NEW DELHI: 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, an official said on Saturday.
The GoM to decide on GST on health and life insurance premiums, at its meeting on Saturday, decided to exempt GST on premiums paid by individuals, other than senior citizens, for health insurance with a coverage of up to Rs 5 lakh.
However, 18 per cent GST will continue to be levied for a health insurance cover of over Rs 5 lakh. Separately, the GoM on GST rate rationalisation, too, met on Saturday and suggested that the GST Council rejig tax rates on a host of goods, including packaged drinking water, bicycles, exercise notebooks, luxury wrist watches and shoes. A final decision on GST on health and life insurance premiums as well as rate rationalisation is likely to the taken by the GST Council, chaired by Union Finance Minister and comprising state counterparts, in its meeting scheduled to take place next month. “The rate rejig exercise will help the states and Centre to realise revenue gain of Rs 22,000 crore, which will help cover the revenue loss from reduction in GST rates for insurance premiums,” the official added.
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The GoM on rate rationalisation proposed reducing GST on packaged drinking water of 20 litre 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 per pair from 18 per cent to 28 per cent. It also proposed hiking GST on wrist watches above Rs 25,000 from 18 per cent to 28 per cent.
Talking to reporters after the GoM meetings, Bihar Deputy CM Samrat Chaudhary, who is the convenor of the health and life insurance GoM, said, “Every GoM member wants to give relief to people. Special focus will be on senior citizens. We will submit a report to the council for taking a final decision.”
Chaudhary, who is also a convener of the GoM on rate rationalisation, said the panel would meet again before submitting its report to the council. This was the first meeting of the 13-member GoM health and life insurance premiums, which was set up to last month to suggest tax rates.