A GST Council meeting on September 3-4 in New Delhi will discuss proposed tax reforms, including rate rationalization and insurance premium exemptions.
A two-day meeting of the Goods and Services Council will be held on September 3-4 in New Delhi to discuss the three-pillar GST reforms proposed by the centre, including ratonalisation of tax rates by eliminating 12% and 28% slabs while retaining the other two — 5% and 18%, people in the know said.
The secretariat of the council on Friday notified the dates of the meeting that will follow the officers’ meeting on September 2. Officers will prepare backgrounds and details for the two-day GST Council deliberations, including the proposed three-pillar reforms. The other two pillars of the GST 2.0 are structural reforms and ease of living.
Although the GST secretariat is yet to make the meetings’ agenda public, the council is also expected to discuss matters related to the compensation cess, which, according to the law, will cease to exist after March 31, 2026. The council’s agenda may also include exemption of GST on individuals’ health and life insurance premiums, which is currently 18%.
Tax rate rationalisation and elimination of GST on insurance premiums, if accepted by the council, are expected to reduce tax burden on many goods and services and bring cheers to the people ahead of Diwali. Prime Minister Narendra Modi on August 15 underscored the importance of the next generation of reforms under GST that would bring relief to the common man, the middle class, farmers and micro, small and medium enterprises (MSMEs).
After deliberations on Wednesday and Thursday, the group of ministers (GoM) on rate rationalisation approved, in principle, the Union government’s proposal to reduce the number of GST slabs from four to two in order to substantially reduce tax burden on the consumer, although some of the ministers expressed concerns over the revenue implication of the move and sought ways in which the states could be compensated. The Centre proposed to eliminate two tax slabs of 12% and 28% and retain the 5% and 18% tax rates with a special slab of 40% for so-called luxury and sin goods.
Another GoM on insurance also supported elimination of GST for individual policyholders. The centre has proposed exempting individual life and health insurance premiums from the 18% GST, a move that received positive response from a panel.
While the GoM on restructuring of compensation cess is headed by Union minister of states for finance Pankaj Chaudhary, Bihar’s deputy chief minister Samrat Choudhary heads GoMs on rate rationalisation, and life and health insurance. Final decisions on all matters pertaining to GST are taken by the GST Council as GoMs are only recommendatory bodies.
