Proposed GST Rates.The GoM wants to hike rates on many commodities and decrease rates on others; the whole change is anticipated to result in an extra Rs 22,000 crore in income. Discounts: 5% on 20L water bottles, bicycles, and watches; 28% on shoes and health insurance premiums.
The GoM agreed on Saturday to exempt term life insurance premiums and health insurance premiums up to Rs 5 lakh coverage from the GST rate rationalization. Along with raising the tax rate to 28% on expensive shoes and wristwatches, it also suggested lowering the tax rates to 5% on bicycles, exercise notebooks, and 20-liter packaged drinking water bottles.
The panel of ministers, led by Bihar Deputy Chief Minister Samrat Chaudhary, suggested raising some rates and lowering others. The whole change is anticipated to result in a 22,000 crore income surplus. The GoM decided to waive GST on premiums paid by non-elderly residents for health insurance policies with a Rs 5 lakh coverage cap. Tax on premiums paid beyond Rs 5 lakh for health insurance coverage will remain at 18%.
Regardless of the quantity of coverage, senior individuals may not be required to pay GST on their insurance premiums.
The GST Council will make the ultimate decision on this matter.
At the moment, life insurance premiums for family floater and term policies are subject to an 18% GST. “Every GoM member wants to give relief to people,” stated Chaudhary. Seniors should receive special attention. We are going to provide a report to the council. The council will make the ultimate decision.
The GoM also voted to increase the 18% to 28% GST on shoes costing more than Rs 15,000 per pair and on wristwatches costing more than Rs 25,000.
A 13-member Group of Men (GoM) was established by the GST Council last month to decide on the taxation of life and health insurance premiums.
The GoM’s convenor is Choudhary. Ministers from the following states are on the panel: Goa, Gujarat, Meghalaya, Punjab, Tamil Nadu, Telangana, Kerala, Karnataka, Rajasthan, West Bengal, Uttar Pradesh, and Goa.
By the end of October 2024, the GoM is required to deliver its report to the Council.
During a meeting on Saturday, the majority of the ministerial panel formed to look into this matter converged towards providing relief for consumers of these insurance categories, suggesting that a Goods and Services Tax (GST) rate exemption for term life insurance premium for all and health insurance premium for senior citizens could be in the offing.
GST Rates
Separately, during its discussion of rate rationalization under the GST, the Group of Ministers (GoM) decided to lower rates for a number of items, including exercise notebooks (5 percent from 12 percent), bicycles priced under Rs 10,000 (5 percent from 18 percent), and packaged water above 20 liters (5 percent from 18 percent). In the insurance industry, GST on the premiums for term life insurance is probably going to be waived for everyone, including family plans.
Senior citizens’ health insurance premiums will probably not be subject to GST. Other residents are likely to be spared from paying health insurance premiums up to Rs 5 lakh, with the current rate of 18% applied to premiums exceeding this amount. “Every member of GoM aspires to help others.” Seniors should receive special attention. We are going to provide a report to the Council. Samrat Chaudhary, the convenor of the GoMs on insurance and rate rationalization and the deputy chief minister of Bihar, stated that the Council would make the ultimate decision.
“During the meeting, discussions were held. The majority of states support removing the GST from term life insurance premiums. Plans for term life insurance that cover family members will likewise be excluded. Senior folks will receive complete health insurance benefit, while others would only be exempt up to Rs 5 lakh in coverage. For health insurance coverage exceeding Rs 5 lakh, 18% GST will be kept, a state finance minister announced during the meeting.
Concurrently, the process of rationalizing rates is also underway. The GoM on rate rationalization had its second meeting on Saturday, discussing rates on a number of items, including some for which rates had previously been lowered from 28% to 18%.
