GST Council meeting: Rationalization of big ticket prices may require further discussions

The next meeting of the Goods and Services Tax (GST) Council later this month is expected to bring relief in premiums for select health and life insurance products as well as a series of other products, but a decision on rationalization of big ticket prices may take some time.

According to sources, a decision on compensation may also take longer as the team of ministers is expected to submit a report on the status of the issue as of now.

The GST Council, headed by Union Finance Minister Nirmala Sitharaman, and members from all states and union territories, is scheduled to meet in Jaisalmer on December 21.

“The GST Council is likely to take a decision on providing GST exemption on premiums for selected health and life insurance products. However, with revenue considerations remaining a priority for most states, any decision on widespread price rationalization may not It happens all at once.

Many states remain concerned about potential revenue losses from any major change in GST rates and are understood to be in favor of maintaining the status quo with regard to rates for the time being.

The Group of Ministers on Price Rationalization headed by Bihar Deputy Chief Minister Samrat Chaudhary is understood to have prepared a report proposing to realign GST rates for nearly 150 items including clothing and footwear as well as a special rate of 35% for tobacco and soft drinks. .

However, the Central Board of Indirect Taxes and Customs has stressed that any decision will be taken by the GST Council. “The GST Council is yet to discuss any changes in the GST rate. The Council has not even received the recommendations of the Government of Morocco. In fact, the Government of Morocco is yet to finalize its recommendations and submit them to the Council, after which the Council will take a final opinion on the government’s recommendations.

Meanwhile, sources indicated that the Moroccan government headed by Union Minister of State for Finance Pankaj Chaudhary to submit a tax proposal to replace the compensation tax after its abolition is unlikely to submit a final report in the next meeting. “The Moroccan government is likely to submit a report on the situation at the moment because it has not yet confirmed its views on what should be done regarding the compensation law,” the source said.

However, he stressed that countries agree to continue imposing a tax instead of compensation, but the exact mechanism and proposal must be finalized. The compensation deduction is expected to expire by March 2026, and the loan will likely be repaid by January 2026. The Moroccan government will consider what happens to the deduction after its expiration date.

GST on insurance premium

At present, 18% GST is levied on the insurance premium. Sources indicated that the House is likely to approve a proposal to exempt health and life insurance policies up to Rs 5 lakh from GST. The goal is to reduce the tax burden on low- and middle-income groups. It is also likely to offer similar exemptions for policies for seniors.

These are also the major suggestions made by the Government of Malaysia regarding health and life insurance which have been formulated under the supervision of the Deputy Chief Minister of Bihar. The Government of Morocco will submit its report to the Goods and Services Tax Council at the next meeting.