GST Council 55th Meeting: Key Expectations
Date: December 20, 2024
Category: 55th GST Council
Read Time: 4 Minutes
The 55th GST Council meeting, chaired by Union Finance Minister Nirmala Sitharaman, is set to convene on December 21, 2024, in Jaisalmer, Rajasthan. This meeting will focus on critical rate revisions affecting sectors such as insurance, luxury goods, and aviation turbine fuel (ATF).
Key Proposals Under Consideration
1. Life and Health Insurance
Proposed GST Exemptions:
- Term Life Insurance Policies: Full exemption from GST.
- Health Insurance Premiums:
- Senior Citizens: Complete GST exemption.
- Policies Covering Up to ₹5 Lakh: Exemption for non-senior citizens.
- Policies Above ₹5 Lakh: Continuation of the 18% GST rate.
These changes aim to make insurance more affordable, especially for vulnerable groups.
2. Luxury Goods and Sin Goods
Proposed Tax Hikes:
- Luxury Goods:
- Wristwatches (Above ₹25,000): Increase from 18% to 28%.
- Shoes (Above ₹15,000 per pair): Increase from 18% to 28%.
- Ready-Made Garments:
- Costing ≤ ₹1,500: GST at 5%.
- Costing ₹1,500–₹10,000: GST at 18%.
- Costing > ₹10,000: GST at 28%.
- Sin Goods:
- Aerated beverages, cigarettes, and tobacco may shift to a new 35% tax slab, up from 28%.
These revisions aim to increase revenue while curbing the consumption of non-essential and harmful goods.
3. Proposed Tax Reductions
Certain goods may see a GST reduction to ease costs for consumers:
- Packaged Drinking Water (20L+): Reduced from 18% to 5%.
- Bicycles (Below ₹10,000): Reduced from 12% to 5%.
- Exercise Notebooks: Reduced from 12% to 5%.
These measures could enhance affordability for basic goods.
4. Aviation Turbine Fuel (ATF)
The Council is set to deliberate on including ATF under GST, addressing the following:
- Uniform Taxation: Replace central excise duty and state VAT with a single tax structure.
- Input Tax Credit (ITC): Enable airlines to claim ITC on ATF purchases, potentially reducing operational costs.
- Industry Demand: Respond to long-standing calls for a simplified tax regime from the aviation sector.
Bringing ATF under GST could streamline operations and boost the sector’s growth.
5. Other Notable Discussions
The Council will also discuss changes to 148 items, including:
- Used Electric Vehicles (EVs): Potential rate hike from 12% to 18%.
- Smaller Petrol and Diesel Vehicles: Possible rate increase.
- Food Delivery Platforms: Proposal to reduce GST from 18% (with ITC) to 5% (without ITC).
- GST Compensation Cess: Likely extension until June 2025 to support state finances.
These adjustments aim to balance revenue generation with economic relief.
Background
When GST was introduced on July 1, 2017, five major commodities—crude oil, natural gas, petrol, diesel, and ATF—were excluded. The inclusion of ATF under GST has been a key demand from the aviation industry, as it simplifies the tax structure and reduces costs.
Impact
- Positive Revenue Impact: The proposed rate revisions are expected to generate additional revenue for the government.
- Industry Relief: Tax exemptions and the potential inclusion of ATF under GST could significantly benefit businesses across various sectors.
