Jaisalmer: The 55th GST Council meeting began on Saturday in Rajasthan's Jaisalmer decided to postpone a decision on cutting taxes on health, and life insurance policies, officials said. The meeting chaired by Union Finance Minister Nirmala Sitharaman and comprising state counterparts, decided that some more technicalities needed to be ironed out and tasked the Group of Ministers (GoM) for further deliberations.
Bihar Deputy Chief Minister Samrat Chaudhary said one more meeting of the GoM on insurance is required to take a call on taxation of group, individual, and senior citizens' policies. “Some members said more discussions were required. We (GoM) will meet in January again,” Chaudhary told reporters.
A GoM set up by the Council under Samrat Chaudhary, in its meeting in November had agreed on exempting insurance premiums paid for term life insurance policies from GST. Also, premiums paid by senior citizens towards health insurance coverage have been proposed to be exempted from the tax. Besides, GST on premiums paid by individuals, other than senior citizens, for health insurance with coverage of up to Rs 5 lakh is proposed to be exempted. However, 18 per cent GST will continue on premiums paid for policies with health insurance cover of over Rs 5 lakh.
Union Minister for Finance and Corporate Affairs Smt. @nsitharaman chairs the 55th meeting of the GST Council, in Jaisalmer, Rajasthan, today.
— Ministry of Finance (@FinMinIndia) December 21, 2024
The participants included Union Minister for State for Finance Shri @mppchaudhary, Chief Ministers of Goa, Haryana, Jammu and Kashmir,… pic.twitter.com/MmuPnigO1g
The meeting is also expected to deliberate on bringing Aviation Turbine Fuel (ATF) into the Goods and Services Tax fold.
Several proposals of the Fitment Committee, comprising officials from the Centre and state GST department would come up for review before the Council. One of the proposals include cutting taxes on food delivery platforms like Swiggy and Zomato, to 5 per cent (without input tax credit), from the current 18 per cent (with ITC).
It is likely to have proposed a rate hike on the sale of used EVs as well as small petrol and diesel vehicles to 18 per cent from the current 12 per cent. This hike would bring used and old smaller cars and EVs at par with old larger vehicles, according to sources.
Also, the GoM on GST compensation cess is likely to get a six-month extension till June 2025, to submit their report. The compensation cess regime comes to an end in March 2026, and the GST Council has set up a panel of ministers, under Union Minister of State for Finance Pankaj Chaudhary, to decide the future course of the cess.
Another major item before the Council is the GST rate rationalisation panel's report, which has suggested rate tweaks in 148 items. The GoM earlier this month decided to submit before the Council their recommendation to hike tax on sin goods, like aerated beverages, cigarettes, tobacco and related products, to 35 per cent from the present 28 per cent.
The four-tier tax slab of 5, 12, 18 and 28 per cent under GST will continue and a new rate of 35 per cent is proposed by the GoM only for sin goods. The GoM also decided to propose rationalising tax rates on apparel. As per the decision, ready-made garments costing up to Rs 1,500 would attract 5 per cent GST, and those between Rs 1,500 to Rs 10,000 would attract 18 per cent.
Garments costing above Rs 10,000 would attract a 28 per cent tax. Currently, garments costing up to Rs 1,000 attract 5 per cent GST, while those above that attract 12 per cent.
The GoM also proposed hiking GST on shoes above Rs 15,000/pair from 18 per cent to 28 per cent. It also proposed hiking the GST rate on wristwatches above Rs 25,000 from 18 per cent to 28 per cent.
"Some of the low-hanging fruits in the 148 items that the rate rationalisation panel has suggested may be decided in the meeting. But, no major big-ticket rate rationalisation is expected," an official said.
The GoM had proposed reducing GST on packaged drinking water of 20 litres and above to 5 per cent from 18 per cent and reducing the tax rate on bicycles costing less than Rs 10,000 to 5 per cent, from 12 per cent. Also, GST on exercise notebooks would be reduced to 5 per cent from 12 per cent.
In total, the GoM on rate rationalisation has proposed tax rate tweaks in 148 items to the GST council. "The net revenue impact of rate rejigs will be positive," an official had said earlier. Concerning bringing ATF into GST, the Council is likely to deliberate on the timeline and build consensus among states.
When GST was introduced on July 1, 2017, amalgamating over a dozen central and state levies, five commodities -- crude oil, natural gas, petrol, diesel, and aviation turbine fuel (ATF) -- were included in GST law, but it was decided that it would be taxed under GST at a later date. (With agency inputs).
