55th GST Council Meeting on December 21: Important Issues and Possible Amendments

The 55th GST Council meeting is scheduled for December 21, 2024, in Jaisalmer, Rajasthan. It will discuss several important issues including the current GST structure of life and health insurance, rationalization of GST rate, and changes in existing tax slabs. These recommendations by a Group of Ministers (GoM) on health insurance are to be reviewed by the GST Council after presenting them to the revenue officials from both the central and state governments.

Key Recommendations by the Group of Ministers (GoM)

The GoM has put forward several key proposals with the aim of making the insurance policies more affordable.

• Exemption of GST on Pure Term Life Insurance: The GoM recommends exempting GST on pure term life insurance covering members of the family, hence reducing the burden of costs of insurance on families.
• Senior Citizens’ Health Insurance: The GoM has also put forward the exemption of health insurance policies that are aimed specifically at senior citizens for relief in the cost of their healthcare.
• GST on Individual Health Insurance: The GST rate applicable to all individual health insurance plans should be reduced to 5% without claiming an ITC. The lower the GST, the more expensive health insurance will become for individuals, but less likely to impact the companies with their overall cost due to the loss of the facility of claiming ITC.

Effect on Customers and Businesses

Changes that will likely help consumers are expected, but especially for the senior citizens and families who require term life insurance policies. But with the potential cut in GST rates for health insurance, the trade-off could come about, where the ITC would be lost for insurance companies, thereby influencing the extent to which cost savings are passed on to consumers.

While the reduction in GST for health insurance may reduce premiums, experts point out that the exclusion of ITC may lead to limited benefits for both consumers and insurance providers. Additionally, the GST Council’s decision to maintain an 18% GST rate on health insurance premiums exceeding Rs 5 lakh could lead to higher healthcare costs for middle-class families, especially those with pre-existing conditions or specialized care needs.

GST Rate Rationalisation for Luxury Goods

The GST Council is also expected to discuss the rationalisation of GST rates based on recommendations from the GoM. Reports suggest that the council may propose increasing the GST rates on luxury goods:

GST on Shoes: The GST on shoes priced above Rs 15,000 could increase from 18% to 28%.
GST on Watches: Watches, if they cost over Rs 25,000, can be hiked to GST of 28% as against 18%.

In a way, these measures look to enhance the tax revenues besides aligning the rates of taxation to public welfare concerns, however, the price for consumer of luxury may go high.

Reduction of Tax on Food Delivery to 5%

The Goods and Services Tax (GST) council is likely to consider the reduction of tax on food delivery services. According to sources, food delivery apps like Zomato and Swiggy may benefit from this new tax cut, with GST rates likely to come down from the current 18 percent to 5 percent.

Broad Economic Effects

The GST Council meeting will also discuss broad economic issues. Experts have criticized the growth of income in India saying that consumption does not rise with income growth, thereby raising the issue of income inequality. Furthermore, growth in GST collections has not been up to expectations; hence, the council will have to reassess its tax policies to balance the fiscal need with public welfare.

However, discussions on GST rate rationalisation could bring huge alterations to the cost structures for companies, especially in areas such as luxury goods and health insurance. The consequences of this meeting might give greater clarification about long-standing disputes and could pave the way to further GST reforms.

55th GST Council Meeting Date

The 55th GST Council meeting set for December 21, 2024 is expected to address several critical issues affecting both consumers and businesses. These issues include potential reductions in GST on health & life insurance; however, they also involve changes in GST rates concerning luxury goods. If these modifications occur because they could help in lowering costs for consumers, they may create a more manageable GST framework for businesses to adhere to, ultimately leading to enhanced tax management and a more robust economy.