GST Council To Meet In Jaisalmer On Dec 21; Key Decisions On Insurance And Rate Cuts Likely

In its last GST meeting on September 9, the council tasked a Group of Ministers to finalise recommendations on GST levy on insurance by October

The GST follows a four-tier structure with slabs at 5 per cent, 12 per cent, 18 per cent, and 28 per cent.

Source : ABPLIVE AI

The 55th meeting of the GST Council, chaired by Union Finance Minister Nirmala Sitharaman, is scheduled for December 21 in Jaisalmer, Rajasthan. The council, comprising state finance ministers, is expected to deliberate on major tax policy changes, including a decision on exempting or reducing GST rates on health and life insurance policies.

Focus on Insurance Premiums

In its last meeting on September 9, the council tasked a Group of Ministers (GoM) to finalise recommendations on GST levy on insurance by October. Following discussions last month, the GoM has proposed significant changes, including:

• Exemption from GST for premiums paid for term life insurance policies and senior citizens' health insurance.
• No GST on premiums for health insurance policies covering up to Rs 5 lakh for individuals other than senior citizens.
• Retaining the 18 per cent GST for premiums on policies exceeding Rs 5 lakh in coverage.

Rate Rationalisation on Common Goods

The council is also expected to discuss recommendations by another GoM on GST rate rationalisation, which aims to simplify the tax structure and adjust rates for various goods. Proposals include:

• Reducing GST on packaged drinking water (20 liters and above) from 18 per cent to 5 per cent.
• Lowering GST on bicycles under Rs 10,000 and exercise notebooks from 12 per cent to 5 per cent.
• Increasing GST on shoes priced above Rs 15,000/pair and luxury wristwatches above Rs 25,000 from 18 per cent to 28 per cent.
• If accepted, these measures could potentially yield additional revenue of Rs 22,000 crore.

Current GST Structure and Need for Reforms

The Goods and Services Tax (GST) follows a four-tier structure with slabs at 5 per cent, 12 per cent, 18 per cent, and 28 per cent. Essential items are taxed at the lower end, while luxury and demerit goods fall under the highest slab, with additional cess applied.

However, the average GST rate has fallen below the revenue-neutral rate of 15.3 per cent, prompting the council to consider rationalising tax slabs and addressing revenue deficits.

Leadership of Key Panels

The GoM on health and life insurance is led by Bihar Deputy Chief Minister Samrat Chaudhary, who also chairs the GoM on rate rationalisation. Their recommendations will play a crucial role in shaping the outcomes of the upcoming meeting.

The December 21 meeting is expected to mark a pivotal moment in GST policy, with significant implications for consumers and businesses alike.