GST Council’s December Meet: Waiver of levy on health, life insurance premiums on agenda

The GST Council will convene its 55th meeting on December 21 in Jaisalmer, Rajasthan, to address crucial policy changes, including possible tax relief on health and life insurance premiums. The council, chaired by Union Finance Minister Nirmala Sitharaman and including state finance ministers, is expected to also deliberate on rate reductions for essential goods, as per a report by PTI.

A post on X by the GST Council confirmed the meeting: “The 55th meeting of the GST Council will be held on 21 December 2024 at Jaisalmer, Rajasthan.”

Insurance Tax Breaks 

The council is likely to discuss a proposal from a Group of Ministers (GoM) to exempt GST on premiums for term life insurance and health insurance policies for senior citizens. The GoM also suggested exempting premiums for health insurance policies with coverage up to ₹5 lakh. However, premiums for coverage above ₹5 lakh will continue to attract an 18% GST.

The recommendations follow a directive from the council in September for the GoM to finalize its report on insurance GST by October.

Rate Rationalization for Everyday Goods

Another key agenda item is the restructuring of GST rates on various items to boost affordability and revenues. The GoM on rate rationalization has proposed:

Packaged drinking water (20 liters and above): GST reduction from 18% to 5%.

Bicycles under ₹10,000: GST cut from 12% to 5%.

Exercise notebooks: GST reduction from 12% to 5%.

Luxury items: Increase in GST on shoes above ₹15,000 and wristwatches over ₹25,000 from 18% to 28%.

If accepted, these changes could bring ₹22,000 crore in additional revenue.

GST currently operates under a four-tier structure with rates at 5%, 12%, 18%, and 28%. Essential goods generally fall under lower slabs, while luxury items are taxed higher, often with an added cess.

With average GST collections slipping below the revenue-neutral rate of 15.3%, the council faces pressure to rationalize rates and enhance revenue without burdening common citizens.

The meeting is expected to result in significant announcements impacting households and businesses nationwide.

(With inputs from PTI)