GST Council Considers Rate Cuts for Health Insurance and Electric Vehicles
GST Council may cut rates on health insurance and EVs, potentially boosting affordability and green mobility.
Photo by Czapp Botond
The GST Council is reportedly considering a reduction in Goods and Services Tax (GST) rates on health insurance and electric vehicles (EVs). This potential move aims to make health insurance more affordable, thereby increasing its penetration and promoting financial security.
For EVs, a rate cut would further incentivize their adoption, aligning with India's climate goals and push for sustainable transportation. Such decisions by the GST Council have broad economic and social impacts, influencing consumer behavior, industry growth, and government revenue.
UPSC परीक्षा के दृष्टिकोण
Constitutional provisions related to GST and GST Council (Article 279A)
Fiscal policy and its impact on economic sectors and consumer behavior
Social security and health insurance penetration in India
Environmental policy, climate change mitigation, and promotion of green technologies (EVs)
Cooperative federalism and the role of inter-state bodies in policy formulation
दृश्य सामग्री
GST Rate Cuts: Potential Impact on Health Insurance & EVs (Jan 2026)
This dashboard highlights the current GST rates for health insurance and electric vehicles, alongside their market penetration and the potential implications of proposed rate cuts on government revenue. It provides a snapshot of the economic context surrounding the GST Council's considerations.
- Current GST on Health Insurance
- 18%
- Current GST on Electric Vehicles (EVs)
- 5%
- Health Insurance Penetration (FY 2025-26 Est.)
- ~45%
- EV Market Share (New Vehicle Sales, FY 2025-26 Est.)
- ~12%
- Potential Government Revenue Impact
- Short-term dip, Long-term gain
Standard GST rate on most health insurance premiums. A reduction aims to boost affordability and penetration.
Already a reduced rate to incentivize EV adoption. Further cuts would amplify this push for sustainable transport.
Percentage of population covered by health insurance. A rate cut could significantly increase this figure, improving financial security.
Share of electric vehicles in total new vehicle sales. Rate cuts would accelerate the transition to EVs.
Initial revenue loss from rate cuts is expected to be offset by increased tax base, compliance, and economic activity in the long run.
और जानकारी
पृष्ठभूमि
नवीनतम घटनाक्रम
The GST Council is reportedly considering reducing GST rates on health insurance and electric vehicles (EVs). This move aims to enhance the affordability and penetration of health insurance, thereby boosting financial security and reducing out-of-pocket health expenditures.
For EVs, the rate cut is intended to further accelerate their adoption, aligning with India's climate change commitments and promoting sustainable transportation. Such decisions reflect the Council's role in using fiscal policy to achieve broader socio-economic and environmental goals.
बहुविकल्पीय प्रश्न (MCQ)
1. With reference to the Goods and Services Tax (GST) Council in India, consider the following statements: 1. It is a statutory body established under the Goods and Services Tax Act, 2017. 2. The Union Finance Minister serves as its Chairperson. 3. Every decision of the GST Council requires a majority of not less than three-fourths of the weighted votes of the members present and voting. Which of the statements given above is/are correct?
उत्तर देखें
सही उत्तर: B
Statement 1 is incorrect: The GST Council is a constitutional body, established under Article 279A of the Constitution, not a statutory body. Statement 2 is correct: The Union Finance Minister is indeed the Chairperson of the GST Council. Statement 3 is correct: As per Article 279A(9), decisions are taken by a majority of not less than three-fourths of the weighted votes of the members present and voting, with the Central Government having one-third of the total votes cast, and the State Governments together having two-thirds.
2. In the context of India's indirect tax regime, which of the following statements regarding the Goods and Services Tax (GST) is NOT correct?
उत्तर देखें
सही उत्तर: D
Statement D is incorrect. GST in India operates on a multi-rate structure (e.g., 5%, 12%, 18%, 28%), with different goods and services falling into different tax slabs. It is not a uniform rate across all goods and services. Statements A, B, and C are correct. Alcohol for human consumption and five petroleum products (petroleum crude, motor spirit, high-speed diesel, natural gas, and aviation turbine fuel) are currently outside GST. IGST is indeed levied on inter-state supplies. The GST Compensation Cess was introduced to compensate states for revenue losses for a period of five years from GST implementation.
3. Consider the following statements regarding government initiatives to promote health insurance and electric vehicles in India: 1. Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (PMJAY) is the world's largest government-funded health assurance scheme. 2. The FAME India scheme primarily aims to promote the manufacturing of electric and hybrid vehicles by providing subsidies to manufacturers. 3. A reduction in GST rates on health insurance is expected to increase the financial burden on public healthcare infrastructure in the short term. Which of the statements given above is/are correct?
उत्तर देखें
सही उत्तर: B
Statement 1 is correct: PMJAY is indeed recognized as the world's largest government-funded health assurance scheme. Statement 2 is incorrect: While FAME India (Faster Adoption and Manufacturing of Electric Vehicles in India) promotes manufacturing, its primary aim is to incentivize the adoption of EVs by providing demand-side incentives (subsidies to buyers) and supporting charging infrastructure, not solely subsidies to manufacturers. Statement 3 is incorrect: A reduction in GST rates on health insurance is expected to make it more affordable, leading to increased penetration. This would shift the burden from public healthcare infrastructure to private insurance, potentially reducing the financial burden on public systems in the long term, not increasing it in the short term.
4. Assertion (A): The GST Council's decision to reduce rates on electric vehicles (EVs) aligns with India's commitments under the Paris Agreement. Reason (R): Lower GST rates on EVs are expected to boost their adoption, thereby contributing to reduced carbon emissions and air pollution. In the context of the above two statements, which one of the following is correct?
उत्तर देखें
सही उत्तर: A
Both Assertion (A) and Reason (R) are true, and R is the correct explanation of A. India has committed to reducing its emissions intensity under the Paris Agreement. Promoting EVs through measures like GST rate cuts directly contributes to this goal by reducing reliance on fossil fuels in transportation, leading to lower carbon emissions and improved air quality. Thus, the rate cut aligns with India's climate commitments, and the reason correctly explains how it achieves this alignment.