Meeting of GST Council to determine reduced taxes on insurance plans and addition of ATF to list of taxed items.

The city of Jaisalmer was bustling with anticipation as the 55th GST Council meeting commenced on Saturday. This meeting was expected to make crucial decisions regarding the tax rates on health and life insurance policies, as well as consider changes in rates for 148 other items. Chaired by Union Finance Minister Nirmala Sitharaman and joined by state counterparts, the council was also set to discuss the inclusion of Aviation Turbine Fuel in the Goods and Services Tax.

One of the key items on the agenda was determining the GST rate for health and life insurance policies. In a previous meeting in November, a Group of Ministers led by Bihar Deputy Chief Minister Samrat Chaudhary had agreed to exempt term life insurance premiums from GST. They also proposed to exempt the premiums paid by senior citizens for health insurance coverage and exempt the GST on premiums paid by individuals for health insurance up to Rs 5 lakh. However, premiums paid for policies with health insurance coverage above Rs 5 lakh would continue to be taxed at 18%.

The final decision on insurance taxation under GST was expected to be made on Saturday, with majority of the states in favor of reducing taxes on premiums to provide relief to the common man. The council would also review several proposals from the Fitment Committee, which consists of officials from both the central and state GST departments. One of these proposals included lowering the GST rate on food delivery platforms like Swiggy and Zomato from 18% to 5%.

Another significant matter before the council was the report from the GST rate rationalization panel, which suggested changes in tax rates for 148 items. The Group of Ministers had recently recommended increasing the tax rate on items like aerated beverages, cigarettes, tobacco, and related products from 28% to 35%. They also proposed rationalizing tax rates on apparel, with ready-made garments up to Rs 1,500 being taxed at 5%, those between Rs 1,500 and Rs 10,000 being taxed at 18%, and garments above Rs 10,000 being taxed at 28%. Currently, garments up to Rs 1,000 are taxed at 5%, while those above Rs 1,000 are taxed at 12%.

The GoM also suggested increasing the GST rate on shoes above Rs 15,000 per pair from 18% to 28%, as well as hiking the rate on wristwatches above Rs 25,000 from 18% to 28%. However, it was unlikely that there would be any major changes in tax rates during the meeting.

Telangana Deputy Chief Minister Mallu Bhatti Vikramarka expressed his opinion on the matter, stating that the taxation system should not be a burden on the people and should be more flexible. The GoM had also proposed reducing the GST on 20-liter and above packaged drinking water from 18% to 5%, and reducing the tax rate on bicycles costing less than Rs 10,000 from 12% to 5%. Additionally, GST on exercise notebooks would also be reduced from 12% to 5%.

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