GST Council meeting: Big-ticket rate rationalisation may require more discussions

The upcoming Goods and Services Tax (GST) Council meeting later this month is expected to ease surcharges on certain health and life insurance products as well as other products, but a decision on big-ticket tariff rationalization may take some time.

According to sources, a decision on the suspension of compensation may also take longer as the Group of Ministers is expected to present a status report on the issue at this point.

The GST Council, headed by Union Finance Minister Nirmala Sitharaman and with members from all states and union territories, is scheduled to meet in Jaisalmer on December 21.

“It is likely that the GST Council may decide to grant exemption from GST for premiums on prescribed health and life insurance products. However, as revenue considerations remain a priority for most states, any decision on large-scale rate rationalization cannot happen at once,” said a source familiar with the development.

Several states remain concerned about potential revenue losses from any major change in GST rates and are believed to be in favor of keeping the rates status quo for now.

A group of Ministers led by Bihar Deputy Chief Minister Samrat Chaudhary is said to have prepared a report recommending a cut in GST rates on about 150 items, including clothing and footwear, and 35% on tobacco and aerated drinks. special rate.

However, the Central Board of Indirect Taxes and Customs had stressed that any decision would be taken by the GST Council. “The GST Council has not yet discussed any changes in the GST rate. The Council has not even received the government’s recommendations. In fact, the government has yet to finalize and submit its recommendations to the Council, after which the Council will give its final view on the government’s recommendations,” said a note published in X on December 3.

Meanwhile, sources said the government, led by Union finance minister Pankaj Chaudhary, is unlikely to present a final report on the tax proposal to replace the cess after its abolition it has yet to confirm its view on what should be done about the suspension of compensation,” the source said.

He, however, emphasized that the states agree to the continuation of levies instead of the cessation of compensation, but the clear mechanism and proposal should be finalized. The moratorium is expected to be completed by March 2026 and the loan repayment likely by January 2026. The government will consider what happens to the moratorium after sunset.

GST on insurance premium

At present 18% GST is levied on insurance premium. Sources said the Council is likely to accept the proposal to exempt health and life insurance policies up to Rs 5 lakh. The aim is to reduce the tax burden on low and middle income groups. It is also likely to provide similar exemptions for policies for senior citizens.

These are also the main proposals of the government on health and life insurance, which has been set up under the Bihar CM.The CM will present his report to the GST Council in the upcoming meeting.