The government's panel of group of ministers (GoM) to deliberate on GST on health and life insurance premiums in its meeting on Saturday decided to exempt GST on premiums paid by individuals, other than senior citizens, for health insurance with coverage of up to ₹5 lakh. However, 18 per cent GST will continue to be levied for health insurance cover of over ₹5 lakh.
Term life insurance policies, and senior citizens' health insurance premium are likely to be exempted from GST as most members of a state ministerial panel favoured cutting taxes to benefit the common man, according to news agency PTI.
The GoM has suggested lowering tax rates on 20-litre packaged drinking water bottles, bicycles and exercise notebooks to 5 per cent. However, GoM has proposed to raise taxes on high-end wrist watches and shoes, a PTI report said.
Additionally, the GoM on GST rate rationalisation met on Saturday and suggested changes in GST rates on various goods such as packaged drinking water, bicycles, exercise notebooks, luxury wrist watches, and shoes.
The GoM on rate rationalisation has proposed to reduce GST from 18 per cent to 5 per cent on packaged drinking water of 20 litres. The GoM has suggested reducing GST on bicycles costing less than ₹10,000 from 12 per cent to 5 per cent.
The other suggestions include lowering GST on exercise notebooks from 12 per cent to 5 per cent. Meanwhile, it has been suggested to increase GST on shoes above ₹15,000 from 18 per cent to 28 per cent and on wrist watches costing more than ₹25,000 from 18 per cent to 28 per cent, the report added.
The final decision regarding GST on health and life insurance premiums will be taken at the GST Council meeting chaired by Finance Minister Nirmala Sitharaman, which will be conducted next month.
"The rate rejig exercise will help the states and Centre to realise revenue gain of ₹22,000 crore, which will help cover the revenue loss from reduction in GST rates for insurance premiums," the report said quoting an official.
The GoM is supposed to submit its report to the GST Council by October end. The Centre and states have collected ₹2,262.94 crore as GST on health insurance premiums and ₹1,484.36 crore on health reinsurance premiums in 2023-24, the report added.
