LUCKNOW, MONDAY, MARCH 24, 2025 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE READ TO LEAD InsuranceGSTlikely tobeslashedto5% ● Revenue loss to govt pegged at `36,000 crore PRIYANSH VERMA New Delhi, March 23 THE GOODSAND ServicesTax (GST) Council may settle for a reduction in the tax rates on health and life insurance insteadofafullwaiver.TheGST, which now applies at 18% on gross premiums, is likely to be reduced to 5%,while retaining the facility of input tax credit, according to official sources. Most members of the group of ministers (GoM) that reviewed tax rates for health and life insurance favoured a tax cut, noting that a full exemption could jack up costs as input taxes would get accumulated for the insurers. In fact,a section of the insurance industry reckons that even a 5% taxwill result in non-utili- TAX RELIEF ■ It is estimated that a complete exemption will cost the exchequer Insurance industry has sought a GST rate of at least ■ 12%, saying a lower rate will put companies at a cost disadvantage ■ It says a 5% tax will result in non-utilisation of input tax credit `50,000 cr annually ■ Between FY22 Firms say input tax paid constitutes and FY24, total GST collected from health insurance of their cost on premiums stood term plans at `21,000 crore ■ 8-11% sationoftaxcredit,andpitches for a 12% output tax liability. “We are not in favour of completelyexempting life and health insurance premiums from GST, but wish to reduce the rates.We have finalised our report…now it’s up to the Council to decide,” a member of the GoM told FE. Another membersaid,“A5%GSTonlife & health insurance premiums would reduce the burden on policyholders.”The GST Council is likely to meet in April or May to deliberate on the issue. The Council will also consider a report prepared by the Insurance Regulatory and Development Authority of India (Irdai) on taxation on insurance premiums. Continued on Page 16 Jewellers face margin calls RAJESH BHAYANI Mumbai, March 23 IT’S A DOUBLE whammy for the gold jewellery industry. Already reeling under loss of demand due to high prices — 15.7% increase since January — the industry is now facing liquidity crunch due to margin calls from banks on their metal loans. Almost one-fifth of the jewellery industry is dependent on gold metal loans from banks to manage liquidity and inventories.That is, they borrow gold bars from banks, make jewellery and pay back banks from sale proceeds.The difference between the purchase and sale price serves as a natural hedge. Gold metal loan (GML) is a well-established practice,as it allows jewellers to borrow gold from banks for 180 days instead of making an outright purchase.The total market size of GML in India is estimated at 120 tonne. Shekhar Bhandari, president, Kotak Bank, said, “Due »INSIDE« VOL 18 NO. 94, 18 PAGES, `12 P U B L I S H E D F R O M : A H M E D A B A D , B E N G A L U R U , C H A N D I G A R H , C H E N N A I , H Y D E R A B A D , K O C H I , K O L K ATA , L U C K N O W, M U M B A I , N E W D E L H I , P U N E GSTCOUNCILMAYTAKE DECISIONATNEXTMEET WWW.FINANCIALEXPRESS.COM MSME loan limit raised to `10 cr FMCG prices may go up again THE CENTRE HAS urged banks to extend loans of up to `10 crore to MSMEs through the digital footprint-based credit assessment model, raising the limit. ■ PAGE 2 FMCG FIRMS ARE likely to raise prices again in the coming weeks, particularly for products that rely heavily on palm oil which remains expensive. ■ PAGE 4 LOSING SHEEN Gold metal loan allows jewellers to borrow gold from banks instead of buying ■ The total market size of GML in India is estimated at ■ 120 tonne ■ Gold lease rates have doubled from 3-4% to over 6% ■ Tight liquidity in global bullion market driving surge in gold lease rates to rising prices and slowdown in sales, jewellers are facing liquidity issues due to margin calls. However, this is a temporary issue, as once consumers come to terms with higher prices and demand comes back due to wedding and other festivities, things will improve.” Continued on Page 16 Investorssoundalarmonstartup‘AIwashing’ ● In 60-70% cases, basic rule-based system touted as machine learning S SHANTHI Bengaluru, March 23 INFOSYS CO-FOUNDER NARAYANAMurthy’sconcerns over “AI washing” — inflating artificial intelligence credentials to attract funding — have found resonance among the venture capitalist community. STRICTER SCREENING ■ Many VCs now seek increased due diligence budgets by domain experts, either in-house or through external consultants, to validate AI claims in the past year due to AI-washing concerns ■ A few firms have established dedicated committees to scrutinise AI-heavy startup pitches ■ Some VC firms have 20-50% “I think somehow it has become a fashion in India to talk ofAI for everything.I have seen several normal, ordinary programmes touted as AI,” Murthy remarked at a recent conferenceinMumbai.Several VC firms told FE that many startups do indeed falsely claim leveraging AI in their products and services. One such glaring example involved an early-stage SaaS startup pitching to VC firm Auxano Capital. The startup claimed to use AI-powered medical diagnosis, but upon further scrutiny, investors found that human experts were manually analysing the data, with no functional AI models in place. Another startup claimed using AI for automation,yet it was merely a basic rule-based system with no actual machine learning (ML) capabilities. Another AI-powered chatbot pitch turned out to be nothing more than manually programmed responses with no real natural language processing (NLP) or learning mechanism. Continued on Page 16 Getting here has been hard. Going ahead doesn’t have to be. Your achievements have been challenging, but the journey ahead doesn’t have to be. Our Portfolio Management Services (PMS) & Alternative Investment Funds (AIF) are designed to help with your next investment milestone. Begin Your Next PMS & AIF Offerings Equity | Private Credit | Real Estate www.iciciprualternates.com ICICI Prudential Alternate Investments is the brand that envelops Portfolio Management Services and Alternative Investment Funds and is managed by ICICI Prudential Asset Management Company Limited (IPAMC). 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