Union Finance Minister Nirmala Sitharaman is set to meet with state finance ministers on December 21-22 for pre-Budget discussions and a meeting of the Goods and Services Tax (GST) Council, reports PTI.
The upcoming meeting is significant, as state finance ministers will present their recommendations for the 2025-26 Union Budget, which is scheduled to be presented on February 1, 2025. The two-day session is scheduled to be held in Rajasthan, with Jaisalmer or Jodhpur as possible venues.
The 55th GST Council meeting will also take place during these two days, with a key focus on a long-awaited decision regarding the potential exemption or reduction of GST rates on health and life insurance.
The Council is also expected to address the rationalisation of tax rates on a range of common items, with recommendations to reduce rates from 12% to 5%, according to a panel of state ministers.
Last month, the Group of Ministers (GoM) on health and life insurance proposed exempting GST on premiums for term life insurance policies and health insurance for senior citizens. The GoM also recommended exempting GST on premiums for health insurance coverage up to Rs 5 lakh for individuals (excluding senior citizens). However, an 18% GST would continue to apply on policies with coverage exceeding Rs 5 lakh.
The GST Council’s 54th meeting, held on September 9, had directed the GoM to finalise its report on the GST levy on insurance by the end of October.
In addition to insurance issues, the GoM on GST rate rationalisation has suggested revising tax rates for a variety of goods, including packaged drinking water, bicycles, exercise notebooks, luxury wristwatches, and shoes. If approved, these changes are expected to generate an additional Rs 22,000 crore in revenue.
The proposed adjustments include reducing GST on packaged drinking water (20 liters and above) from 18% to 5%, and lowering the GST rate on bicycles costing under Rs 10,000 from 12% to 5%. Additionally, GST on exercise notebooks could be reduced from 12% to 5%.
Meanwhile, the GoM has also recommended increasing GST on shoes priced above Rs 15,000 per pair and wristwatches above Rs 25,000 from 18% to 28%.
Bihar Deputy Chief Minister Samrat Chaudhary leads both the 13-member GoM on health and life insurance and the 6-member GoM on rate rationalisation.
Under the current GST framework, which consists of four tax slabs—5%, 12%, 18%, and 28%—essential items are either exempt or taxed at the lowest rate, while luxury and non-essential items are taxed at the highest rates, with a cess on top of the highest slab. The average GST rate has now fallen below the revenue-neutral rate of 15.3%, prompting calls for a reassessment of the tax structure.
