55th GST Council Meeting: From tax cut on insurance premium to ATF inclusion, check key expectations

The GST Council, chaired by Union Finance Minister Nirmala Sitharaman, will convene its 55th meeting on Saturday, December 21, to deliberate on key tax rate changes, including possible reductions on life and health insurance premiums and hikes on luxury items such as high-end wristwatches, shoes, and apparel.

The Council is also likely to discuss the creation of a new 35% tax slab for sin goods, including aerated beverages, cigarettes, and tobacco products, reported PTI quoting people aware of the matter. Among key proposals is the inclusion of Aviation Turbine Fuel (ATF) under the GST regime, a long-pending demand from the aviation industry to streamline taxation and enable input tax credit claims.

The Council is expected to review recommendations by the Group of Ministers (GoM) on rate rationalisation, which has proposed tweaks in GST rates for 148 items. Major recommendations include:

• Exempting GST on term life insurance premiums and health insurance premiums for senior citizens. Policies with health cover up to ₹5 lakh may also be exempt, while premiums for cover exceeding ₹5 lakh would continue to attract 18% GST.

• Hiking GST on wristwatches priced above ₹25,000 and shoes costing over ₹15,000 from 18% to 28%. Similarly, readymade garments costing above ₹10,000 may attract 28% GST.

• Cutting GST on packaged drinking water (20 litres and above) and bicycles priced under ₹10,000 to 5%, from the current 18 and 12%, respectively. Exercise notebooks may also see a reduction from 12% to 5%.

A new 35% tax slab has reportedly been proposed exclusively for sin goods, which currently fall under the highest 28% slab with an additional compensation cess. Items under this category include aerated beverages, cigarettes, and tobacco products.

The inclusion of ATF in the GST regime is likely to be another key agenda item. Currently taxed under the dual structure of central excise duty and state VAT, bringing ATF under GST would create uniformity in taxation and allow airlines to claim input tax credits, potentially reducing operational costs.

SpiceJet chairman and managing director Ajay Singh recently called for the inclusion of ATF under the GST framework to address high taxes that burden the sector. In an interview with Moneycontrol, Singh said, "The biggest reform required is bringing the aviation turbine fuel (ATF) under the GST framework. Airlines pay high VAT on ATF but cannot claim input credit. This anomaly doesn’t exist elsewhere in the world."

The Council may extend the deadline for the GoM on GST compensation cess, chaired by Union Minister of State for Finance Pankaj Chaudhary, to submit its report until June 2025. The compensation cess regime is set to end in March 2026.

Tax cuts for food delivery platforms like Swiggy and Zomato, from 18% (with input tax credit) to 5% (without ITC), are also on the table.