On July 23, 2024, Finance Minister Nirmala Sitharaman presented the budget for the fiscal year 2024-25. She announced plans to simplify and rationalize the Goods and Services Tax (GST) structure to enhance its benefits and extend it to more sectors. However, despite this promise, there are doubts about reducing GST rates.
States Hesitant About GST Rate Cuts
Finance Minister Sitharaman noted that states are cautious about reducing GST rates. She explained that states want to increase revenue without burdening the public. The next GST Council meeting on September 9, 2024, will discuss rationalizing GST rates and also review the cess on luxury and sin goods. This cess compensates states for any losses due to GST.
Committee Recommendations
On August 22, 2024, a committee of state finance ministers, led by Bihar’s Finance Minister Samrat Chowdhury, met. The committee decided not to recommend any changes to the existing GST rates of 5%, 12%, 18%, and 28%. Although the committee is against reducing these rates, the central government faces pressure to address criticism regarding the current GST rate structure. There is ongoing pressure to reduce the four GST rate slabs to three, a move suggested by CBIC Chairman Sanjay Agarwal.
Upcoming Discussions
The GST Council meeting on September 9 will also address the 18% GST on life and health insurance premiums. This issue was raised during the monsoon session, and Finance Minister Sitharaman has assured that it will be discussed with state finance ministers. Senior Minister Nitin Gadkari has also written to the Finance Minister about this issue. The permanent committee of Parliament has recommended reviewing this GST rate. Over the past three years, GST collection from health insurance premiums has totaled ₹21,256 crore, with an additional ₹3,274 crore from health reinsurance premiums.