The 55th meeting of the Goods and Services Tax (GST) Council, scheduled for December 21 in Jaisalmer, Rajasthan, is expected to address several important issues, including rate adjustments on GST tax slabs, life and health insurance, and rate rationalization steps.
Key Proposals for Health and Life Insurance
A Group of Ministers on health insurance on December 16, submitted its recommendations to state and central revenue officials, which will be talked-over at the meeting. Among the key proposals:
GST Exemption for Pure Term Life Insurance Policies: The GoM has suggested waiving GST on pure term life insurance policies that include family coverage. This move aims to make life insurance more affordable for families.
Relief for Senior Citizens: Another major proposal is to exempt health insurance policies for senior citizens from GST, offering significant financial relief to the elderly. Lower GST on Individual Health Insurance Policies: The GoM has also recommended reducing GST on individual health insurance plans to 5%, but without the option for Input Tax Credit (ITC). This measure could lower premium costs for individuals.
These proposals are expected to provide much-needed relief for taxpayers and policyholders, especially those burdened by high premiums on essential insurance products.
Changes to GST on Luxury Goods
The Council will also deliberate on GST rates for luxury items, with proposals to increase the tax rates in certain categories:
Shoes priced above Rs15,000 may see a hike in GST from 18% to 28%. Wristwatches costing over Rs25,000 may face a similar GST increase from 18% to 28%.In addition, the Council may discuss introducing multiple GST slabs for readymade garments based on price. While this could help businesses reduce Input Tax Credit (ITC) accumulation and improve working capital, it may also lead to higher costs for consumers.
Recommendations from the 54th GST Council Meeting
The 54th GST Council meeting had already laid the groundwork for several reforms, some of which include:
Formation of a GoM to explore the future of compensation cess. Exemption of GST on research and development services provided by government entities or institutions using grants. Reduction of GST rates on cancer drugs like Trastuzumab Deruxtecan, Osimertinib, and Durvalumab from 12% to 5%. A pilot rollout for Business-to-Consumer (B2C) e-invoicing.Implications for Businesses and Citizens
The recommendations from the GoM and decisions made during this meeting could have far-reaching implications for businesses and citizens alike. By addressing the GST burden on health and life insurance, the Council could improve affordability and increase insurance penetration in the country. Meanwhile, the proposed changes to luxury goods taxation and garment GST slabs may impact consumer prices and business operations.
As taxpayers and businesses await the Council's decisions, all eyes are on potential relief measures that could benefit millions across the nation.