The much-awaited GST Council meet on December 21 in Jaisalmer is expected to take up the issue of exemption or lower GST rate on health and life insurance.
The council, which will be chaired by Union Finance Minister Nirmala Sitharaman and her state counterparts, may also take up some rate rationalisation exercise and reduce tax rates on a host of common man items from 12 percent to 5 percent slab, as per the recommendations of a panel of state ministers.
The meeting, chaired by Union Finance Minister Nirmala Sitharaman and attended by her state counterparts, may also address the rationalization of tax rates. The council could approve a reduction in GST rates on various everyday items, bringing them from the 12 percent slab to the 5 percent slab, based on recommendations from a group of state ministers.
“The 55th meeting of the GST Council will be held on December 21, 2024, in Jaisalmer, Rajasthan,” the Council announced on X (formerly Twitter).
The council, in its previous meeting on September 9, had tasked the GoM to finalise the report on GST levy on insurance by October-end.
The GoM on health and life insurance met last month and reached a broad agreement to exempt GST on premiums for term life insurance policies and health insurance for senior citizens.
Additionally, GST on premiums paid by individuals (excluding senior citizens) for health insurance policies with coverage up to Rs 5 lakh is expected to be exempted. However, the 18 percent GST rate would remain on premiums for policies with coverage exceeding Rs 5 lakh.
Separately, the GoM on GST rate rationalisation has proposed adjustments to the tax rates on a variety of goods, including packaged drinking water, bicycles, exercise notebooks, luxury wristwatches and footwear. This proposed revision could yield an estimated revenue increase of about Rs 22,000 crore.
The GoM has suggested lowering the GST rate on packaged drinking water (20 liters or more) from 18 percent to 5 percent. If accepted, GST on bicycles priced below Rs 10,000 would be reduced from 12 percent to 5 percent, and GST on exercise notebooks would similarly decrease from 12 percent to 5 percent.
On the other hand, the GoM recommended increasing the GST on high-end shoes (priced over Rs 15,000 per pair) from 18 percent to 28 percent, as well as hiking the GST on wristwatches valued over Rs 25,000 from 18 percent to 28 percent.
Bihar’s Deputy Chief Minister, Samrat Chaudhary, is the convenor of both the 13-member GoM on health and life insurance and the 6-member GoM on rate rationalisation.
Currently, the GST system has four main tax slabs: 5 percent, 12 percent, 18 percent, and 28 percent. Essential goods are either exempt from GST or taxed at the lowest slab, while luxury and non-essential items are taxed at higher rates. The highest 28 percent slab is further supplemented by an additional cess on luxury and sin goods.
The average GST rate has now fallen below the revenue-neutral rate of 15.3 percent, prompting a reassessment of tax rates and the need for rationalization discussions.
(With inputs from PTI)