NEW DELHI New Delhi: The Group of Ministers (GoM) constituted by the GST Council to consider the demand for lower rates on health and life insurance premiums has recommended complete waiver of GST on health insurance premium for senior citizens. The GoM, headed by Bihar Deputy Chief Minister Samrat Choudhary, has also recommended that no GST should be levied on health insurance premium where the sum insured is up to Rs 5 lakh, sources said. For all other health insurance policies, the GoM has proposed 18% GST. As far as life insurance policies are concerned, a majority of the panel members are in favour of complete waiver of GST on term insurance premium. Term insurance policies provide the sum insured only on the death of the policyholder.
There is no investment component attached to them. Besides, the GoM on GST rate rationalisation met in Delhi on Saturday and recommended a three-slab structure instead of the existing four-tier tax structure- 5%, 12%, 18% and 28%. The slabs will be based on pricing, with higher-priced items attracting GST at higher rates, sources said. The panel has also decided to cut tax rates on 20-litre packaged drinking water bottles, bicycles and exercise notebooks from 18% to 5%. The proposals include reducing GST on bicycles priced below Rs 10,000 from 12% to 5%. The panel has also suggested higher GST for some luxury items. The GoM has also suggested raising GST on shoes priced above Rs 15,000 and wristwatches above Rs 25,000 from 18% to 28%.
Some items currently in the 18% slab, such as hair dryers, hair curlers and make-up preparations, may be placed in the 28% bracket, sources said. According to a GoM member, this will help the government raise another Rs 22,000 crore, which will offset the revenue loss caused by the reduction in GST rates on health and life insurance premiums. The six-member GoM on rationalisation of rates is also headed by Bihar’s deputy chief minister.
