Finance Minister Nirmala Sitharaman is scheduled to meet her state counterparts for the 55th meeting of the GST Council in Jaisalmer, Rajasthan on December 21.
The council was originally scheduled to meet in November. The delay is due to assembly elections in Maharashtra and Jharkhand and then the winter session of Parliament.
During the meeting, the state finance ministers will present their recommendations for the 2025-26 budget to be presented on February 1, 2025.
The Council is also likely to undertake some rationalization exercise and may reduce tax rates on a number of common items from 12 per cent to 5 per cent as per the recommendations of the panel of state ministers.
The purpose of rate rationalization is to increase taxes on luxury and sin goods and provide relief on essentials. The group of ministers on rate rationalization led by Chaudhary 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 Medical and Health Services Minister Gajendra Singh. as members.
Currently, GST is a four-tiered tax structure with slabs of 5, 12, 18 and 28 percent. Under GST, essential items are exempted or taxed in the lowest slab, while luxury and demerit items attract the highest slab. Cess is levied on luxury and sin goods at the top of the highest slab of 28 percent. The average GST rate has fallen below the revenue-neutral rate of 15.3 percent, prompting a debate on GST rate rationalization.
The Group of Ministers (GoM) on Health and Life Insurance GST, this October, broadly agreed on the exemption of insurance premiums paid for term life insurance policies and health insurance of senior citizens from GST.
Apart from this, exemption from GST on premiums paid by persons other than senior citizens for health insurance with coverage up to Rs 5 lakh has also been proposed. However, Rs. 18 per cent GST will continue to be levied on the premium paid for health insurance cover policies above Rs 5 lakh.