GST Council to Revise Tax Slabs Ahead of Diwali
The Goods and Services Tax (GST) Council is gearing up for an important meeting on September 3-4 in New Delhi. This two-day gathering will address significant reforms proposed by the central government, particularly focusing on rationalizing tax rates. The aim is to eliminate the 12% and 28% tax slabs while retaining the 5% and 18% slabs. This reform is anticipated to alleviate the tax burden on many goods and services, providing relief to consumers, especially as the festive season of Diwali approaches.
One of the key discussions will revolve around the exemption of GST on health and life insurance premiums, which are currently taxed at 18%. This potential change is expected to bring financial relief to individuals, making health and life insurance more affordable for the average citizen. Prime Minister Narendra Modi emphasized the need for these reforms during his Independence Day speech, highlighting their importance in supporting the middle class, farmers, and small businesses.
In the lead-up to the meeting, the group of ministers (GoM) on rate rationalization has already given a tentative nod to the Union government's proposal to reduce the number of GST slabs from four to two. While the intention is to lessen the tax burden on consumers, some ministers have raised concerns about the revenue implications of such a move, seeking ways to ensure states are compensated for potential losses.
Moreover, the council will also discuss matters related to the compensation cess, which is set to expire after March 31, 2026. This cess is a significant part of the GST framework, and its termination could have broad implications for state revenues. The discussions are crucial for setting the agenda for the future of GST in India.
Overall, the upcoming GST Council meeting is being watched closely as it could lead to substantial changes that may enhance the ease of living for many Indians. With the festive season around the corner, the proposed reforms could bring much-needed cheer to consumers and small enterprises, making it a pivotal moment in India's economic landscape.
