The GST Council in its' 55th meeting on Saturday, postponed the decision on cutting the tax rate on life and health insurance premiums. The meeting which was being chaired by Union Finance Minister Nirmala Sitharaman and comprising state counterparts, decided that some more technicalities needed to be ironed out and tasked the GoM for further deliberations.
Bihar Deputy Chief Minister Samrat Chaudhary said one more meeting of the GoM on insurance is required to take a call on taxation of group, individual, and senior citizens policies.
“Some members said more discussions were required. We (GoM) will meet in January again,” Chaudhary told the media.
A Group of Ministers (GOM) set up by the Council under Chaudhary, in its meeting in November had agreed on exempting insurance premiums paid for term life insurance policies from GST.
Also, premiums paid by senior citizens toward health insurance coverage have been proposed to be exempted from the tax.
Besides, premiums paid by individuals, other than senior citizens, for health insurance with coverage of up to Rs 5 lakh are proposed to be exempted from GST.
However, 18 per cent GST will continue on premiums paid for policies with health insurance cover of over Rs 5 lakh.
The GST rate rationalisation GoM report, which has suggested rate tweaks in 148 items, was not tabled before the Council and would be taken up in next Council meeting.
The GoM earlier this month had arrived at a consensus to hike tax on sin goods, like aerated beverages, cigarettes, tobacco and related products, to 35 per cent from the present 28 per cent.
Currently, GST is a four-tier tax structure with slabs at 5, 12, 18 and 28 per cent. Luxury and demerit goods are taxed at highest bracket of 28 per cent, while packed food and essential items are at the lowest 5 per cent slab.
The GoM had also decided to propose rationalising tax rates on apparel. As per the decision, ready-made garments costing up to Rs 1,500 would attract 5 per cent GST, those between Rs 1,500-10,000 would attract 18 per cent. Garments costing above Rs 10,000 would attract 28 per cent tax.
Currently, garments costing up to Rs 1,000 attract 5 per cent GST, while those above that attract 12 per cent. The GoM also proposed hiking GST on shoes above Rs 15,000/pair from 18 per cent to 28 per cent. It also proposed hiking the GST rate on wrist watches above Rs 25,000 from 18 per cent to 28 per cent.
The GoM had proposed reducing GST on packaged drinking water of 20 litre and above to 5 per cent from 18 per cent, and reducing tax rate on bicycles costing less than Rs 10,000 to 5 per cent, from 12 per cent. Also, GST on exercise notebooks would be reduced to 5 per cent from 12 per cent.
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