New Delhi. The Group of Ministers (GoM) has agreed on the proposal to reduce GST rates on health and life insurance premiums, which can provide great relief to the common man. The GoM suggested that GST should be completely abolished on senior citizens' health insurance policies and term life insurance premiums. At the same time, it has been suggested to give GST exemption on health insurance policies up to Rs 5 lakh and keep 18% GST applicable on policies above that.

The GoM also discussed the restructuring of GST rates, recommending a reduction or increase in GST rates on packaged drinking water, bicycles, exercise notebooks, expensive shoes, and watches. It is proposed to reduce GST from 18% to 5% on packaged water over 20 liters, so that the general public can get relief. It has also been said to reduce the GST rate on bicycles and exercise notebooks priced below Rs 10,000 from 12% to 5%. However, it is proposed to increase GST rates on expensive products, including shoes above Rs 15,000 and watches above Rs 25,000, from 18% to 28%.

Other changes to compensate for revenue loss
are the current four-tier GST structure with slabs of 5%, 12%, 18%, and 28%. The GoM has projected a revenue generation of around Rs 22,000 crore through the proposed rate changes, which will compensate for the loss due to the deduction on insurance premiums. Apart from this, there is also talk of increasing tax rates on products like aerated water and beverages.

A meeting will be held next month.
GoM head and Bihar Deputy Chief Minister Samrat Choudhary said that all the members are in favor of giving relief to the general public, especially to senior citizens. He informed that this proposal will be placed in the GST Council meeting to be held next month, where the final decision will be taken. In 2023-24, GST of Rs 8,262.94 crore was collected on health insurance premiums and Rs 1,484.36 crore on health reinsurance premiums. Along with this, ministers of various states are included in this committee who will submit their report by the end of this month.

According to the committee's report, GST rates on essential goods are in the lowest slab, while the highest slab applies to luxury and non-essential goods. Under this, an additional cess is also levied on luxury and sin goods along with the 28% slab. The GST Council aims to bring the average GST rates to a revenue-neutral level of 15.3%, so that the country's revenue can be kept balanced.