New Delhi: The group of ministers (GoM) on GST rate rationalisation on Saturday proposed to exempt the goods and services tax (GST) on premiums paid by individuals for health insurance with coverage of up to ₹5 lakh. However, the panel suggested no change in the GST health insurance cover of over ₹5 lakh.
However, final decision on the issue will be taken by the GST council meeting to be held under chairmanship of Union finance minister Nirmala Sitharaman next month, officials familiar with the matter said.
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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 reduction of taxes to benefit the common man.
The GoM has suggested lowering tax rates on 20-litre packaged drinking water bottles, bicycles and exercise notebooks to 5%. However, GoM has proposed to raise taxes on high-end wrist watches and shoes.
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. It also proposed to reduce GST from 18% to 5% on packaged drinking water of 20 litres. The GoM has suggested reducing GST on bicycles costing less than ₹10,000 from 12% to 5%.
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The other suggestions include lowering GST on exercise notebooks from 12% to 5%. Meanwhile, it has been suggested to increase GST on shoes above ₹15,000 from 18% to 28% and on wrist watches costing more than ₹25,000 from 18% to 28%, the report added.
“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.
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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.
