The GoM on GST rate rationalisation has decided to exempt GST on premiums paid for health insurance with coverage of Rs 5 lakh for individuals.
The GoM proposes to reduce rates on several items and hiking on many, and the overall rejig is expected to yield a revenue surplus of Rs 22,000 crore.
The GoM on GST rate rationalisation on Saturday decided to exempt health insurance premiums up to Rs 5 lakh coverage and term life insurance premiums. It also proposed to cut tax rates on 20-litre packaged drinking water bottles, bicycles and exercise notebooks to 5 per cent, apart from suggesting higher 28 per cent tax on high-end wristwatches and shoes.
The group of ministers, headed by Bihar Deputy Chief Minister Samrat Chaudhary, proposed to reduce rates on several items and hike on many, and the overall rejig is expected to yield a revenue surplus of Rs 22,000 crore.
The GoM decided to exempt GST on premiums paid for health insurance with coverage of Rs 5 lakh for individuals other than senior citizens. Premiums paid for health insurance coverage of above Rs 5 lakh will continue to attract 18 per cent GST.
However, there might be no GST on insurance premium paid for senior citizens, irrespective of the coverage amount.
The final decision in this regard will be taken by the GST Council.
Currently, 18 per cent GST is levied on life insurance premiums paid for term policies and family floater policies.
Chaudhary said, “Every GoM member wants to give relief to people. Special focus be on senior citizens. We will submit a report to the council. A final decision will be taken by the council”.
The GoM also decided to hike GST on shoes above Rs 15,000 a pair and on wrist watches above Rs 25,000 from 18 per cent to 28 per cent.
The GoM proposed reducing GST on packaged drinking water of 20 litres and above to 5 per cent from 18 per cent. It also decided to cut the tax rate from 12 per cent to 5 per cent on bicycle less than Rs 10,000.
GST on exercise notebooks will be reduced to 5 per cent from 12 per cent, the GoM proposed.
Last month, the GST Council in its meeting had decided to set up a 13-member GoM to decide on tax on health and life insurance premiums.
Choudhary is the convenor of the GoM. The panel includes ministers from Uttar Pradesh, Rajasthan, West Bengal, Karnataka, Kerala, Andhra Pradesh, Goa, Gujarat, Meghalaya, Punjab, Tamil Nadu, and Telangana.
The GoM has been mandated to submit its report to the Council by the end of October 2024.
Currently, there are five slabs under GST — 0 per cent, 5 per cent, 12 per cent, 18 per cent, and 28 per cent.
(With inputs from agencies)
