Finance Minister Nirmala Sitharaman will meet with her state counterparts for the 55th meeting of the GST Council on 21 December. 

At the meeting, state finance ministers will share their proposals for the 2025-26 Budget, which is scheduled to be presented on 1 February 2025.

In addition, the Council is expected to implement certain rationalisation efforts and reduce the tax rates on several common commodities from 12% to 5% in accordance with the suggestions of a group of state ministers.

Term life insurance premiums and senior citizens’ health insurance premiums are exempt from GST, according to a general agreement reached by the group of ministers (GoM) on health and life insurance GST in October.

Furthermore, an exemption from GST has been proposed for premiums paid by individuals (apart from senior citizens) for health insurance up to Rs 5 lakh in coverage. However, the 18% GST would still be applied to premiums for health insurance policies that cost more than Rs 5 lakh.

At the moment, the GST has four tax slabs: 5, 12, 18, and 28%. Luxury and demerit items are subject to the highest slab of GST, whereas necessities are either excluded or charged at the lowest slab. On top of the highest 28% slab, luxury and sinful items are subject to a cess. It is now necessary to begin conversations on rationalising the GST rate because the average rate has dropped below the revenue-neutral rate of 15.3%.

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