Union Finance Minister Nirmala Sitharaman with Minister of State Pankaj Chaudhary at the 55th meeting of the GST Council, in Jaisalmer.
| Photo Credit: PTI
A GST Council meeting on Saturday (December 21, 2024) postponed a decision on reducing taxes on health and life insurance, while the much talked-about GoM recommendation of rate rejig in 148 items was not tabled before the Council.
Some members of the Council, chaired by Union Finance Minster Nirmala Sitharaman and comprising her state counterparts, felt that more deliberations were required before a final decision could be arrived at with regard to insurance taxation.
Bihar Deputy Chief Minister Samrat Chaudhary, who heads the panel on GoM on insurance, said one more meeting is required to take a call on taxation of group, individual, senior citizen’s policies.
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“Some [Council] members said more discussions required. We [GoM] will meet in January again,” Mr. Chaudhary told reporters here.
Besides, the report of the GoM on rate rationalisation, which had recommended tweaks in 148 items, was not tabled before the Council.
“We will submit the GoM report on rate rationalisation in next meeting of Council,” said Mr. Chaudhary who is the convenor of the panel.
The ongoing Council meeting will also deliberate on bringing Aviation Turbine Fuel (ATF) in Goods and Services Tax fold.
Several proposals of Fitment Committee, comprising officials from the Centre and states’ GST departments 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% (without input tax credit), from the current 18% (with ITC).
It is likely to have proposed a rate hike on sale of used EVs as well as small petrol and diesel vehicles to 18% from the current 12%. This hike would bring used and old smaller cars and EVs at par with old larger vehicles, according to sources.
Also, the Group of Ministers (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.
The GoM on insurance had recommended exempting insurance premiums paid for term life insurance policies from GST. Also premium paid by senior citizens towards health insurance cover has 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 ₹5 lakh is proposed to be exempted.
However, 18% GST will continue on premiums paid for policies with health insurance cover of over ₹5 lakh.
The GST rate rationalisation GoM report, which has suggested rate tweaks in 148 items, was not tabled before the Council and would be taken up in next Council meeting.
The GoM earlier this month had arrived at a consensus to hike tax on sin goods, like aerated beverages, cigarettes, tobacco and related products, to 35% from the present 28%.
Currently, GST is a four-tier tax structure with slabs at 5, 12, 18 and 28%. Luxury and demerit goods are taxed at highest bracket of 28%, while packed food and essential items are at the lowest 5% slab.
The GoM had also decided to propose rationalising tax rates on apparel. As per the decision, ready-made garments costing up to ₹1,500 would attract 5% GST, those between ₹1,500-10,000 would attract 18%. Garments costing above ₹10,000 would attract 28% tax.
Currently, garments costing up to ₹1,000 attract 5% GST, while those above that attract 12%. The GoM also proposed hiking GST on shoes above ₹15,000/pair from 18% to 28%. It also proposed hiking the GST rate on wrist watches above ₹25,000 from 18% to 28%.
The GoM had proposed reducing GST on packaged drinking water of 20 litre and above to 5% from 18%, and reducing tax rate on bicycles costing less than ₹10,000 to 5%, from 12%. Also, GST on exercise notebooks would be reduced to 5% from 12%.
Published – December 21, 2024 12:46 pm IST