GST Council Meeting to Review Tax Rates

The GST Council is set to convene shortly, with a comprehensive review of the eight-year-old GST regime on the agenda. The focus will be on reducing taxes for several consumer-focused items currently in the 12% bracket, as well as lowering the burden on high-ticket items like air conditioners.

Compensation Cess and Sin Goods

With the compensation cess due to end in March, plans to impose a cess on sin goods such as tobacco are expected to be finalized. This move aims to mitigate potential revenue losses for states transitioning away from GST compensation.

Insurance and Health Sector Relief

The Centre is advocating for a liberal view on pure term insurance plans, proposing a shift from the current 18% GST to a nil bracket. Discussions on health insurance relief are also underway, promising significant benefits for middle-class consumers.

Proposal to Eliminate 12% GST Slab

A proposal to do away with the 12% GST slab is under consideration, alongside other options, to streamline tax rates while keeping revenue implications in check. Businesses may see adjustments in tax rates for certain items, signaling a balanced approach to tax rationalization.

Political Consensus and Future Framework

Achieving consensus on these changes will require political maneuvering, with the Centre open to some revenue loss for the sake of long-term benefits. The goal is to establish a stable tax framework that reduces the need for frequent adjustments, offering certainty to both businesses and consumers.