GST Council Meeting: Exemptions for foreign airlines, rate reductions, and new Groups of Ministers formed

The Goods and Services Tax (GST) Council exempted the import of services by foreign airline companies from related persons or any of their establishments outside India as well as approved flight training courses. It reduced GST rates on certain cancer drugs and helicopter rides barring charters as well as namkeens or savoury snacks.It is setting up two groups of ministers – one to look into GST on life and health insurance premiums and a second to examine the compensation cess. Members also discussed the status report on rate rationalisation by a ministerial panel as well as tax of online gaming.

The exemption provided to foreign airlines will provide significant relief for the sector that was facing a tax demand of about ₹39,000 crore.

Regularisation of Tax Notices

Educational institutions set up under state and central laws and those exempt from income tax won’t have to pay GST on research and development grants.

This will regularise the existing show-cause notices issued to seven institutions, including IITs, by the Directorate General of GST Intelligence (DGGI) on “as is where is” basis.

The finance minister clarified that the tax notices sent to the institutions were merely an interpretational issue. “The issue of research related funds going to institutions and notice which had gone to seven such institutions was not an attempt at tax terrorism and I say this with certain responsibility,” union finance minister Nirmala Sitharaman said, adding that the matter was flagged by Prime Minister Narendra Modi himself recently.

Briefing reporters on the outcome of the 54th GST Council meeting on Monday, Sitharaman said it had mandated a group of ministers (GoM) to look into the GST on life and health insurance premiums. The GoM has been asked to submit its report by October end, she said, adding that the issue would then be taken up at the November meeting of the council. The GoM will be headed by Bihar deputy chief minister Samrat Choudhary, who also leads the panel on GST rate rationalisation. The issue of taxation of insurance premiums had come up in parliament with opposition members asking that they be exempted from GST.

First GST meeting since PM Modi’s third term

This was the first meeting of the GST Council after the formation of the new government at the Centre in June. The GST Council also decided to set up a GoM to decide on the roadmap for the compensation cess beyond March 2026 and will take a call on the additional ₹40,000 crore collected after adjusting for back-to-back loans taken by the states and interest.

The minister said a committee of secretaries headed by additional secretary, revenue, will be formed on integrated GST, which is currently facing a negative balance. It will look into ways to retrieve the money from states.

Other decisions

The council approved the introduction of B2C e-invoicing to facilitate consumers on a voluntary basis in select states. It also decided to bring renting of commercial property by unregistered persons to a registered person and supply of scrap under the reverse charge mechanism (RCM) under GST to prevent revenue leakage.