The much-talked-about GST Council-nominated group of ministers (GoM) on rate rationalisation is set to meet on September 25 in Goa to discuss the way forward on GST rates and several issues, including the treatment of GST on health and life insurance premiums.

The GoM’s report will be crucial in setting the agenda for the upcoming 55th GST Council meeting, likely to take place in November 2024. The GoM on ‘Rate Rationalisation,’ headed by Samrat Choudhary, Deputy Chief Minister of Bihar, has a full agenda for detailed discussions.

Sources indicate that the GoM meeting will address several pressing points and priority areas highlighted in previous GoM meetings. The 54th GST Council, held in New Delhi on September 9, tasked the GoM with returning with more detailed deliberations.

Some top agenda items include whether there should be an exemption or reduction in GST rates on health and life insurance premiums. This proposal was discussed in the 54th meeting, leading to the creation of an expanded GoM to assess the impact and need and to determine appropriate GST rates for these services. This will be the primary agenda for the GoM.

On September 9, during the 54th GST Council meeting, the GoM on rate rationalisation was expanded to include representatives from Bihar, UP, West Bengal, Karnataka, Kerala, Rajasthan, Andhra Pradesh, Meghalaya, Goa, Telangana, Tamil Nadu, Punjab, and Gujarat. This group will holistically examine GST-related issues related to life and health insurance. The GoM is expected to submit its report by the end of October 2024.

Other agenda items include discussing whether the current treatment of non-alcoholic beverages should be modified within the GST regime. This category includes bottled/packaged drinking water, carbonated non-fruit-based drinks, carbonated and fruit-based drinks, packaged tea, and coffee, all taxed differently. The GoM will deliberate on this matter.

The group will also likely consider changing GST rates for various goods and services by identifying sectors requiring urgent attention and prioritisation. Additionally, they will assess whether there is a need for further correction of the inverted duty structure.

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The GoM is expected to reconsider the GST treatment of all food products, such as namkeen and snacks, as different categories are currently taxed at varying rates despite falling under the umbrella of packaged snacks. This review aims to reduce classification issues and litigation while simplifying the GST regime to enhance the ease of doing business.

Other agenda items include rate rationalization for the transportation of goods, courier services, and air and road transport. The group will revisit the differential rates currently levied on restaurant bills, which vary for five-star hotels, standalone restaurants, and speciality category restaurants. There is a need to restructure this category, which is likely to be addressed by the panel.

These are just a few urgent agenda items, alongside others, such as considering slab changes and rate adjustments, which may be discussed later by the GoM.

Interestingly, this group has not been able to submit any concrete proposals to the council in the past. The only recommendations came during the 47th GST Council meeting held on June 28-29, 2021, in Chandigarh, when the GoM submitted interim recommendations on correcting the inverted duty structure and reviewing exemptions in the GST rate structure.

This report was submitted by the then-convenor of the GoM, BS Bommai, the former Chief Minister of Karnataka, who requested a three-month extension to finalize the report, which the council granted during the same meeting.

Since then, the GoM has not convened, but it was reconstituted with Samrat Choudhary, Deputy Chief Minister of Bihar, as the convener. Member states include the Finance Minister of Karnataka, Krishna Byre Gowda; the Finance Minister of Uttar Pradesh, Suresh Khanna; Diya Kumari, Finance Minister of Rajasthan; West Bengal Finance Minister, Chandrima Bhattacharya; and KN Balagopal, Finance Minister of Kerala.

It remains to be seen whether the GoM will be able to firm up its views on at least a few of the agenda items set for the September 25th meeting.

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