The upcoming 55th GST Council meeting is scheduled for December 21, 2024, in the penultimate week of the month at Jaisalmer, Rajasthan, and is expected to focus on GST for insurance premiums.
GST Council Meeting at the End of December Month
The GST council meeting will likely be held at the end of December month, after the Maharashtra and Jharkhand elections. The council will accept the final report by the Group of Ministers on lower interest rates for life and health insurance premiums.
The GoM seems to offer a GST exemption on the premium paid for term insurance for individuals and families. The exemption on the life insurance premia seems to have a revenue implication of Rs 213 crore. It was reported on October 19 that the revenue loss from the exemption of term life insurance from the GST seems to be nearly Rs 200 crore yearly.
It seems that GST exemption is for all health insurance policies for senior citizens, and on health insurance of up to Rs 5 lakh for non-senior citizens. Rs 2100 crore might be the revenue implication from the GST rationalization on health insurance premia.
GST Exemption Limit
GoM agreed to offer a GST exemption for the health insurance proposing a coverage of up to Rs 5 lakh.
To measure the advantage of the exemption against the revenue loss to the exchequer and make suggestions to the council a fitment committee that consists of the state and central government revenue officials has been made.
In October the Group of Ministers met to discuss the GST rates on the insurance premium and attained a consensus to waive off the term life insurance and premiums and health insurance for the senior citizens from the GST net.
It reported on August 30 that a GoM proposal can suggest waiving off the term life insurance policies from GST. But still, there will be a tax on insurance products with investment components. The same move has the objective of raising the demand for pure protection policies by making them cheaper for consumers.
Proposed Items for GST Rate Rationalization
In another initiative, the GoM on GST rate rationalization has recommended revising tax rates on several goods, including bicycles, packaged drinking water, exercise notebooks, luxury wristwatches, and shoes. This adjustment is projected to increase revenue by approximately ₹22,000 crore.
Under the GST framework, essential commodities are either free from taxation or imposed the lowest tax rates, while luxury and non-essential items are subject to the highest 28% slab. Additionally, goods classified as luxury or “sin” items are subject to a cess on top of the highest GST rate.
The average GST rate has now dipped below the revenue-neutral level of 15.3%, which requires discussions on rate rationalization of GST to balance revenue and affordability.
What is the Agenda of the 55th GST Council Meeting?
As per the sources, the meeting would discuss GST rates on distinct items like educational ones and textiles however can not end. It is anticipated that the discussion will carry on in the upcoming meeting, and as a result, a report will be compiled for the next 55th GST Council meeting.
The forthcoming meeting would be important as there will be a discussion on GST for distinct sorts of insurance. It is obligated for the committee to finalize its story by the finish of October as FM Nirmala Sitharaman cited on September 9 that the GOM has sought to provide its report by the end of October which would be regarded by the GST council in its subsequent meeting in October.
Currently, health insurance, term insurance plans, and unit-linked insurance plans are subject to an 18 per cent GST rate on their premiums.
On endowment plans, the GST is applied distinctly. It is 4.5% for the paid premium in the first year, and it is 2.25% in the second year. There is a 1.8% GST rate that is applicable for life insurance in the form of a single premium annuity policy.
The rates apply equally to all age groups and may be adjusted according to the GST Council’s recommendations.
The Group of Ministers (GOM) is working on the rate rationalization exercise not only for slab but also in terms of individual items. Till now there are four normal rates tax rate slabs 5, 12, 18, and 28 per cent besides a few special rates such as 0.25 percent (rough or sown diamond) and 3 per cent (gold and silver). A few goods in the 28 per cent slab incur a compensation cess that can reach 22 per cent, resulting in a combined tax rate of 50 per cent.
Last month, Chaudhary held the inaugural meeting of the newly formed GoM, during which most members expressed their support for maintaining the existing structure.
He stated that additional discussions will occur before making a final decision, noting that the group has received input from the restaurants, beverages, and other industries, which will be evaluated, and some will be forwarded to the Fitment Committee.
can you post exact date of 55th GST council meeting