JAISALMER: The GST Council is set to convene for its 55th meeting, chaired by Union Finance Minister Nirmala Sitharaman, to discuss potential adjustments in tax rates affecting numerous goods and services. Among the proposals, the Council is likely to consider reducing GST on life and health insurance premiums while increasing rates on luxury items such as high-end wristwatches, shoes, and apparel. The introduction of a new 35% tax slab for sin goods is also on the agenda.
The meeting aims to review adjustments for around 148 items and will examine the inclusion of Aviation Turbine Fuel (ATF) within the GST framework, a significant move given the operational costs it imposes on the airline industry. Additionally, the Council is expected to propose lowering GST on food delivery services from 18% (with input tax credit) to a flat 5% (without input tax credit).
The Fitment Committee has recommended a rate hike on used electric vehicles and small petrol and diesel vehicles from 12% to 18%, aligning these with the tax rates of larger vehicles. In discussions around the GST compensation cess, a Group of Ministers (GoM) may receive a six-month extension to submit a report on the cess, which is set to expire in 2026.
One central topic is the taxation of life and health insurance premiums. Recent meetings have indicated a potential exemption for term life insurance premiums from GST. Further proposals include exempting health insurance premiums for senior citizens and individuals for plans covering up to Rs 5 lakh, while maintaining an 18% rate on higher coverage policies.
The GoM has also put forward recommendations for revising taxes on apparel, suggesting a 5% charge on garments costing up to Rs 1,500, 18% for those between Rs 1,500 to Rs 10,000, and 28% for items above Rs 10,000. Additionally, GST on shoes priced over Rs 15,000 and wristwatches exceeding Rs 25,000 is proposed to increase from 18% to 28%.
The Council will assess the recommendations from the GoM on GST rate rationalization, which includes various other items, such as reducing GST on packaged drinking water and exercise notebooks. The adjustments aim to ensure essential goods remain affordable while imposing higher taxes on luxury and sin products.
Lastly, discussions on including ATF within GST are anticipated, as this measure could provide a more uniform taxation structure and enable the aviation sector to better manage costs through input tax credits. This inclusion has been a long-standing request from the aviation industry.
Agencies
GST council meeting to review tax adjustments on insurance, luxury goods
