New Delhi: The Goods and Services Tax (GST) Council is likely to take up major proposals to cut tax rates on cement, insurance policies and mass-consumption services during its meeting scheduled for September 3 and 4. The move is part of a broader plan to simplify the indirect tax system and reduce classification disputes that have troubled businesses and consumers for years.
Cement levy reduction on the agenda
According to officials, the Council will discuss reducing the GST rate on cement from the current 28% to 18%. Cement is a crucial input for the construction and infrastructure sectors, and the reduction has been a long-pending demand from industry stakeholders. Officials said the move is expected to bring down the cost of construction and housing for end users, provided that cement manufacturers pass on the benefit of lower tax rates.
Industry experts, however, cautioned that cartelisation has often kept cement prices artificially high. “If the sector ensures transparency and passes on the benefits, this tax cut can significantly ease the burden on homebuyers,” a source said.
Boost for insurance penetration
Another major proposal involves making individual term assurance and health insurance policies completely exempt from GST. At present, these attract 18% GST, which is ultimately borne by consumers. Officials said removing the levy would not only reduce costs but also help increase penetration of life and health insurance across a wider population.
“Insurance is an essential social safety net. By reducing its cost, the government is ensuring more families opt for financial protection,” said a senior official familiar with the discussions.
Relief for salons and beauty parlours
The Council will also examine a proposal to cut GST on certain mass-consumption services. While small salons are exempt from GST, mid-sized and premium outlets currently face 18% GST. The proposal seeks to bring this down to 5% in order to reduce the burden on consumers.
Officials noted that many urban households rely on such services and lowering the tax rate could provide immediate relief. The move would also align the sector with the government’s larger objective of rationalising GST rates across categories.
Simplified slabs under consideration
The meeting is expected to deliberate on restructuring GST into fewer slabs. Currently, GST has multiple rates ranging from 5% to 28%, with additional cess on some items. The Centre is keen on moving to just two primary slabs — 5% and 18% — along with a 40% rate for a handful of luxury and sin goods.
Sources indicated that smaller cars of up to four metres length could attract 18% GST, while larger ones may fall into the 40% slab, down from the current effective rate of 50% (28% GST plus 22% cess). Officials believe this will simplify compliance and reduce disputes.
Balancing revenue and consumer interest
Officials stressed that the government is mindful of balancing consumer relief with the need to maintain revenue flows. “When GST was introduced, the focus was on revenue neutrality. Eight years of experience now shows the need for a simpler, consumer-friendly structure that also supports the exchequer,” a senior official said.
The Council will also consider moving all food and textile items to the 5% slab, which could benefit households and small businesses by reducing prices and ending classification confusion.
Conclusion
The upcoming GST Council meeting is expected to bring significant changes that can impact construction, healthcare, insurance and service sectors. If approved, the proposals could lower costs for millions of consumers and provide a fresh push to the economy. However, the extent of benefits will depend on how effectively the industry passes on the reduced tax burden.