The GST Council, chaired by Union Finance Minister Nirmala Sitharaman, is set to deliberate on several tax-related issues during its 55th meeting in Jaisalmer. Here’s a breakdown of the expected outcomes and discussions:
1. Gift Vouchers and GST
- Clarification on Tax Status: The council may exempt gift vouchers from GST by recognizing them as prepaid instruments under the Reserve Bank of India (RBI) guidelines.
- Impact on the Retail Sector: This exemption will address disputes, including the Karnataka Authority for Advance Rulings’ decision that categorized vouchers as taxable goods.
- Expert Viewpoint: Bipin Sapra of EY noted this would settle disputes over the taxability of vouchers, confirming them as instruments rather than supplies.
2. Insurance Premium Taxation
- Proposed Exemptions:
- Term life insurance premiums may be exempt from GST.
- Reduced tax rates for health insurance premiums, especially for senior citizens and individuals with coverage up to ₹5 lakh.
- Current Rate: Insurance premiums are currently taxed at 18%.
3. Tax Rate Revisions
- Used Cars and EVs: Proposed increase in GST from 12% to 18%.
- Luxury Goods: Rationalization of rates on items like watches, pens, shoes, and apparel.
- Sin Goods: Introduction of a separate 35% slab for items like tobacco and alcohol.
4. Food Delivery Platforms
- Tax Rate Cut: Proposed reduction to 5% without input tax credit (from the current 18% with credit) for platforms like Swiggy and Zomato.
5. Future of Compensation Cess
- Extended Deadline: Ministerial panel’s report on compensation cess may be postponed until June 2025. The cess currently ends in March 2026.
6. Diverging Views Among States
- Some states oppose significant changes, such as exemptions or cuts in insurance taxes.
- A state finance minister emphasized the need for deeper discussions on these issues.
Proposed Changes Table
| Category | Proposed Change | Current Rate | Proposed Rate |
|---|---|---|---|
| Gift Vouchers | Exempt from GST | Taxable as goods | Exempt |
| Health Insurance | Exemption/Reduced Rate for Senior Citizens | 18% | Lower or Exempt |
| Used Cars & EVs | GST hike | 12% | 18% |
| Luxury Goods | Rationalization of rates | Varies | Higher rates |
| Food Delivery Apps | Tax cut | 18% (with credit) | 5% (no credit) |
| Sin Goods | New 35% slab | N/A | 35% |
These changes reflect the council’s ongoing efforts to address industry concerns, streamline taxation, and balance state and central government interests. The outcomes of this meeting could have a significant impact on consumers and businesses alike
