The Group of Ministers ( GoM ) on Goods and Services Tax ( GST ) rate rationalization, led by Bihar Deputy Chief Minister Samrat Choudhary, recently held its second meeting in Goa but could not arrive at final recommendations. A follow-up meeting has been scheduled for the upcoming 55th GST Council meeting in November, with a focus likely on GST rates for insurance premiums.
According to sources, the GoM’s discussions covered potential rate adjustments on various items, including educational materials and textiles, but remained inconclusive. These discussions are expected to continue, and a comprehensive report will be prepared for the next council meeting.
The November meeting is anticipated to be pivotal, particularly regarding GST rates for different types of insurance. Finance Minister Nirmala Sitharaman had emphasized that the GoM’s report should be finalized by the end of October, allowing the council to consider it in their forthcoming meeting.
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Currently, health and term insurance plans, along with unit-linked insurance policies, are subject to an 18% GST on premiums. Endowment plans, however, are taxed at 4.5% on the first year’s premium and 2.25% on subsequent years. For single premium annuity life insurance, the GST rate is 1.8%. These rates apply across all age groups but may be reviewed by the GST Council.
The GoM is examining rate rationalization not only for tax slabs but also on a per-item basis. Presently, GST is levied across four main rate slabs—5%, 12%, 18%, and 28%—with additional special rates, such as 0.25% for rough or uncut diamonds and 3% for gold and silver. Certain goods in the 28% slab also incur a compensation cess, which can raise the total tax rate to as high as 50%.
In its inaugural meeting last month, most GoM members expressed a preference for maintaining the current GST structure. Choudhary noted that further consultations will take place before any final decisions are made. Input from sectors like the restaurant and beverage industries will be reviewed, with some recommendations to be forwarded to the Fitment Committee for further evaluation.
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