The GST Council is set to meet soon for what could be one of the most significant reviews of the Goods and Services Tax regime since its launch eight years ago.
According to a TOI report, high on the agenda is a sweeping reassessment of tax rates on consumer goods and a proposal to trim the burden on products like air conditioners, which are currently taxed at the highest slab.
Compensation cess strategy
Another critical issue is the compensation cess—a pool of funds the Centre has been releasing to states to offset GST-related revenue losses.
With this arrangement ending in March, TOI reported that the Council is expected to draft plans to maintain revenue streams, possibly by continuing to levy additional cess on products such as tobacco and other “sin goods.”
States remain apprehensive about potential revenue shortfalls if the cess disappears without an alternative. This fear has often made them reluctant to approve any tax reductions, even when such cuts are considered beneficial to consumers.
Relief likely for insurance policies
Among the proposals is a move to eliminate GST on pure term insurance policies altogether, shifting them from the current 18% rate to a zero-tax bracket, the news outlet noted.
While the life insurance industry has argued for reducing the tax to 12%, the Centre appears inclined to go further to support middle-class buyers.
Health insurance may also see some relief, though no final call has been made yet.
12% slab under scrutiny
One of the most significant changes on the table is scrapping the 12% GST slab entirely, according to the report.
While this could lower taxes on many items, officials are considering whether goods primarily used by businesses might need to shift to a higher rate to safeguard revenue.
Officials familiar with the deliberations told TOI that no final decision has been reached.
They indicated that any overhaul must balance the goal of rationalisation with fiscal prudence.
Balancing revenue & consumption
The Centre is open to accepting some revenue loss if it means boosting consumption.
According to TOI, officials argue that a purely arithmetic approach often fails to capture the longer-term gains of higher sales volume that follow tax cuts.
This approach, however, could require extensive discussions and consensus-building among states, some of which are still sceptical about revenue impact.
Need for stable framework
Talks around GST simplification have been under way for more than a year, but a breakthrough has remained elusive.
The group of ministers tasked with rationalisation and insurance-related tweaks has so far recommended incremental adjustments rather than a broad reset.
Sources told TOI that the intention now is to put in place a more predictable tax structure that reduces the need for frequent revisions and provides clarity to both businesses and consumers.
According to a TOI report, high on the agenda is a sweeping reassessment of tax rates on consumer goods and a proposal to trim the burden on products like air conditioners, which are currently taxed at the highest slab.
Compensation cess strategy
Another critical issue is the compensation cess—a pool of funds the Centre has been releasing to states to offset GST-related revenue losses.
With this arrangement ending in March, TOI reported that the Council is expected to draft plans to maintain revenue streams, possibly by continuing to levy additional cess on products such as tobacco and other “sin goods.”
States remain apprehensive about potential revenue shortfalls if the cess disappears without an alternative. This fear has often made them reluctant to approve any tax reductions, even when such cuts are considered beneficial to consumers.
Relief likely for insurance policies
Among the proposals is a move to eliminate GST on pure term insurance policies altogether, shifting them from the current 18% rate to a zero-tax bracket, the news outlet noted.
While the life insurance industry has argued for reducing the tax to 12%, the Centre appears inclined to go further to support middle-class buyers.
Health insurance may also see some relief, though no final call has been made yet.
12% slab under scrutiny
One of the most significant changes on the table is scrapping the 12% GST slab entirely, according to the report.
While this could lower taxes on many items, officials are considering whether goods primarily used by businesses might need to shift to a higher rate to safeguard revenue.
Officials familiar with the deliberations told TOI that no final decision has been reached.
They indicated that any overhaul must balance the goal of rationalisation with fiscal prudence.
Balancing revenue & consumption
The Centre is open to accepting some revenue loss if it means boosting consumption.
According to TOI, officials argue that a purely arithmetic approach often fails to capture the longer-term gains of higher sales volume that follow tax cuts.
This approach, however, could require extensive discussions and consensus-building among states, some of which are still sceptical about revenue impact.
Need for stable framework
Talks around GST simplification have been under way for more than a year, but a breakthrough has remained elusive.
The group of ministers tasked with rationalisation and insurance-related tweaks has so far recommended incremental adjustments rather than a broad reset.
Sources told TOI that the intention now is to put in place a more predictable tax structure that reduces the need for frequent revisions and provides clarity to both businesses and consumers.
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