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Hindustan Times
7 hours ago
- Business
- Hindustan Times
Centre pushes insurance GST relief
NEW DELHI: The Centre has proposed exempting individual life and health insurance premiums from the 18% goods and services tax (GST), a move that received positive response from a panel discussing the issue during crucial consensus-building talks in New Delhi on Wednesday. Finance minister Nirmala Sitharaman chairs a meeting of Group of Ministers (GoMs) constituted by the GST Council on Compensation Cess, Health and Life Insurance, and Rate Rationalisation at Vigyan Bhawan, in New Delhi on Aug 20 (@FinMinIndia) Union finance minister Nirmala Sitharaman is spearheading efforts to build state consensus on Prime Minister Narendra Modi's 'next generation' GST reforms ahead of the promised Diwali implementation, with the insurance exemption forming a key component of the broader overhaul. Sitharaman is reaching out to three Groups of Ministers (GoMs)—the engagements were planned over Wednesday and Thursday—to secure agreement for reforms that would deliver Modi's promised 'very big gift' to citizens this Diwali, now about two months away. 'There is near consensus in the GoM on this matter, but the council is the final authority,' said one person aware of the development, referring to the Group of Ministers examining the proposal. The exemption would provide significant relief to millions of Indians currently paying 18% GST on both life and health insurance premiums, though it would cost the exchequer an estimated ₹9,700 crore in annual revenue. Bihar deputy chief minister Samrat Choudhary, who heads the GoM on both rate rationalisation and insurance matters, confirmed the Centre's proposal and said his panel would make recommendations to the GST Council—the apex federal body that takes final decisions on indirect tax matters. The insurance exemption is part of Modi's three-pillar GST reform vision announced during his Independence Day speech, encompassing structural reforms, rate rationalisation, and ease of living measures. The finance ministry said Sitharaman addressed all three GoMs at Vigyan Bhawan, with the Union minister of state for finance, chief minister of Goa, deputy chief minister of Bihar and finance ministers from various states participating in the deliberations. Whilst Samrat Choudhary heads the GoMs on rate rationalisation and insurance, Union Minister of State for Finance Pankaj Chaudhary leads the third GoM focused on restructuring compensation cess arrangements. The comprehensive reform package is estimated to have a revenue impact of around ₹85,000 crore annually but is expected to boost consumption by ₹1.98 lakh crore, according to an SBI Research report released on Tuesday. The reforms would reduce GST slabs from four to two, eliminate the 12% and 28% rates, and streamline compliance processes, providing massive relief particularly to the poor, farmers, and middle class. A third category of 40% GST will apply to a handful of 'demerit goods' such as luxury items that are typically highly taxed. 'The proposed reduction of GST on health and life insurance from 18% to nil shows how GST has evolved from just a way to collect revenue to a tool for advancing national goals,' said Saurabh Agarwal, tax partner at EY India. 'It can help promote financial inclusion, strengthen healthcare, and support key initiatives like Ayushman Bharat and universal coverage.' The Union finance ministry outlined how the structural reforms would correct inverted duty structures, reduce input tax credit accumulation, and resolve classification disputes whilst ensuring policy stability for long-term business planning. Rate rationalisation—reducing the current four slabs of 5%, 12%, 18% and 28% to just 5% and 18%—would provide relief to farmers, the middle class and MSMEs whilst creating a simplified, transparent tax regime that enhances affordability and boosts consumption. The third pillar focuses on ease of living through tech-driven registrations, pre-filled returns to reduce errors, and faster automated refunds to simplify compliance and enhance business operations. The GST Council, chaired by Sitharaman and comprising state finance ministers, typically reaches unanimous decisions—barring one occasion in its history—and is expected to meet in the coming weeks to deliberate on the reform proposals. 'The central government remains committed to building a broad-based consensus with the states in the coming weeks to implement the next generation of GST reforms in the spirit of cooperative federalism,' the finance ministry said. The insurance exemption proposal comes as the government seeks to strengthen healthcare access and financial inclusion, particularly relevant given India's expanding insurance penetration and the ongoing push for universal health coverage under schemes like Ayushman Bharat. Officials said the reforms, despite short-term revenue implications, would deliver massive gains through deeper tax base expansion whilst providing substantial relief to citizens, particularly the poor, ahead of the festive season.
Hans India
15 hours ago
- Business
- Hans India
India set for big reform push
New Delhi: Finance Minister Nirmala Sitharaman on Wednesday presented to Group of Ministers (GoMs) from States her government's plans for sweeping reforms in the GST regime that involves slashing tax rates and easing compliance burden for businesses. The GoMs on rate rationalisation, insurance taxation and Compensation Cess will over two days deliberate on the Centre's 'next-gen' GST reforms under which tax will be levied at 5 and 18 per cent rates. A special 40 per cent rate has been proposed on 5-7 items, including sin goods. GST is currently levied at 5, 12, 18 and 28 per cent. FM Nirmala Sitharaman tells the GoM that next generation GST reforms aimed at making India Aatmanirbhar and also the Centre committed to building broad-based consensus with States on next-gen GST reforms. While food and essential items are either at nil or 5 per cent rate, luxury and demerit goods are in 28 per cent slab, with a cess on top of it. The finance minister's address to the GoMs was for about 20 minutes during which she elaborated on the Centre's proposal, a source said. She explained the necessity for GST reforms to the states, the source added. The group of ministers (GoM) on compensation cess was set up to decide on the future of compensation cess post the loan repayment period. Besides, the GoM on insurance was deliberating on reducing tax rates on health and life insurance premium. The rate rationalisation GoM was mandated to suggest changes in slabs and rates and also remove duty inversion faced by certain sectors.
Time of India
17 hours ago
- Business
- Time of India
GST reforms to offer relief to middle class, farmers: Finance minister
NEW DELHI Finance minister Nirmala Sitharaman said on Wednesday that proposed GST rate rationalisation was aimed at providing greater relief to the common man, farmers, the middle class and MSMEs, while ensuring a simplified, transparent and growth-oriented tax regime. In her address here to the group of ministers (GoM) set up by the GST Council on compensation cess, health and life insurance and rate rationalisation, the FM also said the rate rationalisation would enhance affordability, boost consumption and make essential and aspirational goods more accessible to a wider population. The GoMs will discuss the GST rejig that has been proposed by the Centre over the next two days. Sitharaman also said reforms presented to the GoMs by the Centre are based on three pillars, which include structural reforms, rate rationalisation and ease of living. She said the proposal by the Centre is with a vision to usher in the next generation of GST reforms in India's journey towards becoming " Atmanirbhar Bharat ". Sitharaman said the reforms will correct the inverted duty structures to cut input tax credit accumulation and boost domestic value addition, resolve classification issues for simpler compliance and fewer disputes. It will also ensure stability and predictability in GST policy to strengthen industry confidence and long-term planning, the FM insisted during the meeting. She added that upcoming GST reforms will ensure seamless, tech-driven and time-bound registration, introduce pre-filled returns to reduce errors and mismatches and enable faster and automated refunds, all aimed at simplifying compliance, supporting businesses and enhancing overall ease of living and doing business. "The central govt remains committed to building a broad-based consensus with the states in the coming weeks to implement the next generation of GST reforms in the spirit of cooperative federalism," A finance ministry post on microblogging site X quoted FM. Prime Minister Narendra Modi in his Independence Day speech promised next generation GST reforms, with a two-rate structure and simpler registration and refunds, aimed at providing relief to consumers and businesses. The blueprint of the reforms circulated by the Centre proposed two main slabs of 5% for items of common use and 18% for other goods, and scrapped the 12% and 28% slabs. Stay informed with the latest business news, updates on bank holidays , public holidays , current gold rate and silver price .
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Business Standard
a day ago
- Business
- Business Standard
FM Sitharaman briefs GST GoMs on need for sweeping tax reforms
Finance Minister Nirmala Sitharaman on Wednesday presented to GoMs from states her government's plans for sweeping reforms in the GST regime that involves slashing tax rates and easing compliance burden for businesses. The GoMs on rate rationalisation, insurance taxation and compensation cess will over two days deliberate on the Centre's 'next-gen' GST reforms under which tax will be levied at 5 and 18 per cent rates. A special 40 per cent rate has been proposed on 5-7 items, including sin goods. GST is currently levied at 5, 12, 18 and 28 per cent. While food and essential items are either at nil or 5 per cent rate, luxury and demerit goods are in 28 per cent slab, with a cess on top of it. The finance minister's address to the GoMs was for about 20 minutes during which she elaborated on the Centre's proposal, a source said. She explained the necessity for GST reforms to the states, the source added. The group of ministers (GoM) on compensation cess was set up to decide on the future of compensation cess post the loan repayment period. Besides, the GoM on insurance was deliberating on reducing tax rates on health and life insurance premium. The rate rationalisation GoM was mandated to suggest changes in slabs and rates and also remove duty inversion faced by certain sectors. The GoM on GST rate rationalisation is scheduled to meet again on August 21. As per an SBI Research report, the proposal, if implemented, could result in revenue loss of about Rs 85,000 crore a year. For the current fiscal, the loss to revenue is estimated at Rs 45,000 crore assuming the new tax rates are implemented from October 1. The Centre's proposal once approved by the GoMs will be placed before the GST Council, comprising ministers from Centre and all states, in its meeting next month. Prime Minister Narendra Modi has announced rollout of the GST reforms by Diwali. The SBI Research report estimated that the effective weighted average GST rate came down from 14.4 per cent at the time of inception to 11.6 per cent in September 2019. Given the current rationalisation of rates, the effective weighted average GST rate may be 9.5 per cent.
News18
a day ago
- Business
- News18
GST 2.0 To Benefit Common Man, Small Businesses And Farmers, Says FM Nirmala Sitharaman
Last Updated: The finance minister presents to GoMs from states the Centre's blueprint for the next generation of GST reforms, describing it as a step towards making India Aatmanirbhar. Finance Minister Nirmala Sitharaman on Wednesday said the GST rate rationalisation, which may reportedly include reducing the GST structure to two slabs of 5% and 18%, will provide relief to common man, farmers, the middle class and MSMEs, while ensuring a simplified, transparent and growth-oriented tax regime. 'This would enhance affordability, boost consumption and make essential and aspirational goods more accessible to a wider population," Sitharaman said, according to a post by the finance ministry on X. Union Minister for Finance and Corporate Affairs Smt. @nsitharaman today addressed the Group of Ministers (GoMs) constituted by the GST Council on Compensation Cess, Health & Life Insurance, and Rate Rationalisation at Vigyan Bhawan, New Delhi. Union Minister of State for… — Ministry of Finance (@FinMinIndia) August 20, 2025 The finance minister said this during a meeting of the Group of Ministers (GoMs) constituted by the GST Council on Compensation Cess, Health & Life Insurance, and Rate Rationalisation, at Vigyan Bhawan, New Delhi. Sitharaman also said the new GST regime will make people self-sufficient and boost growth in manufacturing and MSMEs. The Union finance minister also presented to GoMs from states the Centre's blueprint for the next generation of goods and services tax (GST) reforms, describing it as a step towards making India Aatmanirbhar while committing to build consensus with states in the coming weeks. Speaking to Groups of Ministers (GoMs) on rate rationalisation, insurance taxation, and compensation cess, Sitharaman said 'emphasised that the proposal by the Central Government is with a vision to usher in the next generation of GST reforms in India's journey towards becoming #AtmanirbharBharat." 'During the meeting, the Union Finance Minister emphasised that the proposal by the Central Government is with a vision to usher in the next generation of GST reforms in India's journey towards becoming Atmanirbhar Bharat," Sitharaman said during the meeting. According to a PTI report citing a source present at the meeting, the Union finance minister's address lasted about 20 minutes, during which she explained the rationale for reforms and urged states to support the transition. The rate rationalisation GoM is scheduled to meet again on August 21. Two-Slab GST Structure The three GoMs will over two days deliberate on the Centre's 'next-gen' GST reforms under which tax will be levied at 5 and 18 per cent rates. A special 40 per cent rate has been proposed on 5-7 items, including sin goods. Currently, GST is levied at 5%, 12%, 18% and 28%, with luxury and demerit goods in the highest bracket and many food and essential items either exempt or taxed at 5%. At the GoM meeting, finance minister said, 'The next-generation GST stands on three pillars: structural reforms, rate rationalisation, and ease of living." Exemption for Insurance Premiums For Individuals Bihar Deputy CM Samrat Choudhary, who is also the convenor of insurance GoM, said the Centre has proposed exempting health and life insurance premiums from GST for individuals, to which some states differed. Currently, such premiums attract 18% GST. 'The Centre's proposal is clear that the insurance sector's individual and family (policies) should be exempt from GST. This has been discussed and the GoM report will be presented to the Council," Choudhary told reporters. The panel, comprising ministers from 13 states including Uttar Pradesh, West Bengal, Karnataka, Kerala and Tamil Nadu, will submit its report to the GST Council by October-end. Union Minister of State for Finance, Chief Minister of Goa, Deputy CM of Bihar and Finance Ministers of States in the three GoMs were also present at the meeting. Fiscal Impact and Next Steps According to an SBI Research estimate, the proposed changes could lead to a revenue loss of about Rs 85,000 crore annually, and about Rs 45,000 crore in the current fiscal if implemented from October 1. The research note said the effective weighted average GST rate has already fallen from 14.4% at inception to 11.6% in 2019, and may drop further to 9.5% post-reforms. The GoM on compensation cess is also deliberating on the levy's future after repayment of loans taken to compensate states during the pandemic. top videos View all Once the GoM reports are finalised, the proposals will be placed before the GST Council, which includes representatives from the Centre and all states. Prime Minister Narendra Modi in his 79th Independence Speech last week announced that the rollout of the GST reforms is targeted by Diwali 2025. Click here to add News18 as your preferred news source on Google, Stay updated with all the latest business news, including market trends, stock updates, tax, IPO, banking finance, real estate, savings and investments. Get in-depth analysis, expert opinions, and real-time updates. Also Download the News18 App to stay updated. tags : Finance Minister GST Nirmala Sitharaman view comments Location : New Delhi, India, India First Published: August 20, 2025, 18:13 IST News business » economy GST 2.0 To Benefit Common Man, Small Businesses And Farmers, Says FM Nirmala Sitharaman Disclaimer: Comments reflect users' views, not News18's. Please keep discussions respectful and constructive. Abusive, defamatory, or illegal comments will be removed. News18 may disable any comment at its discretion. 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