Union Finance Minister Nirmala Sitharaman is set to chair the 55th GST Council Meeting in Jaisalmer, Rajasthan on 21st December, 2024.
Originally planned for November, the meeting was delayed due to the Assembly elections in Maharashtra and Jharkhand, as well as the Winter Session of Parliament.
The upcoming discussions will focus on the 2025-26 Budget, set to be presented on February 1, 2025. During the meeting, state finance ministers will propose their recommendations for the upcoming budget.
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A key topic for the GST Council will be tax rate rationalisation. State ministers are expected to discuss lowering GST on a number of common items from 12% to 5%, following recommendations from a panel of state ministers. The goal of this exercise is to boost taxes on luxury and “sin” goods while offering relief on essential items.
The Group of Ministers (GoM) responsible for rate rationalisation is led by Rajasthan’s Finance Minister Choudhary. The group also includes Kerala Finance Minister KN Balagopal, Uttar Pradesh Finance Minister Suresh Kumar Khanna, Karnataka Revenue Minister Krishna Byre Gowda, West Bengal Finance Minister Chandrima Bhattacharya, and Rajasthan’s Health Minister Gajendra Singh.
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Currently, the GST structure includes four tax slabs: 5%, 12%, 18%, and 28%. Essential items fall under the lowest slab or are exempt from GST, while luxury and sin goods are taxed at the highest slab, with an additional cess on top of the 28% rate.
As the average GST rate has fallen below the revenue-neutral rate of 15.3%, there is a pressing need to begin discussions on rationalising the tax structure.
Additionally, a group of ministers working on health and life insurance GST reached broad consensus in October to exempt term life insurance premiums and senior citizens’ health insurance premiums from GST. The proposal also suggests exempting health insurance premiums for individuals (excluding senior citizens) with coverage up to Rs 5 lakh. However, premiums for policies covering more than Rs 5 lakh will continue to attract an 18% GST.
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This meeting promises to bring key decisions that could impact everyday consumers and middle-income earners who can actually afford an insurance among the day-to-day expenses.
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