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Union Finance Minister Nirmala Sitharaman is likely to meet her State counterparts on December 21-22 for pre-budget consultations and meeting of the GST Council, an official said. The meeting assumes significance as State Finance Ministers will present their recommendations for the 2025-26 Budget to be unveiled on February 1, 2025. Also Read: What is cheaper and costlier after the latest GST Council meeting? The 55th GST Council meeting would be held during one of these two days in which the much-awaited decision on exemption or lower GST rate on health and life insurance would be taken.
The Council may also take up some rationalisation exercise and reduce tax rates on a host of common items from 12% to 5% as per the recommendations of a panel of State Ministers. Also Read: No friction between Centre-States on GST; federal structure should be respected: Nirmala Sitharaman “The two-day meeting is slated to take place in Rajasthan, either in Jaisalmer or Jodhpur,” the official added. Last month, the group of ministers (GoM) on health and life insurance GST broadly agreed on exempting insurance premiums paid for term life insurance policies, and senior citizens' health insurance from GST.
Also, 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 ₹5 lakh. The GST Council in its 54th meeting on September 9 had tasked the GoM to finalise the report on GST levy on insurance by October-end.
Separately, the GoM on GST rate rationalisation has also suggested that the GST Council rejig tax rates on a host of goods, including packaged drinking water, bicycles, exercise notebooks, luxury wristwatches, and shoes. This rate rejig is expect to result in revenue gain of about ₹22,000 crore. The GoM on rate rationalisation proposed reducing GST on packaged drinking water of 20 litre and above to 5% from 18%.
If the GoM's recommendation is accepted by the GST Council, GST on bicycles costing less than ₹10,000 will be reduced to 5% from 12%. Also, GST on exercise notebooks will be reduced to 5% from 12%. The GoM also proposed hiking GST on shoes above ₹15,000/pair from 18% to 28%.
It also proposed hiking GST on wristwatches costing above ₹25,000 from 18% to 28%. Bihar Deputy Chief Minister Samrat Chaudhary is the convenor of the 13-member GoM on health and life insurance and 6-member GoM on rate rationalisation. Currently, GST is a four-tier tax structure with slabs at 5, 12, 18, and 28%.
Under GST, essential items are either exempted or taxed at the lowest slab, while luxury and demerit items attract the highest slab. Luxury and sin goods attract cess on top of the highest 28% slab. The average GST rate has fallen below the revenue-neutral rate of 15.
3%, prompting the need to start discussions on GST rate rationalisation. Published - November 12, 2024 01:10 pm IST Copy link Email Facebook Twitter Telegram LinkedIn WhatsApp Reddit state budget and tax / economy, business and finance / business (general).
