Union Finance Minister Nirmala Sitharaman chairs the 55th GST Council meeting, Jaisalmer on December 21, 2024. | Photo credit: PTI

A much-anticipated review of Goods and Services Tax (GST) levies on life and health insurance policies has been postponed by the apex body in charge of the indirect tax regime, the GST Council, during its 55th meeting Saturday, December 21, 2024. ), with some members wanting to continue discussions on the issue before taking a final call.

A group of ministers (GoM) led by Bihar Deputy Chief Minister Samrat Chaudhary is now expected to meet again to deliberate on insurance dues again before returning to the Council with its recommendations. Besides, the tariff rationalization suggestions on around 150 items, including price-based differential levy for clothing, 5 per cent levies on packaged drinking water and bicycles priced below ₹10,000 , were also postponed to the next Council meeting.

The Council, chaired by Union Finance Minister Nirmala Sitharaman, which met in Jaisalmer, also decided to give more time to a ministerial panel to suggest a road map for dealing with the tax levies. GST compensation tax on several points which are planned for March 2026. .

The Council agreed on some rate changes, including exempting gene therapy and long-range surface-to-air missiles (LRSAM) from the tax, increasing levies on used car sales, including electric vehicles, from 12% to 18%, and clarifying how farmers’ supplies of pepper and raisins and popcorn should be taxed. The Council decided to tax sweetened or caramelized popcorn at 18%, and to levy 5% on salted and spicy varieties not prepackaged and labeled, and 12% for labeled and prepackaged salted popcorn.

A proposal to levy GST on taxes collected by municipalities for granting floor space index (FSI) to builders, presented to the Council on Saturday, has been deferred for further consideration at the request of the Center on the grounds that this amount concerns municipalities and local authorities. . It was also agreed by the Council members that gift vouchers are not liable to be subject to GST and that criminal penalties are not imposed on borrowers by banks and non-banking financial companies that fail to comply the conditions of the loan.

Ms. Sitharaman announced that the Council had agreed to a reduction in GST levy on fortified rice grains supplied with the aim of passing it on to the Public Distribution System (PDS) for the benefit of the poor, from 18% to 5%.

“Gene therapy, which is now essential to treat life-threatening diseases, has therefore been completely exempted (from GST). LRSAM systems are very important for defense, which is why we have decided to extend the exemption for systems, subsystems, equipment, parts, sub-parts, tools, test equipment and software intended for their assembly or to their manufacture of integrated GST levies,” she transmitted after the Council meeting.

In addition, a ministerial group would be created to examine the tax levies of states affected by a natural disaster. “At the request of the State of Andhra Pradesh, the Council recommended that a GoM be constituted to examine the legal and structural issues and recommend a uniform policy on imposition of levies in the event of a natural disaster or calamity in the state,” the Finance Ministry said. » said the ministry in a statement.