'5% on dining, 12% on cancer drugs': Entrepreneur slams GST structure, asks, who is deciding this?

The structure of GST rates has once again come under scrutiny, with many questioning the fairness of its application across essential and non-essential services. Highlighting this issue, entrepreneur Aman Goel, co-founder and CEO of GreyLabs AI, shared his perspective in a viral LinkedIn post on Sunday.

Goel recounted a visit to a fine dining restaurant, where he was surprised by the 5% GST rate on his bill. "We prefer Chef's tasting menu. The amount mentioned for that was Rs 2,900 + taxes per person. In my head, I thought that tax would be 18%. When the final bill came, I was pleasantly surprised to see that the GST amount was just 5%," he wrote.

However, Goel's experience with the GST on health insurance was different. "I renewed my parents' Health Insurance policy today. I thought the tax on the premium amount would be 5%. Turns out it was 18%. The total GST amount was a whopping Rs. 25k. Yes, the premium is high because my parents are senior citizens."

Expressing frustration, he added, "How lame it is that there is lesser tax on fine dining but more tax on Health Insurance, which is a basic necessity for every person! Not sure who is deciding GST slabs, but 18% premium on Health Insurance is tax loot."

Goel also pointed out a 12% GST on cancer medicines. "Look at the medicine invoice attached below. The GST amount is approximately Rs. 24k. By God's grace, I can afford to pay this. But what about those who can't afford the medicine because of the extra tax burden? Don't they have a right to live? Should they die just because the Government wants to tax them so heavily?" he questioned.

The post triggered a conversation on LinkedIn. Mohit Ambani suggested that hotels cannot claim input tax credit which is why the tax was kept lower at 5%. "Hotels cannot take GST input, 5% is direct expenses. Everyone else as manufacturer can take GST input." 

To this, Goel argued, "What restaurants do with the collected GST and whether they get ITC or not is not the problem of the end consumer who ultimately bears the burden of GST."

Another person highlighted, "Higher education has 18% tax as if education is bad." Goel replied, "Education should have 0 tax. It's a basic human right." 

Atul Donde, director at CKP Chamber of Commerce and Industry, pointed out, "5% GST on dining is net tax. It doesn't allow the service provider to claim ITC."

In July this year, Union Minister of Road Transport and Highways Nitin Gadkari requested Finance Minister Nirmala Sitharaman to reconsider the 18% GST on life and medical insurance premiums after receiving a memorandum from the Nagpur Divisional Life Insurance Corporation Employees Union.