GST Council Approves Two-Rate Tax Slab and Removes Tax on Insurance Premiums
The 56th GST Council meeting, chaired by Union Finance Minister Nirmala Sitharaman, decided to simplify the tax structure into primarily two slabs: 5% and 18%. A significant move includes removing the 18% GST on life and health insurance policies to make them more affordable. A 'special rate' of 40% will be introduced for 'sin goods' and luxury items like tobacco, large cars, and yachts. The changes, effective from September 22, aim to reduce prices for daily-use items, food, and life-saving medicines while addressing the long-pending inverted duty structure in sectors like textiles and fertilizers.
Key Points
- The GST structure is being streamlined to 5% and 18% slabs for most goods and services.
- Health and life insurance premiums are now exempt from GST, moving from 18% to 0%.
- A 40% special rate applies to sin goods like tobacco and super-luxury items like yachts and large cars.
- Inverted duty structures in man-made textiles and fertilizers are being rectified to improve sector efficiency.
Exam Facts
- 56th GST Council meeting
- Effective date: September 22
- 33 life-saving medicines moved from 12% to 0% GST
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