According to official sources quoted by CNBC-TV18 in its report, the GoM on Life and Health Insurance and the GoM on rate rationalisation are both likely to be headed by Bihar Deputy Chief Minister, Samrat Choudhary. These panels are set to meet for two days to examine the existing tax structure and recommend changes aimed at streamlining rates and ensuring parity in the sector.
The revised tax structure as proposed by the Centre will collapse the existing four-tier GST system into just two principal slabs: 5 per cent and 18 per cent. According to the new proposal, the 12 per cent and 28 per cent brackets are proposed to be eliminated, with most products in the 12 per cent category moving to either 5 per cent or 18 per cent . Further, a few select items would remain taxed at a special 40 per cent rate, aiming to act as a revenue cushion for the exchequer.
GoM on Life and Health Insurance
The other GoM on life and health insurance, again headed by Bihar Deputy CM, is expected to recommend some sweeping relief measures. The panel is exploring full GST exemption on health and life insurance premiums for policies up to Rs 5 lakh, specifically benefiting senior citizens. Currently, the insurance premiums levy GST of 18 per cent.
While the government has estimated an annual revenue impact of about Rs 2,600 crore if the exemptions are implemented, officials argue that this would be compensated by greater insurance coverage.
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GoM on Compensation Cess
The third GoM headed by MoS Finance Pankaj Chaudhary, as stated by the CNBC-TV18 report, will meet to discuss the future of the GST compensation cess. The cess was initially introduced to help states bridge revenue shortfalls, but it was extended till March 26 to allow the Centre to repay COVID-era loans taken to supplement state finances. Many reports had indicated that the compensation cess might end ahead of schedule.
Earlier on Friday, PM Narendra Modi had highlighted the importance of reforms under GST, which would bring relief to the common man, farmers, middle class and MSMEs.