Kolkata: The GST Council meeting, which Union Finance Minister Nirmala Sitharaman chairs, will take place on September 3 and 4. Scarcely has a GST Council meeting taken place in a climate of such high expectation. Prime Minister Narendra Modi set the expectations, when he said GST reforms will not only take place before Diwali but will result in the prices coming down on a huge number of items, which he described as a “double Diwali” gift.
Reports have stated that close to 200 items could see a dip in prices as GST rates could go down by 10 percentage points or more and many of these are items of common and every day use such as FMCG items such as toothpaste, talcum powder on the one hand and electronic goods such as AC machines, television sets and automobile on the other. Health and life insurance premiums can also witness complete GST relief.
Nil GST on insurance health, life premiums expected
While the attention of both the common individual and the investors will be focused on the deliberations of the meeting, with auto and consumption stocks perhaps being in focus, GST abolition on health and life insurance premiums could be one of the benefits that everyone will look forward to. The premiums on health insurance policies has surged in the past two years and if insurance premiums are taken out of the ambit of GST, it could provide some relief to the common people who are already suffering high healthcare costs.
According to reports, the Group of Ministers (GoM) have arrived at a decision that health and life insurance premiums should be given complete relief from GST. Welcoming the decision, a few states have expressed the view that the benefits of nil GST should be passed on to the policyholders. The GST relief should not line the pockets of the insurance companies. By the way, the Centre will be taking a knock of Rs 9,900 crore a year. The final decision rests with the GST Council, which is the final authority on all matters concerning GST.
Two rates instead of four
According to the current structure, GST rates in India are 0% for essential items, 5% for basic necessities, 12% for standard goods, 18% for most consumer products and 28% for luxury and sin goods. The proposed GST reforms will cut down two slabs altogether and settle for 5% and 18%, while 12% and 28% could be abolished. A new category of 40% GST for a few sin goods such as tobacco could be created. The policymakers expect that the new structure will result in higher consumption and help boost the growth rate of the economy, which could shed some basis points, thanks to the 50% tariff by US President Donald Trump.