Jaisalmer: Several states are still not ready to waive the Goods and Services Tax (GST) on term insurance and reduce the rate on health insurance from 18 per cent to 5 per cent, with the all-powerful GST Council taking up the issue. But a call may have to be delayed, which is of great interest to the middle class.
However, the levy on second-hand vehicles is likely to be increased from 12 per cent to 18 per cent, negating calls to reduce the levy to 5 per cent for second-hand electric vehicles.
While there is no consensus on re-employment rates, given the concerns expressed by states such as West Bengal, Kerala and Karnataka. No opinion, even insurance has failed to gain the necessary support, as was widely expected. The task of resetting the rates was entrusted to a Group of Ministers (GoM) headed by Bihar Deputy Chief Minister Samrat Chaudhary.
On Saturday, a major effort will be made by the Center to get the states to agree to the insurance tax changes proposed by another GoM, of which Chaudhary is also the convener.
States fear that they will lose revenue because of the lower rates, especially since the compensatory cess has been withdrawn, which has assured them of covering any gap. The Center and states received Rs 16,400 crore from GST on life and health insurance in 2023-24, marginally lower than last year. The total revenue loss could be Rs 2,500 crore annually.
Also, it is not clear how the GST Council intends to enforce that the benefit of lower taxes is passed on to consumers, given that the anti-profiteering clause has now been scrapped. Finance Minister Nirmala Sitharaman had recently hinted that market forces would take care of the issue.
Even on the issue of rationalizing the rates of 148 items, discussed by the ministerial panel, states have their own concerns. On the agenda will be issues related to taxation of food delivery services, tax deduction on cancer treatment and sponsorship and clarification on FSI.