GoM proposes GST exemption on health insurance policies
The Group of Ministers has suggested GST exemption on term insurance and health insurance policies for senior citizens
Term life insurance policies and senior citizens' health insurance premiums 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 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 Rs 5 lakh. However, 18% GST will continue to be levied for health insurance coverage 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 be taken by the GST Council, chaired by the 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 a reduction in GST rates for insurance premiums," the official added.
The GoM on rate rationalisation proposed reducing GST on packaged drinking water of 20 litres and above to 5% from 18%. 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% from 12%. The GoM also proposed hiking GST on shoes above Rs 15,000/pair from 18% to 28%. It also proposed hiking GST on wrist watches above Rs 25,000 from 18% to 28%.
Talking to reporters after the GoM meetings, Bihar Deputy Chief Minister 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. A final decision will be taken by the Council".
Chaudhary, who is also a convenor of the GoM on rate rationalisation, said the panel will 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 last month to suggest tax rates.