55th GST Council meeting: The council is expected to consider key proposals for rate adjustments covering insurance, luxury goods, aviation turbine fuel (ATF) and more.
In the 55th meeting of the GST Council, a decision will be taken to exempt or reduce GST rates on health and life insurance.
55th GST Council Meeting: Finance Minister Nirmala Sitharaman will chair the 55th meeting of the GST Council in Jaisalmer, Rajasthan on Saturday. The decision will be announced in the second half on Saturday, probably in the evening. The council is expected to take up key proposals for rate adjustments covering insurance, luxury goods, aviation turbine fuel (ATF) and more.
The GST Council, chaired by Union Finance Minister Nirmala Sitharaman and state finance ministers, is the apex decision-making body on indirect taxes. The decisions expected today are:
Life and health insurance
The Council will consider proposals aimed at reducing the tax burden on life and health insurance premiums. Key recommendations include:
- GST exemption on premiums for term life insurance policies.
- Exemption of GST on health insurance premiums paid by senior citizens
- GST exemption for health insurance policies with coverage up to ₹5 lakh for persons other than senior citizens.
- Retention of 18% GST rate on premiums for policies covering more than ₹5 lakh.
The goods of luxury and sin
The Group of Ministers (GoM) on GST rate rationalization has proposed a significant increase on luxury and sin goods:
- Luxury wristwatches priced above ₹25,000: GST to be increased from 18% to 28%.
- Premium footwear priced above ₹15,000 per pair: GST will increase from 18% to 28%.
- Readymade Garments:
- Up to ₹1,500: GST at 5%.
- ₹1,500 to ₹10,000: GST at 18%.
- Above ₹10,000: GST at 28%.
- Sin goods like aerated drinks, cigarettes, and tobacco products: Introduction of 35% GST slab, up from the current 28%.
Tax cut
- A number of items have been prepared to reduce the GST rate to provide relief to consumers:
- Packaged drinking water (20 liters or more): GST will be reduced from 18% to 5%.
- Bicycles priced below ₹10,000: Reduction in GST from 12% to 5%.
- Exercise Notebook: GST will be reduced from 12% to 5%.
Aviation Turbine Fuel (ATF) under GST
The aviation industry’s long-standing demand for inclusion of ATF under GST will be addressed. If approved, it will:
- Apply a uniform tax across states.
- Allow airlines to claim Input Tax Credit (ITC) on ATF.
Currently, ATF is subject to central excise duty and state level VAT. The proposed inclusion under GST aims to reduce the operational costs of 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 under the ambit of GST. 18% GST may be levied on this.
Other Important Tips
- Discussions on 148 items for possible rate changes, including a rate hike for used electric vehicles (EVs) and small petrol and diesel vehicles from 12% to 18%.
- Extension of GST compensatory cess regime till June 2025.
- Proposal to reduce GST rate on food delivery platforms like Swiggy and Zomato from 18% (with ITC) to 5% (without ITC).
Since its implementation on July 1, 2017, GST has excluded five major commodities — crude oil, natural gas, petrol, diesel, and ATF — and left them under double taxation of excise duty and VAT. gave There is a pressing demand to review their inclusion under GST, especially for industries like aviation, which face high operating costs.