GST Rate Rationalisation, Insurance Tax Cuts On Agenda As Panels Meet This Saturday
This would be the first meeting of the 13-member Group of Ministers, under Bihar Deputy Chief Minister Samrat Choudhary, which was set up to suggest tax on health and life insurance premiums.
The two ministerial panels set up by the GST Council are slated to meet on Oct. 19 to discuss GST rate rationalisation and lowering 18% tax rate on health and life insurance premiums.
This would be the first meeting of the 13-member Group of Ministers, under Bihar Deputy Chief Minister Samrat Choudhary, which was set up to suggest tax on health and life insurance premiums.
The panel, which includes ministers from Uttar Pradesh, Rajasthan, West Bengal, Karnataka, Kerala, Andhra Pradesh, Goa, Gujarat, Meghalaya, Punjab, Tamil Nadu and Telangana, has been mandated to submit its report to the GST Council by October end.
Currently an 18% GST is levied on health and life insurance premiums and the GoM would be suggesting tax rate of health/medical insurance including individual, group, family floater and other medical insurance for various categories like senior citizens, middle class, and persons with mental illness.
It would also suggest tax rates on life insurance, including term insurance, life insurance with investment plans whether individual or group, and re-insurance.
In 2023-24, the Centre and states collected Rs 8,262.94 crore through GST on health insurance premium, while Rs 1,484.36 crore was collected on account of GST on health reinsurance premium.
The GoM on GST rate rationalisation would discuss pruning the 12% slab, bringing more items into the 5% bracket, including rationalising taxes on medical and pharma-related items, bi-cycles and bottled water.
The GoM on rate rationalisation, chaired by Bihar Deputy Chief Minister Samrat Choudhary, may also discuss the possibility of merger of 12 and 18% slabs. The six-member GoM also includes Uttar Pradesh Finance Minister Suresh Kumar Khanna, Rajasthan Health Services Minister Gajendra Singh, Karnataka Revenue Minister Krishna Byre Gowda, West Bengal Finance Minister Chandrima Bhattacharya and Kerala Finance Minister K N Balagopal.
To make good the revenue loss that would be incurred on account of lowering the tax rate on goods used by the common man, the GoM also discussed the possibility of raising tax rates on some items including aerated water and beverages.
Currently, Goods and Services Tax is a four-tier tax structure with slabs at 5, 12, 18 and 28%.
Under GST, essential items are either exempted or taxed at the lowest slab, while luxury and demerit items attract the highest slab. Luxury and sin goods attract cess on top of the highest 28% slab.
The average GST rate has fallen below the revenue neutral rate of 15.3%. This has prompted the need to start discussions on GST rate rationalisation.
