GST Council Meeting: Big-Ticket Rate Rationalisation Requires More Discussions

The Goods and Services Tax (GST) Council will meet in Jaisalmer on December 21, 2024, to discuss various issues. Key topics include tax relief for health and life insurance premiums. However, major decisions on GST rate rationalisation may take longer.

1. Relief for Health and Life Insurance Premiums

The Council will likely address GST relief for specific health and life insurance products. This step aims to reduce the tax burden on lower- and middle-income groups.

  • Exemptions are being considered for policies with premiums up to ₹5 lakh.
  • Special relief for senior citizens’ insurance policies is also under discussion.

2. Delays in Big-Ticket Rate Rationalisation

The Council has proposed a revised GST rate structure for products such as clothing, footwear, tobacco, and aerated drinks. However, a final decision may not happen during this meeting.

  • Revenue concerns remain a top priority for states.
  • The Group of Ministers (GoM) recommended rate changes for around 150 items, but they have not yet submitted formal recommendations to the Council.
  • States argue that large-scale rationalisation requires more time for deliberation.

3. Compensation Cess: Status Report Expected

The Group of Ministers, led by Pankaj Chaudhary, will provide an update on the compensation cess set to end in March 2026.

  • Although states favor continuing some form of levy post-sunset, a final proposal will not be ready for this meeting.
  • Cess repayments are expected to conclude by January 2026.
  • Discussions will focus on designing a new structure for the post-sunset period.

4. Further Consultations Required for Major Reforms

The Council has not officially received the GoM’s recommendations on rate changes. Significant reforms will require additional consultations before reaching a consensus.

Conclusion

The upcoming GST Council meeting will focus on tax relief for the insurance sector. However, major reforms like rate rationalisation and compensation cess replacement will require more time and discussions. Future meetings are expected to provide further clarity on these reforms.

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