The 55th GST Council Meeting is being held today, December 21, 2024, in Jaisalmer, Rajasthan, under the leadership of Union Finance Minister Nirmala Sitharaman. Attended by state finance ministers, this meeting aims to address critical rate revisions across various sectors, with significant implications for consumers and industries alike.

Key Agenda Items

1. Aviation Turbine Fuel (ATF) Under GST
A long-standing demand of the aviation sector, the inclusion of aviation turbine fuel (ATF) under GST could standardize taxation across states. Airlines would gain the ability to claim input tax credit (ITC) on fuel purchases, which could lower operational costs and boost sector growth. If approved, it will mark a transformative step for aviation taxation, which currently involves excise duty and VAT.

2. GST Relief on Life and Health Insurance
Consumers could benefit from lower costs on life and health insurance premiums if the Council approves a full GST exemption on individual term policies and reinsurance. This recommendation from the Group of Ministers (GoM) aims to make insurance more affordable, potentially boosting penetration in underserved segments.

3. Rate Hikes on EVs and Smaller Vehicles
The Council is also deliberating a GST rate increase from 12% to 18% on used electric vehicles (EVs) and smaller petrol/diesel cars. This move seeks to align rates for EVs with broader market segments but could face resistance due to its potential impact on affordability.

Other Major Discussions

4. Online Food Delivery GST Reduction
A proposal to reduce GST on food delivery charges from 18% to 5% has been put forward by the fitment committee. If implemented, this move could make online food delivery more affordable, providing relief to millions of consumers who rely on e-commerce platforms.

5. Rate Revisions for Luxury and Sin Goods
The GoM on GST rate rationalization has proposed increasing taxes on luxury items and sin goods. This step could generate additional revenue but may impact consumer demand in these sectors.

6. Disaster Mitigation Funds for States
West Bengal Finance Minister Chandrima Bhattacharya has requested that 50% of the 50-year interest-free loans under the Scheme for Special Assistance to States for Capital Investment (SASCI) be earmarked for disaster mitigation. This proposal aims to support states frequently impacted by natural disasters.

Background on GST Framework

Since the implementation of GST on July 1, 2017, key commodities like crude oil, natural gas, petrol, diesel, and ATF have remained outside its purview. These commodities are subject to excise duty and VAT, creating disparities in taxation. Industries such as aviation have consistently urged their inclusion under GST to streamline processes and reduce tax burdens.

Potential Outcomes of the Meeting

• Cheaper Insurance: Adoption of GST exemptions for life and health insurance could lead to widespread consumer relief.
• Affordable Food Delivery: Reduced GST on food delivery charges may encourage e-commerce growth.
• Higher Costs for Vehicles: Rate hikes for EVs and smaller vehicles could slightly dampen demand in price-sensitive segments.

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