The next Goods and Services Tax (GST) Council meeting later this month is expected to ease premiums on defined health and life insurance products, as well as several other products, but the decision to rationalize the high ticket rates may take some time. .

According to sources, the decision on the determination of compensation may also take longer, as the Group of Ministers is expected to issue a status report on the matter by now.

The GST Council, chaired by Union Finance Minister Nirmala Sitharaman and members from all states and union territories, will meet in Jaisalmer on December 21.

"The GST Council is likely to take a decision to provide relief from GST on premiums for specified health and life insurance products. However, as revenue considerations remain a priority for most states, there may not be a decision on large-scale rate rationalization at the same time," he said. a source familiar with the development.

Several states remain concerned about revenue losses from any major change in GST rates and are understood to be in favor of keeping the rates status quo for now.

A rate rationalization group of ministers led by Bihar Deputy Chief Minister Samrat Chaudhary is understood to have prepared a report suggesting changes in GST rates on nearly 150 items, including clothing and footwear, as well as a special rate of 35% on tobacco and fizzy drinks. .

However, the Central Board of Indirect Taxes and Customs insisted that any decision would be taken by the GST Council. "The GST Council has not yet discussed any changes in the GST rate. The Council has not even received the Government's recommendations. In fact, the Government is yet to finalize its recommendations and submit them to the Council, after which the Council will take a final view on the Government's recommendations," he said. X on December 3rd.

Meanwhile, sources said, the Government under Union Finance Minister Pankaj Chaudhary will not present a final report on the tax proposal to replace compensation pay in the next meeting. "It is likely that the government will issue a status report for now because it has not yet made up its mind about what to do with the compensation payment," the source said.

However, he emphasized that the states are in agreement with the continuation of a quota instead of the compensation rate, but that the specific mechanism and proposal must be finalized. The compensation is expected to be completed by March 2026 and the loan is likely to be repaid by January 2026. The GoM will consider what happens to the specification after its expiry date.

BGA in Insurance Premium

Currently, 18% VAT is charged on the insurance premium. Sources said the Board is likely to approve exemption of health and life insurance policies up to Rs 5 lakh from GST. The aim is to lower the tax burden on low and middle income groups. Similar exemptions are also likely to be provided for senior citizen policies.

These are also the main suggestions of the GoM regarding health and life insurance schemes created under the Deputy CM of Bihar. The GoM will submit its report to the GST Council in its next meeting.