of 5 percent, 18 percent, and 28 percent rates.

Continue reading “GoM may gradually phase out of 12% GST slab to rationalise rates, sources say”

“But sir, most of GST is paid by the poor in India.” This innocuous comment by a student during a discussion on the state of the Indian economy made me realise the extent to which some data lingers in people’s mind.

The source of this claim was a report, ‘Survival of the Richest: The India Story’, published by the think-tank Oxfam and released at the World Economic Forum. The report claimed 64.3 percent of India’s goods and services tax came from the poorest 50 percent of the population, while the wealthiest 10 per cent contributed a mere 3-4 percent.

This stark portrayal of an unfair tax system made global headlines, influencing media and policy discussions in India—including as a question raised in parliament. Released in January 2023, the figures are still cited at various places and linger on in people’s mind, creating an impression of an unfair taxation system in place.

Continue reading “Taxing truths: Decoding appropriate GST shares”