GST Council Meeting December 2024: What To Expect On December 21?

The GST Council is set to hold a crucial meeting on December 21 and 22 in Jaisalmer, with a heavy agenda covering key issues, including a proposal to reduce the Goods and Services Tax (GST) on health and life insurance premiums, as well as potential changes to tax rates for several goods and services.

GoM Panel Submits Report on Insurance Premium Taxation
The Group of Ministers (GoM) panel, tasked with reviewing the tax structure on health and life insurance premiums, has submitted its report to the GST Council. The Council is likely to discuss the recommendations in its upcoming meeting. The panel has proposed the removal of GST on term life insurance premiums and health insurance for senior citizens, with a reduction of the tax rate for other health insurance premiums from 18 per cent to 5 per cent. Sources estimate that exempting senior citizens' health insurance premiums would cost the exchequer approximately Rs 3,000 crore annually. If the recommendations are adopted, it would bring down the cost of insurance for policyholders, as Finance Minister Nirmala Sitharaman had indicated earlier this month.

Rate Rationalization Exercise for 150 Items
Another key agenda item is the GoM’s report on a rate rejig for around 150 items. The exercise includes increasing rates on some items while lowering them on others. Sources suggest that this rationalization could generate an additional Rs 22,000 crore in revenue for the Centre and states annually. Among the proposed changes, the GoM has recommended slashing GST on readymade garments priced below Rs 1,500 to 5 per cent, while increasing rates for garments priced between Rs 1,500 and Rs 10,000 to 18 per cent. Other proposed changes include lowering GST on bicycles and 20-litre packaged drinking water bottles to 5 per cent, and raising GST on premium wristwatches and shoes to 28 per cent.

Higher GST on Sin Goods to Offset Insurance Losses
As part of the rate rationalization, the GoM has recommended a special GST rate of 35 per cent on sin goods, such as tobacco, pan masala, and aerated beverages. This is expected to offset the revenue loss from the proposed tax cuts on insurance premiums. Some reports suggest that the GST rate on these items could go as high as 40 per cent, the highest permissible rate.

Food Delivery Services Under Scrutiny
The GST Council is also expected to address the taxability issues concerning food delivery services, particularly the GST on delivery charges. The Council may clarify whether the 5 per cent GST on delivery charges by food delivery platforms like Zomato and Swiggy will be applied retrospectively, starting from 2022. Recently, the GST authorities sent a notice to Zomato demanding Rs 803 crore in shortfall for the period between 2019 and 2022. The authorities have argued that delivery charges attract an 18 per cent GST, but food delivery platforms have contended that their delivery partners, typically unregistered, are not liable for GST due to their low turnover.

Pre-Budget Consultations with State Finance Ministers
In addition to the GST Council meeting, state finance ministers are scheduled to meet with the Union finance minister on December 20 for pre-Budget consultations. This session is expected to focus on fiscal policies and economic strategies ahead of the upcoming Union Budget.
With these significant proposals on the table, the GST Council’s upcoming meeting is expected to shape key tax reforms that could impact both consumers and businesses across the country.