55th GST Council Meeting Ahead: Tobacco, Insurance, To Bottled Water, GST Rates Of 148 Items To Change?

GST Rates: The 55th GST council meeting chaired by Finance Minister Nirmala Sitharaman, are scheduled to meet on December 21, 2024, in Jaisalmer, Rajasthan. Ahead of the meeting, the group of ministers (GoM) has reportedly proposed key changes in GST rates for a whopping 148 items. Some of these items include tobacco, aerated beverages, bottled drinking water, health insurance, wrist watches and garments among others. The majority of the items are for daily or common use.

Sources told CNBC-TV18, that the Group Of Ministers proposed to change GST rates of over 148 items, in favour of reducing rates on daily use & common use items.

The GoM has proposed to cut the GST rate to 5% on 20 litre plus bottled drinking water and health insurance premiums. Currently, the GST on these items is about 18%.

However, GST rates on wrist watches above Rs 25,000 or shoes above Rs 15,000 per pair - are recommended to increase to 28% from the current 18%.

Furthermore, GoM has proposed to cut GST to 5% on ready-made garments with RMG worth Rs 1,500. Currently, GST of 5-12% on readymade garments, while the GST rate is at 18% on RMG worth Rs 1,500 to Rs 10,000.

In the case of tobacco and aerated drinks items, the GoM is recommending to introduce a 35% special GST rate.

As per a report by PTI, the government is looking to propose up to a 35% special rate on tobacco and related products apart from aerated beverages. Notably, the report highlighted that the general GST tax brackets of 5%, 12%, 18%, and 28% will continue, while the 35% rate will be a new addition.

Additionally, as per the GST Council website, the Council recommended constituting a GoM to make a taxation proposal to replace the compensation cess after its abolition. The Terms of Reference of the GoM is to make a taxation proposal to replace the compensation cess after its abolition. As per the main statement, the GoM is to submit the report by December 31, 2024.

In general, the GST Council makes decisions through a consensus-based approach during its meetings. However, where any proposal is put to vote, the vote of the Central Government shall have a weightage of one-third of the total votes cast in that meeting, and the votes of all the State Governments taken together shall have a weightage of two-thirds of the total votes cast in that meeting and the proposal shall be carried if the total weighted votes of the members present and voting in favour of the proposal is equal to or greater than three-fourths.

54 meetings of the GST Council have been held thus far, and its decisions have had a significant impact on the GST implementation in India. In its 54th Meeting, the Council recommended the rollout of a pilot project for B2C e-invoicing.

The GST regime has laid the foundation for a seamless national market, reshaping India's tax landscape and driving economic growth. In this process, the GST Council has demonstrated flexibility in responding to challenges by frequently reviewing and amending policies. The dynamic approach allowed for course corrections, ensuring that the tax system evolved to meet the needs of businesses and the economy and has strengthened the idea of cooperative federalism in India, as per the GST Council website.