GST Council Meeting in Jaisalmer: Proposal to Reduce Tax on Health and Term Insurance Stalled Due to State Opposition

The proposal to reduce GST on life insurance and health insurance has been deferred to the next meeting. During the GST Council’s 55th meeting, the proposal to lower taxes on term insurance, life insurance, and health insurance was postponed due to opposition from various states. The council has instructed ministers to conduct further studies on the matter.

The GST Council meeting, chaired by Union Finance Minister Nirmala Sitharaman, began on Saturday at around 11 a.m. in Jaisalmer. Bihar Finance Minister Samrat Choudhary stated that the proposal to reduce GST on insurance has been deferred to the next meeting. The meeting is being conducted in two phases today.

The first phase of the meeting ran from 11 a.m. to 2:45 p.m., followed by the second phase starting at 4:30 p.m. Participants included Union Minister of State for Finance Pankaj Choudhary, chief ministers of Goa, Haryana, Jammu & Kashmir, Meghalaya, and Odisha, deputy chief ministers from Arunachal Pradesh, Bihar, Madhya Pradesh, Rajasthan, and Telangana, as well as department secretaries. Senior officials from the Economic Affairs, Expenditure, and Finance Ministries were also present.

Reports suggest that decisions regarding changes in GST rates on various items are expected to be made during the meeting. Based on recommendations from the Group of Ministers, GST rates on certain items may be reduced, while taxes on luxury items are likely to increase.

Proposal to Reduce GST on Bottled Water, Notebooks, and Bicycles from 18% to 5%

A proposal has been made to reduce the GST on bottled water, notebooks, and bicycles costing less than ₹10,000 from 18% to 5%.

Additionally, it is expected that the GST Council may lower the tax on online food deliveries from 18% to 5%, which would make ordering food online cheaper. According to sources, this reduction would benefit both consumers and online food delivery companies.

Possible GST Hike on Small Petrol and Diesel Cars, and Used Vehicles

There is a possibility that the GST on small petrol and diesel cars may be increased from 12% to 18% in the upcoming GST Council meeting. Additionally, it is expected that the GST rate on old and second-hand vehicles may be raised to 6%. Currently, the GST on used vehicles is 12%, and it could potentially be increased to 18%.

Consideration to Increase Tax Rates on Tobacco Products Including Cigarettes and Gutka

A recommendation has been made by a group of ministers to increase the tax rates on all types of tobacco products, including gutka and cigarettes. It is suggested that the tax rate on tobacco products be raised from 28% to 35%. This proposal will be presented in the GST Council, and an increase in GST on these items is likely.

Additionally, branded shoes and watches are expected to become more expensive. The GST Council is likely to approve an increase in the tax rate on branded shoes priced above ₹15,000 and watches priced above ₹25,000. The proposal suggests raising the GST on shoes priced above ₹15,000 from 18% to 28%, and imposing a 28% GST on watches priced above ₹25,000.

On Friday, Union Finance and Corporate Affairs Minister Nirmala Sitharaman chaired a pre-budget consultation meeting for the upcoming Central Budget 2025-26 with states and union territories (including state assemblies).