GST Council Meeting Eyes Relief for Insurance Policies Before Budget 2025-26
The Goods and Services Tax (GST) Council is set to convene in December, with a primary focus on exemptions from taxation on health and life insurance premiums as part of the pre-budget consultations for Union Budget 2025-26. The meeting was initially planned for November but has been rescheduled.
According to government sources, the GST Council meeting will take place in Rajasthan's Jodhpur or Jaisalmer, with both events likely to coincide with state finance ministers' meetings. This convergence of budget planning and GST policy discussions aims to sharpen focus on economic challenges while offering relief to health and life insurance policies.
Health and life insurance premiums are taxed at 18%, significantly increasing costs for policyholders. The Group of Ministers (GoM) on GST has recommended full exemptions from taxation on term life insurance premiums and health insurance premiums for senior citizens. This move will likely ease the burden on a broad segment of the population, particularly seniors and those seeking basic term life coverage.
In addition to the insurance exemptions, the GST Council is set to review rate adjustments on luxury goods and essentials, with proposals tabled to increase GST on high-end items like luxury wristwatches and shoes by Rs 22,000 crore annually. Conversely, GST on essential items such as bicycles, exercise books, and large packs of packaged drinking water could be lowered to ease household expenses.
The pre-budget consultations are expected to address pressing economic challenges that will shape the final Union Budget document for 2025-26. According to government officials, key areas of focus include job creation in rural economies, MGNREGA spending, housing, water, agriculture, and a pro-industrial approach to attract private investments.
The meeting is also seen as an opportunity for finance ministers from states and union territories to make suggestions on lowering food prices while sustaining growth. The government official expressed optimism that these consultations will help shape the final Union Budget document, driving growth, controlling inflation, and supporting rural job creation.