Nirmala Sitharaman, the Union Minister for Finance and Corporate Affairs, spoke today at Vigyan Bhawan in New Delhi to the Group of Ministers (GoMs) on compensation cess, health & life insurance, and rate rationalisation that was established by the GST Council. The conference was also attended by the Union Minister of State for Finance, the Chief Minister of Goa, the Deputy CM of Bihar, and the Finance Ministers of States in the three GoMs.
The Union Finance Minister emphasised during the meeting that the Central Government’s proposal aims to introduce the next wave of GST reforms in India’s history towards becoming #AtmanirbharBharat.
In a post on X (formerly Twitter), the Ministry of Finance said, “These reforms, proposed by the Central Government to the GoMs, are based on three key pillars.” These are:
Structural reforms: The reforms will correct inverted duty structures to cut input tax credit accumulation and boost domestic value addition, resolve classification issues for simpler compliance and fewer disputes, and ensure stability & predictability in GST policy to strengthen industry confidence and long-term planning.
Rate rationalisation: The rate rationalisation exercise aims at providing greater relief to the common man, farmers, the middle class and MSMEs, while ensuring a simplified, transparent, and growth-oriented tax regime.
This would enhance affordability, boost consumption, and make essential and aspirational goods more accessible to a wider population.
Ease of living: The upcoming GST reforms will ensure seamless, tech-driven and time-bound registration, introduce pre-filled returns to reduce errors and mismatches and enable faster, automated refunds, all aimed at simplifying compliance, supporting businesses and enhancing the overall ease of living and doing business.
Union Minister for Finance and Corporate Affairs Smt. @nsitharaman today addressed the Group of Ministers (GoMs) constituted by the GST Council on Compensation Cess, Health & Life Insurance, and Rate Rationalisation at Vigyan Bhawan, New Delhi. Union Minister of State for… pic.twitter.com/hMRFOCwXBF
— Ministry of Finance (@FinMinIndia) August 20, 2025
The Central Government remains committed to building a broad-based consensus with the States in the coming weeks to implement the next generation of GST reforms in the spirit of cooperative federalism.
GoM proposes GST exemption on health and life insurance
In a move aimed at making insurance more affordable, the GoM on insurance proposed a complete exemption of GST on health and life insurance premiums, Bihar Deputy Chief Minister Samrat Choudhary said on Wednesday.
The proposal, if accepted, could improve insurance penetration in India’s largely underinsured market.
Bihar Deputy Chief Minister Samrat Choudhary
Bihar Deputy Chief Minister Samrat Choudhary, who is a member of the GoM, confirmed that the recommendation will now be placed before the GST Council for a final decision.
He said the council will take a call after consultations with all states.
While some states supported the exemption plan, others raised concerns about possible revenue losses.
Rajasthan GST Council member Gajendra Singh
Rajasthan GST Council member Gajendra Singh said GST reforms have not caused major revenue losses to states so far, but certain measures like lower duty on solar equipment and a tax cut on insurance could have financial implications.
Currently, GST is levied at four main slabs — 5, 12, 18 and 28 per cent. Food and essential goods are taxed at the lower end, while luxury and sin goods fall in the highest slab with an additional cess.
The Centre’s new reform plan aims to simplify the system by focusing mainly on 5 and 18 per cent rates, along with a special 40 per cent levy on a handful of items like sin goods.
The group of ministers on rate rationalisation and insurance is holding two days of deliberations to fine-tune these changes.
The GoM on insurance is specifically examining ways to reduce or remove taxes on premiums, while the GoM on compensation cess is looking at the future of cess collections after the end of the loan repayment period.
The GST Council, which includes representatives from the Centre and all states, is expected to take up the proposals next month.
Exemption benefit only for individual insurance premium
This is to be noted that the exemption benefit will only be for the individual insurance premiums.
Prime Minister Narendra Modi has announced that the rollout of the new GST reforms is targeted for before Diwali.
With inputs from agencies
