The group of ministers (GoM) on health and life insurance GST last month met and broadly agreed on exempting insurance premiums paid for term life insurance policies, and senior citizens’ health insurance from GST
New Delhi: The GST Council will meet on December 21 in Jaisalmer, in which the much-awaited decision on exemption or lower GST rate on health and life insurance is likely to be taken.
The council, chaired by Union Finance Minister Nirmala Sitharaman and comprising her state counterparts, may also take up some rate rationalisation exercise and reduce tax rates on a host of common man items from 12 per cent to 5 per cent slab as per the recommendations of a panel of state ministers.
“The 55th meeting of the GST Council will be held on 21 December 2024 at Jaisalmer, Rajasthan,” the GST Council said in a post on X.
The council, in its previous meeting on September 9, had tasked the GoM to finalise the report on GST levy on insurance by October-end.
Following that, the group of ministers (GoM) on health and life insurance GST last month met and broadly agreed on exempting insurance premiums paid for term life insurance policies, and senior citizens’ health insurance from GST.
Also, GST on premiums paid by individuals, other than senior citizens, for health insurance with coverage of up to Rs 5 lakh is proposed to be exempted. However, 18 per cent GST will continue on premiums paid for policies with health insurance cover of over Rs 5 lakh and group insurance policies.
Separately, the GoM on GST rate rationalisation also has suggested that the council rejig tax rates on a host of goods, including packaged drinking water, bicycles, exercise notebooks, luxury wristwatches, and shoes. This rate rejig is expected to result in a revenue gain of about Rs 22,000 crore.
The GoM on rate rationalisation proposed reducing GST on packaged drinking water of 20 litres and above to 5 per cent from 18 per cent. If the GoM’s recommendation is accepted by the GST council, GST on bicycles costing less than Rs 10,000 will be reduced to 5 per cent from 12 per cent.
Also, GST on exercise notebooks will be reduced to 5 per cent from 12 per cent.
The GoM also proposed hiking GST on shoes above Rs 15,000/pair from 18 per cent to 28 per cent. It also proposed hiking GST on wristwatches costing above Rs 25,000 from 18 per cent to 28 per cent.
Bihar Deputy Chief Minister Samrat Chaudhary is the convenor of the 13-member GoM on health and life insurance and the 6-member GoM on rate rationalisation.
Currently, GST is a four-tier tax structure with slabs at 5, 12, 18, and 28 per cent.
Under GST, essential items are either exempted or taxed at the lowest slab, while luxury and demerit items attract the highest slab. Luxury and sin goods attract cess on top of the highest 28 per cent slab.
The average GST rate has fallen below the revenue-neutral rate of 15.3 per cent, prompting the need to start discussions on GST rate rationalisation.