GST Council Meet : FM Nirmala Sitharaman Chairs 55th Meeting in Jaisalmer- what next

Union Finance Minister Nirmala Sitharaman chairs the 55th GST Council meeting in Jaisalmer, Rajasthan. This significant meeting, involving ministers and officials from the Centre and states, comes just ahead of the Union Budget 2025. The participants included Union Minister for State for Finance Shri Pankaj Chaudhary, Chief Ministers of Goa, Haryana, Jammu and Kashmir, Meghalaya and Odisha; Deputy Chief Ministers of Arunachal Pradesh, Bihar, Madhya Pradesh, and Telangana; the Finance Ministers of States/UTs, besides Secretary of Department of Revenue, Chairman and Members of Central Board of Indirect Taxes and Customs (CBIC) and senior officials of the Ministry of Finance. 

Key discussions include rate revisions, new exemptions, and potential inclusions under GST, all aimed at revenue optimization and easing consumer burdens.  

Proposed Rate Cuts and Revenue Implications  

Health and Life Insurance Premiums : The Council to consider a rate cut on health and term life insurance premiums, especially for senior citizens and family plans. Proposals include GST exemptions for policies with coverage up to Rs 5 lakh. While this could provide relief to policyholders, it may result in a revenue loss of Rs 2,600 crore.  

 Essential Items : The Council may announce GST reductions for:  
- Packed drinking water (20-litre bottles): From 18% to 5%.  
- Bicycles: From 18% to 5%.  
- Exercise notebooks: From 18% to 5%.  

Rate Hikes on Luxury and High-End Products  

The Council is likely to propose GST hikes on luxury items such as:  
- Shoes priced above Rs15,000: From 18% to 28%.  
- Wristwatches over Rs 25,000: From 18% to 28%.  
- Used electric vehicles (EVs): From 12% to 18%.  
- Small diesel and petrol vehicles: From 12% to 18%.  

Rate Hikes on Sin goods

An increase from 28% to 35% on cigarettes, tobacco products, and aerated beverages is also under consideration.

GST on Food Delivery Charges  

The Council will decide whether the 5% GST on food delivery charges by apps like Swiggy and Zomato will be applied retrospectively from 2022. Notices for unpaid GST, including Rs 803 crore for Zomato, highlight the contention. Food delivery platforms argue that they act as intermediaries and many delivery partners fall below the GST registration threshold.  

 GST on Aviation Turbine Fuel (ATF)  

Bringing aviation turbine fuel (ATF) under GST could be a key discussion. Currently, ATF is subject to an 11% central excise duty and varying state VAT rates. Inclusion under GST could standardize taxation and potentially benefit the aviation sector.

Revenue Implications of Rate Rationalization  

The Council is also set to revise rates for around 150 items, aiming to generate additional revenue of Rs 22,000 crore for the Centre.  

This GST Council meeting holds significant implications for consumers and industries, balancing revenue generation with targeted relief. Proposals for rate changes reflect a mix of rationalization and stricter compliance, paving the way for potential reforms in the GST structure.