GST Council to meet on December 21: Insurance levy, rate rationalisation, tax reduction on products on agenda
The GST Council is set to meet on December 21 to decide upon a crucial decision on whether to exempt or reduce the GST rate on health and life insurance. This announcement was made by the GST Council in a post on the social media platform X.
The meeting will be held in Jaisalmer, chaired by Union finance minister Nirmala Sitharaman and her state counterparts. The council is likely to discuss rate rationalization, and based on recommendations from the panel of state ministers, tax rates on several essential items for the common man are expected to be reduced from 12 per cent to the 5 per cent slab.
The GST system at present follows a four-tier tax structure with slabs at 5, 12, 18, and 28 per cent.
In a previous meeting on September 9, the council asked the group of ministers to finalize the report on the GST levy on insurance by October-end. Subsequently, the GoM on GST for health and life insurance met last month and reached a broad agreement to exempt GST on insurance premiums paid for term life policies and health insurance for senior citizens.
Items proposed for tax rationalization
In a separate development, the group on GST rate rationalization has also proposed revising tax rates on a range of products, including packaged drinking water, bicycles, exercise notebooks, luxury wristwatches, and shoes. This adjustment is expected to generate an additional revenue of around Rs 22,000 crore.
| Health insurance premiums | It is proposed to the council that GST should be exempted on premiums paid by individuals (excluding senior citizens) for health insurance policies with coverage of up to ₹5 lakh, however, 18 per cent GST will continue on health insurance cover exceeding that amount. |
| Packaged drinking water | The GoM has also recommended reducing the GST on packaged drinking water (20 liters and more) from 18 per cent to 5 per cent. |
| Bicycles | The GST on bicycles costing less than Rs 10,000 is expected to be lowered from 12 per cent to 5 per cent. |
| Notebooks | Also, GST on exercise notebooks will be reduced to 5 per cent from 12 per cent. |
| Wristwatches and shoes | The GoM proposed increasing the GST on shoes priced above Rs 15,000 per pair and wristwatches costing above Rs 25,000 from 18 per cent to 28 per cent. |
Bihar’s deputy chief minister, Samrat Chaudhary, serves as the convenor of both the 13-member Group of Ministers (GoM) on health and life insurance, and the 6-member GoM on rate rationalization.
Under the GST regime, essential items are either exempt or taxed at the lowest slab, while luxury and non-essential goods are taxed at the highest slab. Additionally, luxury and “sin” goods attract a cess on top of the 28 per cent rate.
The average GST rate has now fallen below the revenue-neutral rate of 15.3 per cent, creating a need to initiate discussions on GST rate rationalization.
