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55th GST Council Meeting: The Council is expected to address crucial proposals for rate adjustments spanning insurance, luxury goods, aviation turbine fuel (ATF), and more.
In the 55th GST Council meeting, the much-awaited decision on exemption or lower GST rate on health and life insurance would be taken.
55th GST Council Meeting: Finance Minister Nirmala Sitharaman will chair the 55th GST Council meeting on Saturday in Jaisalmer, Rajasthan. The decision will be announced on Saturday in the second half, probably in the evening. The Council is expected to address crucial proposals for rate adjustments spanning insurance, luxury goods, aviation turbine fuel (ATF), and more.
The GST Council, chaired by Union Finance Minister Nirmala Sitharaman along with state finance ministers, is the apex decision-making body on indirect taxes. Here are the expected decisions today:
Life and Health Insurance
The Council will deliberate on proposals aimed at easing the tax burden on life and health insurance premiums. Key recommendations include:
- Exempting GST on premiums for term life insurance policies.
- Waiving GST on health insurance premiums paid by senior citizens.
- GST exemption for health insurance policies with coverage up to ₹5 lakh for individuals other than senior citizens.
- Maintaining the 18% GST rate on premiums for policies covering over ₹5 lakh.
Luxury and Sin Goods
The Group of Ministers (GoM) on GST rate rationalisation has proposed significant hikes on luxury and sin goods:
- Luxury wristwatches priced above ₹25,000: GST to increase from 18% to 28%.
- Premium footwear priced above ₹15,000 per pair: GST to rise from 18% to 28%.
- Ready-made garments:
- Up to ₹1,500: GST at 5%.
- ₹1,500 to ₹10,000: GST at 18%.
- Above ₹10,000: GST at 28%.
- Sin goods such as aerated drinks, cigarettes, and tobacco products:The introduction of a 35% GST slab, which is up from the existing 28%.
Tax Reductions
- Several items are slated for GST rate cuts to provide relief to consumers:
- Packaged drinking water (20 liters or more): GST to drop from 18% to 5%.
- Bicycles priced under ₹10,000: GST reduction from 12% to 5%.
- Exercise notebooks: GST to fall from 12% to 5%.
Aviation Turbine Fuel (ATF) Under GST
A long-standing demand of the aviation industry to include ATF under GST is likely to be addressed. If approved, this would:
- Bring uniform taxation across states.
- Allow airlines to claim input tax credit (ITC) on ATF.
Currently, ATF is subject to central excise duties and state-level VAT. The proposed inclusion under GST aims to lower operational costs for airlines and simplify the tax structure.
Floor Space Index Under GST
The GST Council is likely to bring real estate floor space index (FSI) and additional FSI charges within the scope of GST. It might impose an 18 per cent GST.
Other Key Proposals
- Discussions on 148 items for potential rate changes, including rate hikes on used electric vehicles (EVs) and smaller petrol and diesel vehicles from 12% to 18%.
- Extending the GST compensation cess regime until June 2025.
- Proposals to lower GST rates on food delivery platforms like Swiggy and Zomato from 18% (with ITC) to 5% (without ITC).
Since its implementation on July 1, 2017, GST excluded five key commodities—crude oil, natural gas, petrol, diesel, and ATF—leaving them under the dual taxation of excise duty and VAT. Revisiting their inclusion under GST is a critical demand, particularly for industries like aviation, which face high operating costs.
