No decision was taken with regard to reduction in GST on insurance premiums as the GoM needed more time to study the issue. Many inputs are awaited including the one from insurance regulator IRDAI, Finance minister Nirmala Sitharaman
“It was felt any decision on reducing GST on insurance needs further discussion and the GOM will meet again in January to to discuss the issue,” said Bihar Deputy Chief Minister Samrat Chaudhary after the Council’s meeting
Jaisalmer: A GST Council meeting on Saturday postponed the much awaited decision on reducing taxes on health and life insurance, while another much talked- about GoM(Group of Ministers) recommendation of rate rejig in 148 items was not tabled before the Council.
Some members of the Council, chaired by Union Finance Minster Nirmala Sitharaman and comprising her state counterparts, felt that more deliberations were required before a final decision could be arrived at with regard to insurance taxation.
Bihar Deputy Chief Minister Samrat Chaudhary, who heads the panel on GoM on insurance, said one more meeting is required to take a call on taxation of group, individual, senior citizen’s policies.
“Some (Council) members said more discussions required. We (GoM) will meet in January again,” Chaudhary told reporters here.
During the press conference, Sitharaman announced that more time is being granted for the GoM to decide on taxing health insurance.
She said, no decision was taken with regard to reduction in GST on insurance premiums as the GoM needed more time to study the issue.
Many inputs are awaited including the one from insurance regulator IRDAI, she said.
The Finance Minister while announcing outcomes said that the GST Council aims to promote electric vehicles (EVs) by imposing a 5% GST on new EVs. The 18% tax will be levied when a company purchases a used EV or when a seller modifies a used EV for resale but no indirect tax when transaction by one individual to another. This 18% GST will also apply to the margin value between the purchase price and the selling price of a used car.
Also, the GoM on GST compensation cess is likely to get a six-month extension till June 2025, to submit their report. The compensation cess regime comes to an end in March 2026, and the GST Council has set up a panel of ministers, under Union Minister of State for Finance Pankaj Chaudhary, to decide the future course of the cess.
The GoM on insurance had recommended exempting insurance premiums paid for term life insurance policies from GST. Also premium paid by senior citizens towards health insurance cover has been proposed to be exempted from the tax.
Besides, GST on premiums paid by individuals, other than senior citizens, for health insurance with coverage of up to Rs 5 lakh is proposed to be exempted.
However, 18 per cent GST will continue on premiums paid for policies with health insurance cover of over Rs 5 lakh.
The GST rate rationalisation GoM report, which has suggested rate tweaks in 148 items, was not tabled before the Council and would be taken up in next Council meeting.
“We will submit the GoM report on rate rationalisation in next meeting of Council,” said Chaudhary who is the convenor of the panel.
The ongoing Council meeting will also deliberate on bringing Aviation Turbine Fuel (ATF) in Goods and Services Tax fold.
Several proposals of Fitment Committee, comprising officials from the Centre and states’ GST departments would come up for review before the Council.
One of the proposals include cutting taxes on food delivery platforms like Swiggy and Zomato, to 5 per cent (without input tax credit), from the current 18 per cent (with ITC).
The GoM earlier this month had arrived at a consensus to hike tax on sin goods, like aerated beverages, cigarettes, tobacco and related products, to 35 per cent from the present 28 per cent.
Currently, GST is a four-tier tax structure with slabs at 5, 12, 18 and 28 per cent. Luxury and demerit goods are taxed at highest bracket of 28 per cent, while packed food and essential items are at the lowest 5 per cent slab.
The GoM had also decided to propose rationalising tax rates on apparel. As per the decision, ready-made garments costing up to Rs 1,500 would attract 5 per cent GST, those between Rs 1,500-10,000 would attract 18 per cent. Garments costing above Rs 10,000 would attract 28 per cent tax.
Currently, garments costing up to Rs 1,000 attract 5 per cent GST, while those above that attract 12 per cent. The GoM also proposed hiking GST on shoes above Rs 15,000/pair from 18 per cent to 28 per cent. It also proposed hiking the GST rate on wrist watches above Rs 25,000 from 18 per cent to 28 per cent.
The GoM had proposed reducing GST on packaged drinking water of 20 litre and above to 5 per cent from 18 per cent, and reducing tax rate on bicycles costing less than Rs 10,000 to 5 per cent, from 12 per cent. Also, GST on exercise notebooks would be reduced to 5 per cent from 12 per cent.