FX.co ★ India Proposes Major GST Cuts on Small Cars and Insurance

India is considering a reduction in the Goods and Services Tax (GST) on small vehicles, aiming to decrease it from the existing rate of 28% to 18%. This initiative is part of a broader strategy to implement notable consumption tax cuts, according to a government source who disclosed this information to Reuters. This potential change signifies the most extensive tax reduction since the GST was instituted in 2017 under the leadership of Prime Minister Narendra Modi. The central government is contemplating a lowered GST for small petrol and diesel cars at 18%, as shared by the source involved in the negotiations. Moreover, there is a possibility of decreasing the GST on health and life insurance premiums to 5%, or perhaps even eliminating it, from its current rate of 18%. Should these proposals receive approval, they are likely to be officially announced by Diwali, a prominent five-day Hindu festival in October known as the nation's peak shopping period. In a related development, Prime Minister Modi, during his recent Independence Day speech, indicated that the government plans to introduce reforms to the GST system in the coming months.