“GST Council has gone into great details of looking item by item by item to see where rate reduction can happen. And equally, four rates or three rates or two rates or collapse into one rate is also being discussed,” Sitharaman said.
In reply to a question from Nadimul Haque, a Member of Parliament from the All India Trinamool Congress (AITC) representing West Bengal, Sitharaman underscored the continuous decrease in GST rates.
She added: “Every finance minister from every state is doing their maximum best so that GST can become simpler and lesser in terms of compliance difficulties.”
“At the point of GST’s introduction, on an average, 15.8% tax could have been levied without additionally burdening the consumer. If that was the rate at which the GST rates were brought in, today, the rate has come down to 11.3%,” the FM said.
During the discussion, MP Haque raised concerns about the complexity of the GST structure and asked if the government was considering a reduction in the number of tax slabs, similar to recent reforms in income tax.
In response, Minister of State for Finance Pankaj Choudhary emphasized the collaborative nature of the GST Council, established under Article 279A of the Constitution. He explained that decisions related to GST are made collectively by the Council, which includes finance ministers from all states.
Choudhary also mentioned the formation of a Group of Ministers (GoM) after the 45th GST Council meeting. Chaired by the Karnataka Finance Minister, the GoM was tasked with reviewing and proposing changes to simplify the GST rate structure.
When discussing the determination of GST rates, Sitharaman clarified that these decisions are not solely made by the central government. She explained that it is a collective decision of the GST Council, not just the Government of India.
FM Sitharaman highlighted that state finance ministers have the authority to propose and discuss modifications to GST rates to meet the specific needs of their states. These proposals are then deliberated upon during GST Council meetings.
The most recent meeting of the GST Council occurred on December 21, 2024, during which important recommendations were put forward by the panel of state finance ministers. Although several recommendations were discussed, notably absent was any progress on reducing the GST rate on individual health insurance policies to 5%.
In a report submitted to the GST Council in December, the 13-member Group of Ministers (GoM) recommended a GST exemption for premiums paid on pure term life insurance policies covering family members, as well as for health insurance policies for senior citizens aged 60 and above.
Exempting term-life insurance from GST will result in an annual loss of approximately Rs 200 crore for the government. Additionally, exempting health insurance premiums for senior citizens will incur an additional cost of around Rs 3,000 crore annually.
Source: Business Today
