Understanding the Forthcoming GST Council Meeting and Its Implications for Insurance and Online Gaming

The meeting of the GST Council is of such importance that it brings together state and central officials to discuss and decide on various taxation issues affecting the economy. Among several pressing matters, this meeting is set to take up issues of the taxation of insurance premiums and regulation of online gaming. The following blog tries to go into the implications of these discussions and what they mean for consumers and businesses a like.
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Issues to feature in the Agenda of the GST Council Meeting

At least half a dozen contentious issues stare the GST Council as it gears up for its 54th meeting. Of them, it is proposed to decide the tax rates on health and life insurance premium. The present rate of tax on these premiums is at 18 percent, which, according to most stakeholders is on the higher side, particularly as regards premiums related to health insurance.
Besides, Union Minister Nitin Gadkari has also raised the tax burden on life and health insurance. According to him, they should be considered a necessity and not luxury. This is from the larger concern that in India, insurance penetration is low compared with the rest of the world.

Taxation of Insurance Premiums

The 18% GST on health and life insurance premiums has duly invited serious debate. Many strongly feel that the GST ought to be reduced, if not exempted. This is the simple logic: once the taxes levied on health insurance turn out to be less expensive, more Indians will buy health insurance, hence improve their health condition. Such a move shall improve the overall health scenario in India, too.

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•possible Tax Cuts: Exemption or a reduction in the GST slabs is likely to be considered for senior citizens or economically weaker sections.

• Impact on Insurance Companies: Reduction in the burden of GST would provide scope to insurance companies for making premiums more competitive and hence may increase the number of customers.

• Revenue Implication: The policymakers have to gauge the revenue loss that may arise from any reduction in tax rates and its consequences on state finances.

Online Gaming Taxation

Another issue seen to be considered is a major one: the taxation of online gaming. This is currently 28%, one of the biggest in-country, leaving serious concern over just how much longer it can remain sustainable for the gaming industry to reach out to more people amidst such strong financial pressure.
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Current Tax Structure

Currently, GST is paid on the gross value of every bet and wager placed online, rather than just the revenue earned through those games by the companies offering them. This has raised many calls for a re-evaluation in how these firms are taxed, as the great majority support taxing only the net revenue.
• Valuation Issues: The consumed debate is centred on whether the tax has to be collected on the amount wagered or just the revenue. In this regard, the latter serves as an important differentiation that needs to take into consideration for industry sustainability.
ʉۢ Impact on Revenue: Changing the tax regime may provide the government with additional revenue while developing the industry.
Legal Issues: The issue is also subjudice in the courts of law, as there are various litigations pending before the Supreme Court that could have an impact on the final determinations by the GST Council.
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Consumers’ Perspective

The decisions taken by the GST Council may have significant ramifications on consumers. A reduction in GST on health insurance will make policies more affordable for the consumers, which might enhance demand and, subsequently, health outcomes and market strengthening.
Similarly, a change in the taxation of online gaming will either promote or curb the growth. A favorable tax environment will attract more players to participate in online gaming, while unfavorable tax rates will drive players toward dark markets.

Consumer Education and Awareness

Consumers should know their options as these discussions go on in insurance and in online gaming. A capability to fathom the tax implications would make consumers make better financial decisions and have them too fight for a policy that is more favorable.
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• Insurance Literacy: Consumers shall be made aware of the type of available insurance, the benefit accruable from coverage, and how taxes affect premiums.
There are Gaming Regulations: Essentially, awareness of the legal landscape on online gaming would help consumers navigate the risks involved and make suitable choices. Conclusion The GST Council meeting that is due can be expected to take up some very key issues affecting the interests of both consumers and businesses in the country. By targeting insurance premiums and online gaming for taxation, the council can take a step towards making essential services more affordable and spur growth in the digital economy.
With stakeholders around the world awaiting the results of this meeting, it is equally important to consider potential changes and prepare for any consequences that may ensue. The final decisions may be on easy access to insurance or to provide the right atmosphere to gaming. In any case, they may herald a more broad-based strong economy in India.

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