Zero GST on Health Insurance? Big Revamp Likely Next Month – Here’s What All Could Get Cheaper | Economy

From Cement to Cars: GST Council Plans Biggest Rate Cut Yet

New Delhi: In a major GST rate rationalisation move, a bulk of goods will see their levies slashed as the GST council meets early next month. According to a TOI report, among the key agenda items of the meeting will be the proposal to move all food and textile products into the 5% slab.

The report further states that the levy on cement may be cut from 28% to 18%, meeting a long-standing demand from the construction and infrastructure sectors, where the material is a critical input. The reduction is expected to ease costs for end consumers, though much will depend on whether the industry, often accused of cartelisation, actually passes on the tax benefits.

The government is also reportedly considering lowering levies on certain commonly used services from 18% to 5%. While small salons remain exempt, mid- and high-end establishments currently face an 18% GST, a burden ultimately passed on to consumers.

In another major relief, GST on term assurance and individual health insurance policies is proposed to be reduced to zero. The move is expected to make critical coverage more affordable and help expand insurance penetration across a wider section of the population.

These proposals will be taken up at the upcoming GST Council meeting on September 3–4, chaired by Union Finance Minister Nirmala Sitharaman and comprising all states. The Council is set to deliberate on shifting to a simpler structure with fewer slabs — 5% and 18% for most goods and services, and 40% for select sin and luxury items.

Although states like West Bengal have suggested raising the 40% ceiling, sources indicated the Centre believes such a step would send the wrong signal and also necessitate major legal changes. Under the Centre’s plan, small cars (up to 4 metres in length) would be taxed at 18%, while larger vehicles would face a 40% levy, lower than the current 50% (28% GST plus 22% cess).

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