The 55th GST Council meeting commenced in Jaisalmer on Saturday, with several key proposals on the agenda, including potential tax rate reductions for health and life insurance and a review of rates on 148 items. The meeting, chaired by Union Finance Minister Nirmala Sitharaman, also includes state counterparts and is expected to address various issues, including the inclusion of Aviation Turbine Fuel (ATF) under the Goods and Services Tax (GST) regime.
One of the major items being discussed is the GST rate on health and life insurance. A Group of Ministers (GoM), led by Bihar Deputy Chief Minister Samrat Chaudhary, had previously proposed exempting insurance premiums for term life policies from GST. Additionally, premiums paid by senior citizens for health insurance are proposed to be exempt from GST, along with premiums for health insurance policies covering up to Rs 5 lakh. However, 18% GST is expected to continue on premiums for policies with coverage exceeding Rs 5 lakh. A final decision on these proposals is anticipated during the meeting.
Further, several proposals from the Fitment Committee are under review, including a reduction in taxes on food delivery platforms like Swiggy and Zomato, from 18% (with input tax credit) to 5% (without ITC). The Council is also considering a rate hike on the sale of used electric vehicles (EVs) and small petrol and diesel vehicles, raising the GST rate from 12% to 18%, bringing them in line with larger used vehicles.
The GoM on GST compensation cess is likely to be granted a six-month extension until June 2025 to submit their report. The current GST compensation cess regime is set to end in March 2026, and the Council has formed a panel, led by Union Minister of State for Finance Pankaj Chaudhary, to decide on the future of the cess.
Additionally, the GST rate rationalisation panel’s report will be discussed, with recommendations to raise taxes on sin goods like aerated beverages, cigarettes, tobacco, and related products to 35% from the current 28%. The Council is also considering changes to the tax rates on apparel, with proposed rates of 5% for garments costing up to Rs 1,500, 18% for those between Rs 1,500 and Rs 10,000, and 28% for garments above Rs 10,000. Similarly, shoes above Rs 15,000 and wristwatches above Rs 25,000 may see a GST hike from 18% to 28%.
While some of the proposals may be decided during the meeting, no major changes in tax rates are expected. Telangana Deputy Chief Minister Mallu Bhatti Vikramarka expressed his views, stating that the taxation system should be flexible and not burden the people, and his state would present its stance during the meeting.
Other notable proposals include reducing the GST on packaged drinking water (20 liters and above) to 5% from 18%, and lowering the tax rate on bicycles costing less than Rs 10,000 and exercise notebooks to 5% from 12%.
