The 55th GST Council meeting held in December 2024 brought several significant rate changes and clarifications. Here is a plain-English breakdown of what changed and what it means for your business.
Insurance Premium GST — Relief on the Way
The Council deferred a final decision on reducing GST on health and life insurance premiums, but formed a Group of Ministers (GoM) to present recommendations by January 2025. Current rate of 18% on health insurance remains until then. This is a significant relief measure being actively considered.
Online Gaming — Clarification on 28% Rate
The 28% GST on online gaming (on full face value of deposits) has been upheld. The Council clarified that this applies to all skill-based and chance-based games alike. Companies in this space need to ensure compliance with the revised valuation mechanism.
Aviation Turbine Fuel (ATF)
ATF has not been included under GST in this meeting despite industry requests. It continues to attract state-level VAT, resulting in cascading tax effects for airlines. The issue has been deferred for further deliberation.
Rate Changes on Goods
Several goods saw rate rationalisation — fortified rice kernel moved from 18% to 5%, gene therapy exempted from GST, and black pepper / raisins sold by agriculturalists clarified as exempt. Popcorn sold in cinemas attracted controversy with a multi-tier rate structure being introduced.
Key Compliance Clarifications
The Council clarified that no GST applies on penal charges levied by banks and NBFCs. It also clarified the place of supply rules for data hosting services provided to foreign companies, which has significant implications for IT companies.
What Businesses Should Do
Review your product/service HSN classifications in light of the rate changes. If you are in insurance, online gaming, or BFSI sectors, consult your tax advisor immediately. Update your billing software for any applicable rate changes from the effective date of notification.
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The 55th GST Council Meeting recommended several rate rationalisation measures including changes to rates on insurance premiums, life-saving medicines, and food items. Gene therapy was exempted from GST. Popcorn sold at cinema halls attracted a multi-tier rate structure based on packaging and flavouring. Black pepper and raisins sold by agriculturalists were clarified as exempt. Businesses should review HSN classifications for any rate changes affecting their sector.
Yes. The Council provided several clarifications on ITC eligibility and reversal. Key among these was the clarification that penal charges levied by banks and NBFCs on loan defaults do not attract GST — meaning businesses receiving such charges need not pay GST on the same. The Council also clarified ITC rules for construction services and works contracts. Businesses should review their ITC registers in light of these clarifications.
The GST Council recommended reducing the GST rate on term life insurance premiums — moving towards full exemption to make pure protection covers more affordable. Health insurance premiums, particularly for senior citizens and for policies up to ₹5 lakh coverage, were proposed for a reduced rate. These changes require notifications to be issued by the GST Council and become effective from the date of notification, not the date of the Council meeting.
The GST Council is a constitutional body under Article 279A that makes recommendations. These recommendations become law only after the Central Government issues a notification under the CGST Act and respective state governments issue parallel notifications under their SGST Acts. Businesses should implement changes only from the effective date mentioned in the official notification — not from the date of the Council meeting. Shahi & Co. monitors all GST notifications and advises clients on the exact implementation date.