In a significant update, the proposal to reduce GST on health and term insurance has been deferred due to opposition from several states. The decision was made during the GST Council’s 55th meeting, chaired by Union Finance Minister Nirmala Sitharaman, which took place in Jaisalmer on December 20. The proposal to cut taxes on life, health, and term insurance has now been postponed for further consideration at the next meeting.
Finance Minister of Bihar, Samrat Chowdhary, confirmed that the proposal to reduce the GST rates on insurance products has been put on hold. The meeting is being held in two phases, with the first phase running from 11:00 AM to 2:45 PM, and the second phase starting at 4:30 PM. The gathering includes finance ministers, chief ministers, and senior officials from various states and the Ministry of Finance.
Potential GST Rate Changes and Proposals Discussed:
GST Reduction on Everyday Items: There is a proposal to reduce GST on bottled water, notebooks, and bicycles priced below ₹10,000 from the current 18% to 5%. This could make these items more affordable for consumers.
GST on Online Food Delivery: The Council is considering a proposal to lower the GST on online food deliveries from 18% to 5%, which would result in cheaper food delivery services for customers and provide a boost to food delivery companies.
GST Increase on Small Cars and Used Vehicles: A proposal to increase GST on small petrol and diesel cars from 12% to 18% is under discussion. Additionally, GST on used vehicles may rise from 12% to 18%.
Tobacco Products: The Council is also considering an increase in GST rates on tobacco products, including cigarettes and gutka, from 28% to 35%.
Luxury Goods Tax Hike: There is a possibility of an increase in GST on luxury goods, such as branded shoes priced over ₹15,000 and watches costing more than ₹25,000. The proposed increase would see GST rise from 18% to 28%.
The GST Council meeting also includes discussions on several other important economic measures, with ministers and senior officials emphasizing the need for a comprehensive review of tax rates across various sectors. The next phase of discussions is expected to finalize some of these proposals for implementation.
Additionally, on Friday, Union Finance Minister Nirmala Sitharaman presided over a pre-budget consultation meeting with states and Union Territories, discussing key issues for the upcoming Union Budget for 2025-26.
