GST Panels Propose Slew of Tax Tweaks; Rate Changes Likely for 100+ Products
By: Admin | October 21, 2024
Category: GST Recent News
Read Time: 4 Minutes
A Group of Ministers (GoM), formed to assess the Goods and Services Tax (GST) levies on life and health insurance premiums, has recommended several tax changes, including potential exemptions and rate tweaks for over 100 products. These proposed changes could significantly impact both consumers and businesses.
Key Proposals:
- Term Life Insurance Exemption:
The GoM has suggested exempting term life insurance from GST, providing a relief that could cost the government approximately ₹200 crore annually. - Health Insurance Relief for Senior Citizens:
The GoM recommended exempting health insurance premiums up to ₹5 lakh for senior citizens aged 60 and above, a move that could cost an additional ₹3,000 crore to the exchequer. - Partial Exemption for Health Insurance:
Although full tax exemption on health insurance premiums was discussed, the GoM decided against it, leaving the current 18% GST on most health insurance policies in place.
Revenue Impact:
Between FY22 and FY24, GST collected from health insurance premiums amounted to about ₹21,000 crore.
The proposed exemptions could lead to a revenue loss for the government, which the GST Council will need to weigh when making final decisions.
Rate Tweaks for Over 100 Products:
Simultaneously, another GoM has reviewed rate rationalisation for several goods. The panel recommended GST rate changes on over 100 products to generate additional revenue of ₹22,000 crore annually. Some of the proposed changes include:
Lowering GST to 5% on 20-litre packaged drinking water bottles, bicycles, and exercise notebooks.
Raising GST to 28% on high-end wristwatches priced above ₹25,000 and shoes priced above ₹15,000, up from the current 18%.
Balancing Revenue Losses and Gains:
The additional ₹22,000 crore expected from the rate hikes would help offset the losses from the proposed insurance tax exemptions, which include the term life insurance and senior citizen health insurance exemptions.
Outlook for GST Structure:
Despite the suggestions for rate changes, the merging of GST slabs—currently at 5%, 12%, 18%, and 28%—was not prominently discussed during the meeting. Many states are hesitant to modify the slab structure, fearing potential revenue losses.
The GST Council, which convened a 13-member GoM led by Bihar’s deputy chief minister Samrat Choudhary, will review these recommendations and make final decisions by the end of October.
GSTUpdates #LifeInsurance #HealthInsurance #TaxRelief #RateRationalisation
