Next GST Council meet in Jaisalmer on Dec 21; lower rates on insurance, everyday items expected

The Goods and Services Tax (GST) council, headed by Union Finance Minister Nirmala Sitharaman, will hold its 55th meeting on December 21 in Jaisalmer. The council, comprising representatives from all states and Union Territories, oversees the implementation of the GST process and makes recommendations on related matters.

This meeting is much-awaited as many are expecting decisions on tax exemption or reductions on health and life insurance premiums.

The council might undertake a rate rationalisation exercise, lowering GST for many common-use items from the 12% slab to the 5% as per the recommendations by a panel of state ministers.

"The 55th meeting of the GST Council will be held on 21 December 2024 at Jaisalmer, Rajasthan," the GST Council said in a post on X.

In the last council meeting on September 9, a group of ministers (GoM) was tasked with finalising its report on GST for insurance by October.

The GoM, which met in October, broadly agreed on exempting term life insurance premiums and health insurance for senior citizens from GST.

Another proposal under consideration is to exempt the GST on premiums for life insurance policies with coverage of up to ₹5 lakh. For policies over ₹5 lakh, 18% GST will continue to be applicable on the premiums paid.

Rate rationalisation

The GoM on rate rationalisation has also suggested the council to rejig taxes on multiple items including packaged drinking water, bicycles, exercise notebooks, luxury wristwatches and shoes. This is expected to result in an additional revenue of nearly ₹22,000 crore annually.

The GoM proposed reducing the GST on packaged drinking water of 20 litres and above to 5% from the previous 18%. If the GoM’s recommendations are accepted by the council, GST on bicycles below ₹10,000 will also be reduced to 5% from 12%.

Additionally, GST on exercise notebooks will be decreased to 5% from 12% and tax on shoes above ₹15,000 per pair will be increased from 18% to 28%. The group also recommended a hike in GST on wristwatches priced above ₹25,000 from 18% to 28%.

The convener of the 13-member GoM on health and life insurance and the 6-member GoM on rate rationalisation is Bihar’s Deputy Chief Minister Samrat Chaudhary.

Tax slabs

The GST framework currently operates on a four-tier structure with slabs at 5%, 12%, 18% and 28%.

Under the GST system, taxes are either exempted on essential items or are levied at the lowest slab. Similarly, luxury items and sin items attract the highest tax slab of 28%.

The average tax rate under GST has fallen below the revenue-neutral rate of 15.3%, which has prompted the need to start discussions on GST rate rationalisation.