GST Council Meeting Today: GST Exemption on Insurance Levy Expected
The GST Council is set to hold its 55th meeting today, November 21, 2024, in Jaisalmer, Rajasthan. Chaired by the Union Finance Minister and comprising state finance ministers, the council will discuss key issues, including GST exemption on insurance premiums and revisions to GST rates for essential and luxury items.
Proposed GST Exemption on Insurance Premiums
A significant agenda point for the meeting is the proposal to exempt GST on insurance premiums for specific categories. These include:
- Health insurance policies for senior citizens.
- Health insurance policies for the general public with coverage up to ₹5 lakh.
However, GST at 18% will continue to apply to insurance policies with coverage exceeding ₹5 lakh. These recommendations were prepared by the Group of Ministers (GoM) on health and life insurance GST.
Proposed GST Rate Revisions
The council will also deliberate on measures to rationalize GST rates to simplify the tax structure.
Reduced GST Rates for Essential Goods
| Item | Current Rate | Proposed Rate |
|---|---|---|
| Packaged drinking water (20 liters or more) | 18% | 5% |
| Bicycles (priced under ₹10,000) | 12% | 5% |
| Exercise notebooks and copies | 12% | 5% |
Increased GST Rates for Luxury Items
| Item | Current Rate | Proposed Rate |
|---|---|---|
| Shoes (priced above ₹15,000) | 18% | 28% |
| Wristwatches (priced above ₹25,000) | 18% | 28% |
GST Slab Structure
The current GST system comprises four tax slabs:
- 5%, 12%, 18%, and 28%.
Essential goods typically fall under the lower slabs (5% and 12%), while luxury and demerit goods are taxed at the highest slab of 28%, often with an additional cess.
However, the average GST rate has fallen below the revenue-neutral level of 15.3%, prompting an urgent need to restructure the slabs. This issue is expected to be a major focus in today’s meeting.
Balancing Revenue and Consumer Relief
The GST Council aims to establish a balanced and practical tax framework that addresses both consumer affordability and government revenue.
- Reduced GST rates on essential items will provide much-needed relief to consumers.
- Higher GST on luxury items is projected to generate an additional ₹22,000 crore in revenue if approved.
Conclusion
The 55th GST Council meeting could bring significant changes to India’s tax framework, focusing on making it simpler and more consumer-friendly while stabilizing government revenues. The outcomes of this meeting will be crucial for shaping the future of GST in India.
