GST Rate Reduction– The ministerial committee is considering reducing GST rates on medicines, insurance and tractors. This can provide a lot of relief to the common people. There is also a possibility of reducing GST rates on health and term insurance.
The ministerial level committee formed to rationalize GST rates can give a big relief to the common man. The committee is considering reducing the GST rate on many medicines, insurance and tractors to 5%. Currently, tractors attract 12% or 28% GST, depending on their classification. The reduced revenue from tractors can be compensated by increasing the GST rate on expensive electric vehicles (EVs).
There is also a possibility of reduction in GST rates on health and term insurance. GST on health insurance can be reduced from 18% to 12%, while 5% GST is expected on term insurance. Although the demand for zero GST on term insurance has been raised for many days, but this may cause loss of input tax credit to insurance companies. In such a situation, the proposal of 5% GST on term insurance is being considered the most appropriate.
The number of items under 12% will be
reduced. According to a report in Times of India, the ministerial level committee is not in favour of changing the four rates of GST into three, but the number of items under 12% rate is being considered. Some items can be put in the 5% slab, while some other items can be shifted to the 18% slab.
Recommendations will come by the end of this month
The committee will make its recommendations clear by the end of this month. A meeting will be held on October 19 to discuss insurance and on October 20, item-specific discussions will be held on rate rationalization. However, many state finance ministers have agreed to a three-rate structure. On the other hand, Kerala, Karnataka and West Bengal are in favor of maintaining the current rates. Kerala Finance Minister K N Balagopal is showing more hesitation about reducing the rates, as the weak financial condition of the state is a major reason for this.