Jaisalmer: Saturday’s GST Council meeting deferred a decision on tax cuts on health and life insurance, while the much-discussed GoM recommendation of rate hikes on 148 items was not tabled in the council.
Some members of the council, chaired by Union Finance Minister Nirmala Sitharaman and comprising her state counterparts, felt that more deliberations were needed before a final decision on the insurance tax was reached.
Bihar Deputy Chief Minister Samrat Chaudhary, who heads the GoM panel on insurance, said another meeting is needed to take a call on taxation of group, individual, senior citizen policies.
“Some (council) members have said further discussion is necessary. We (GoM) will meet again in January,” Chaudhary told reporters here.
Further, GoM’s report on rate rationalization recommending revision in 148 items was not submitted to the Council.
Chowdhury, the coordinator of the committee, said, ‘We will submit a report in the upcoming meeting of the Council of Ministers regarding the rate justification.
The issue of bringing aviation fuel (ATF) under the purview of goods and services tax will also be discussed in the ongoing council meeting.
A number of proposals from the Fitment Committee, comprising officials from central and state GST departments, will come up for review in the council.
One of the proposals includes cutting tax on food delivery platforms like Swiggy and Zomato from the current 18 percent (with ITC) to 5 percent (without input tax credit).
It has proposed to increase the rate on the sale of used EVs and small petrol and diesel vehicles from the current 12 per cent to 18 per cent. The increase will bring older and older small cars and EVs on par with older larger vehicles, sources said.
Also, the Group of Ministers (GoM) on GST Compensation Cess is likely to extend the deadline by six months till June 2025 to submit its report. The compensatory cess regime expires in March 2026, and the GST Council has constituted a panel of ministers headed by Union Minister of State for Finance Pankaj Chaudhary to chart the future course of the cess.
On insurance, the GoM had recommended exemption of insurance premiums paid for term life insurance policies from GST. Similarly, it is proposed to give tax exemption to the premium paid by senior citizens for health insurance cover.
Also, it is proposed to exempt GST on premiums paid by persons other than senior citizens for health insurance up to Rs.5 lakh.
However, 18 percent GST will continue to be levied on premiums paid for policies with health insurance cover of more than Rs.5 lakh.
The GST rate rationalization GoM report, which suggested rate tweaks on 148 items, was not tabled in the council and will be taken up in the next council meeting.
At the beginning of this month, the Cabinet meeting agreed to increase the tax on aerated drinks, cigarettes, tobacco and related products from the current 28 percent to 35 percent.
Currently, GST is a four-tier tax structure with slabs at 5, 12, 18 and 28 percent. Luxury and essential goods are taxed at the highest rate of 28 percent, while packaged food and essential goods are taxed at a minimum of 5 percent.
The Cabinet had decided to propose rationalization of tax rates on textiles. According to the decision, 5% GST will be levied on ready-made clothes up to Rs 1,500, and 18% on clothes between Rs 1,500 and Rs 10,000. 28% tax will be levied on clothes above 10,000.
Currently, garments up to Rs 1,000 attract 5 percent GST, while garments above that attract 12 percent. The GoM has also proposed an increase from 18 per cent to 28 per cent on footwear above Rs 15,000/pair. It has also proposed to increase the GST rate from 18 per cent to 28 per cent on wrist watches above Rs 25,000.
The cabinet had proposed to reduce the GST on packaged drinking water of 20 liters and above from 18 percent to 5 percent and on bicycles priced below Rs 10,000 from 12 percent to 5 percent. Also, GST on exercise notebooks will be reduced from 12 percent to 5 percent.