GST Council to Finalise Tax Rates

New Delhi: A report focusing primarily on tax slabs and rates in health and life insurance premiums and GST rate rationalisation are expected to be finalised by the GST Council-led group of ministers’ (GoMs’) which will be held in Goa on September 25. The GST Council, chaired by Union finance minister Nirmala Sitharaman, is likely to lead to the creation of an expanded GoM to assess the impact and need and to determine appropriate GST rates for these services, a source privy to development said on Tuesday.

“Besides, there will be a discussion on key agenda, including the GST rates on over 100 products, including fertilisers, handloom goods, textiles, non-alcoholic beverages, food products, and transportation rates among others. The GoM is expected to submit its report by the end of October 2024 and the final call will be taken by the GST Council after the proposals from the ministerial panel’s report which will be presented at the 55th GST Council meeting in November,” the source said.

In the previous GST Council meeting, Ms Sitharaman had tasked the GoMs to prepare a foundation report which may fix rates, especially in health and life insurance premiums to take it forward in the next GST Council meeting. The six-member GoMs, led by Bihar deputy chief minister Samrat Chaudhary, is considering merging the 12 and 18 per cent tax slabs, where some states are learnt to have agreed about making changes in this regard.

On September 9, during the 54th GST Council meeting, the GoMs on rate rationalisation was expanded to include representatives from Bihar, UP, West Bengal, Karnataka, Kerala, Rajasthan, Andhra Pradesh, Meghalaya, Goa, Telangana, Tamil Nadu, Punjab, and Gujarat. This group will holistically examine GST-related issues related to life and health insurance.

Other agenda items, the source said, include discussing whether the current treatment of non-alcoholic beverages should be modified within the GST regime. “The GoM will deliberate this category in detail which will include bottled/packaged drinking water, carbonated non-fruit-based drinks, carbonated and fruit-based drinks, packaged tea, and coffee,” the source said.

Discussions on real estate will also include a compensation scheme that could substantially impact the sector in some way or the other. “The meeting is expected to review the implications of rate rationalisation for over 100 items, including real estate and rate assessments, which are key topics for discussion,” it added.

Currently, the GST operates under a four-tier structure with slabs at 5 per cent, 12 per cent, 18 per cent, and 28 per cent. Essential items are either exempt or taxed at the lowest slab, while luxury and demerit goods are subject to the highest slab. Luxury and sin goods incur an additional cess on top of the highest 28 per cent rate.