Finance Minister Nirmala Sitharaman The 55th meeting of the GST Council will be held in Jaisalmer, Rajasthan on Saturday under the chairmanship of. Many important announcements can be made in this meeting. The first announcement is that you can get the gift of GST exemption on insurance premium. Apart from this, it can consider increasing the tax rate on expensive wrist watches, shoes and apparels and introducing a separate 35 percent tax slab for non-essential items. Rate changes in about 148 items are likely to be discussed in the 55th meeting. Additionally, bringing Aviation Turbine Fuel (ATF), a major component of the operating cost of the aviation industry, under the ambit of GST will also be discussed. It is proposed to reduce the GST rate on food delivery platforms like Swiggy and Zomato from the current 18% (with ITC) to five percent (without input tax credit).
Preparation to increase tax on old vehicles
According to sources, the Fitment Committee (comprising tax officials from the Center and states) has proposed to increase the rate on the sale of used electric vehicles as well as small petrol and diesel vehicles from the existing 12% to 18%. With this increase, old small cars and electric vehicles will become at par with old big vehicles. Additionally, the Group of Ministers (GoM) on GST Compensation Cess is likely to get an extension of six months till June 2025 to submit its report. The compensation cess regime will expire in March 2026 and the GST Council has constituted a committee of ministers led by Union Minister of State for Finance Pankaj Chaudhary to decide the future text of the cess. In the GST regime, compensation cess is levied at various rates in addition to the 28% tax on non-taxable goods. The income from cess which was originally planned for five years after the implementation of GST or till June 2022.
There will be a big decision regarding tax exemption on premium
A major issue in the meeting is to decide the GST rate on health and life insurance. The Group of Ministers constituted by the Council, headed by Bihar Deputy Chief Minister Samrat Chaudhary, in its meeting in November had agreed to exempt insurance premiums paid for term life insurance policies from GST. Apart from this, it is also proposed to exempt the premium paid for health insurance ‘cover’ by senior citizens from tax. It is also proposed to exempt from GST the premium paid for health insurance up to Rs 5 lakh by individuals other than senior citizens. It is expected to be announced in the meeting to be held on Saturday. If this happens, crores of people of the country will get great relief.
Tax may increase on readymade clothes
The Group of Ministers also proposed rationalizing the tax rate on readymade garments. He has proposed 5% GST on readymade garments costing up to Rs 1,500 while 18% GST on garments costing Rs 1,500 to Rs 10,000. Whereas garments costing more than Rs 10,000 will attract 28% tax. The Group of Ministers has also proposed to increase the GST rate on shoes priced above Rs 15,000 per pair from 18% to 28%. In the last meeting held on October 19, it was also proposed to increase the GST rate on wrist watches priced above Rs 25,000 from 18% to 28%.
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