The GST Council will convene on December 21 in Jaisalmer to discuss key proposals, including the reduction or exemption of GST on health and life insurance. The meeting, chaired by Union Finance Minister Nirmala Sitharaman, will also focus on rate rationalization and lowering tax rates on essential goods from 12% to 5%, as recommended by the panel of state ministers.
The GST system currently operates with four tax slabs: 5%, 12%, 18%, and 28%. In its September meeting, the council directed the Group of Ministers (GoM) on insurance to finalize recommendations. The GoM later proposed exempting GST on term life and senior citizens’ health insurance premiums.
Proposed Tax Changes:
- Health Insurance Premiums: GST exemption for health insurance premiums up to ₹5 lakh for individuals (excluding senior citizens). Premiums exceeding ₹5 lakh would still attract 18% GST.
- Packaged Drinking Water: Reduction in GST from 18% to 5% on packaged water (20 liters or more).
- Bicycles: GST cut from 12% to 5% for bicycles priced below ₹10,000.
- Exercise Notebooks: Tax rate to be reduced from 12% to 5%.
- Wristwatches and Shoes: GST hike from 18% to 28% for wristwatches above ₹25,000 and shoes above ₹15,000 per pair.
These adjustments could yield an estimated additional revenue of ₹22,000 crore.
Also Read- GST Council to Review Proposal for Rationalising Rates on Life and Health Insurance Premiums
Bihar Deputy Chief Minister Samrat Chaudhary heads the GoM on insurance and rate rationalization. Under the GST framework, essential goods are taxed at lower slabs or exempted, while luxury and non-essential items fall under higher slabs. The average GST rate has dropped below the revenue-neutral rate of 15.3%, necessitating discussions on rationalization.