Nirmala Sitharaman to Lead 55th GST Council Meeting in Jaisalmer Today

The 55th GST Council Meeting scheduled to be held today under the chairmanship of Finance Minister Nirmala Sitharaman is one of the much-discussed occurrences in India’s economic calendar. Scheduled to take place in the beautiful city of Jaisalmer, several crucial questions concerning the current GST regime will be discussed, such as rate adjustments or reduction of the health insurance and the aviation turbine fuel.

Such discussions can cause a huge change in sectors like healthcare and aviation that are key to the countries development. In this blog, let’s explore more about the key decisions being anticipated at the 55th GST Council Meeting: Reduction in GST on Health Insurance Premiums and ATF, etc. Further, we will see how these decisions impact business, customers, and the whole economy in general.

Introduction to the GST Council and Its Role

The GST Council is the policy making body as far as the tax system under the GST structure is concerned. This body is a huge one being made of Union Finance Minister Nirmala Sitharaman in addition to the state finance ministers and among its most significant duties is in setting of the tax rates and all other aspects of the indirect tax regime about which the GST is all about. It convenes from time to time to deliberate on issues of concern regarding the GST rates, the exempted goods and services and other issues concerning the structural framework of the tax. This is the fifty fifth weekly meeting and it promised some changes for today’s session.

Focus on Health Insurance: A Rate Cut in the Works?

Possibility of rate cut on health insurance premiums is one of the most discussed topics on the list of the topics for the 55th GST Council Meeting. Currently, health insurance premium is subject to Goods and Services Tax 18%. This has been a concern to consumers especially due to increased health costs and economic hardships due global COVID 19 pandemic. Since GST has a one nation, one tax model, lowering the GST rate on health insurance can act as an incentive for increased individuals to embrace health insurance plans, plans down the common man.

The change may effect a positive change among millions of policyholders and simplify health care financing, not feel so punitive. The issue of rate cut is being discussed by the insurers, consumer rights organizations and the health care providers. It could also be more appealing to cut down the set of rates on GST to get lower health insurance premiums in a country where a majority of its population has still not signed up for a health insurance plan.

The Significance of Health Insurance in India

Medical insurance and related insurance premium plans have naturally grown to be the part and parcel of financial planning in India, particularly in the backdrop of soaring costs of cash intensive medical procedures.Today, health problems become more alarming and having health insurance is a have to rather than a nice to have when medical emergencies occur.

However, the cost of obtaining health insurance premiums remains relatively high for many, and this puts them off from being able to afford the right level of insurance. Currently, the government came up with some policies aiming at ensuring that people acquire insurance, by decreasing the proportion of the GST which is chargeable on the health insurance. This might increase the overall number of people with health insurance in India; therefore improving the health of its people anywhere from the country.

ATF (Aviation Turbine Fuel) – A Key Focus of the GST Council Meeting

The other big issue that has been proposed to be under discussion at the GST Council Meeting is the excise tax on aviation turbine fuel. The aviation industry has been among the most affected across the globe by the COVID-19 pandemic. Since airlines are still reeling under the recent upheaval in the economic situation, the GST on ATF could help ease the impact a bit. At the moment, ATF is subjected to 18 percent GST tax rate.

However, the aviation industry has been pressurizing the government to reduce this tax with the aim of facilitating cutting of costs. High cost of ATF is a big challenge to airlines especially because fuel prices are on the rise at the global market. Moreover, a reduction in the GST rate on ATF could also cut down the total supply chain costs of the airline and in turn the operational costs and extend the refunds to the customers by means of cheaper tickets.

This could also foster the growth of the aviation industry by increasing the passengers’ demand and consumption on domestic travel. It could also have positive effects on job generation and economic development in the society including during the recovery from the effect of the current pandemic.

The Impact on the Aviation Industry

Aviation industry is a major revenue generator in India and creates millions of employment and their dependents through related industries including tourism, hotels, and transport. However, the sector has not been recovering fast from the financial effect of the pandemic mostly due to forced closures. Operating costs especially the cost of aviation fuel have been put forward as a challenge that has WHO Airlines which means that the major operating cost is borne by airlines.

Lowering GST rate on ATF could be beneficial for the struggling airlines as well as for the consumers as it would bring the fares under GST ambit lower. In the long run this might help more people to use aircraft transport thus improving the aviation industry and other economic sectors.

What Are the Expected Benefits of the GST Rate Cut?

The several rate cuts to GST proposed below are likely to be some of the benefits for the consumers and the economy as a whole.

Lower Insurance Premiums: The income that ATM can generate can persuade the government to bring down the current GST rate on health insurance premiums. It may, therefore, lead to more individuals seeking insurance cover hence families and individuals have a cushion in case they are encounter a medical bill.

Boost to the Aviation Sector: Reducing taxes on ATF would restore air carriers’ operating expenses. Thus, they can afford to sell tickets at a cheaper cost, largely increasing the rate of utilisation. It could increase the number of tourists, generate employment and ensure faster revival of the sector post COVID.

Encouraging Investments: They believed that reduction of taxes and cheap health insurance would foster domestic and foreign investments to the healthcare and aviation industries. As the competitive environment of the business increases both the industries may add products and have enhanced service delivery .

Economic Recovery: Even in health insurance and aviation fuel or any other basic needs, the taxes could be lowered so that a general improvement in the economy could begin. Other sectors that depend on them will also benefit from such as when more individuals purchase into health insurance, or many people use airline services.

Challenges and Considerations

Health insurance and ATF could both be potential positives, but there are issues that must be faced In fact.

Revenue Impact: This may have the effect of reducing government’s revenue if the two previously high taxed, namely; health and AT healthcare insurance as well as ATF are reduced through a lower GST. Although it will apply pressure for the growth of definite branches, for this the government has to reboot the rates on hard currency, and it could be more dangerous.

Industry Lobbying: The health insurance industry together with the aviation industry has for sometime now been advocating for tax reduction. But any decision will entail a very conscious positioning of its implications on the structure of taxes and other sectors of the economy.

Global Factors: Volatility in the global oil prices as well as changes in the international economic environment can impact the results yielded by the proposed tax reductions. For instance, the increase of fuel prices on the global market impacts the solvability of the aviation industry even if there is a decrease in the GST on ATF.

Conclusion: What to Expect from the 55th GST Council Meeting

The 55th GST Council Meeting to be held in Jaisalmer will see major initiatives that could provide a fillip to both healthcare and aviation segment. Cuts to health insurance and ATF have potentialities for consumers, businesses, and economy implications. If these cuts have to be made, it will lead to decreased consumer prices, increase in industry growth and economic revival post pandemic.

While Nirmala Sitharaman continues leading and participating in the GST Council today all ears will be on the results of such important discussions. In the health care industry, today’s decisions may affect tomorrow’s structure of India’s health care system and similarly, implication may be seen in the aviation industry and overall economy of the country.

Source : Buzz Artical & HSUX Solutions