GST for health premium of senior citizen may be exempted

The GoM has recommended exempting the Goods and Services Tax on term life insurance policies and health insurance premiums that people pay when they are senior citizens. This has been done as part of efforts to reduce the tax burden of the common man.At the recent meeting, the GoM reportedly stated that health insurance premiums for individuals who are not senior citizens for coverage up to Rs 5 lakh would continue to remain exempt, and a premium of above Rs 5 lakh would still attract an 18 per cent GST rate.At a different session on GST rate rationalisation, the GoM has offered to consider changes in tax rates on items including packaged drinking water, bicycle, exercise notebooks, wristwatches belonging to the luxury category, and shoes.If the GST Council accepts these suggestions, major changes may come: The GST on packaged drinking water of 20 litres and more will be reduced to 5 per cent from 18 per cent. GST on bicycles priced below Rs 10,000 will be reduced to 5 per cent from 12 per cent. Even exercise notebooks will see a reduction in GST to 5 per cent from 12 per cent. Simultaneously, GoM has proposed raising GST on shoes priced above Rs 15,000 and wristwatches over Rs 25,000 to 28 per cent from 18 per cent.Bihar deputy chief minister Samrat Chaudhary heads both the GoMs and said the objective is to provide relief to citizens with special focus on senior citizens. The GST Council, headed by Union finance minister Nirmala Sitharaman , is likely to take a final call on the same at its next meeting next month.Chaudhary said that rate corrections will unlock a revenue gain of Rs 22,000 crores both for the center and the states as well which will vastly compensate for the possible revenue losses from a decline in GST rates on insurance premiums.The GST Council constituted a 13-member GoM to review health and life insurance premiums. Formed last month, this GoM consists of ministers from different states, including Uttar Pradesh, Rajasthan, and West Bengal. The panel is expected to submit its report to the GST Council by the end of October.In the 2023-24 fiscal year, health insurance premiums yield Rs 8,262.94 crore and health reinsurance premiums Rs 1,484.36 crore to central and state governments.The GoM also deliberated over increasing the duties on some items like aerated beverages because tax rates would be reduced on basic commodities to reduce revenue loss. GST currently operates on a four-tier system with 5 per cent, 12 per cent, 18 per cent, and 28 per cent duty rates. In general, essential items are exempted or taxed at low rates, while luxury goods attract the highest rates. Now, the average rate of GST has fallen below the revenue-neutral rate of 15.3 per cent. Against such a backdrop, these discussions on rate rationalisation are imperative.

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GST for health premium of senior citizen may be exempted

At a different session on GST rate rationalisation, the GoM has offered to consider changes in tax rates on items including packaged drinking water, bicycle.

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