NEW DELHI: The Group of Ministers (GoM) constituted by the GST Council to look into the demand for lower rates on health and life insurance premium recommended a complete GST waiver on health insurance premium for senior citizens.
Sources said the GoM, headed by the Bihar deputy chief minister Samrat Choudhary, also recommended that no GST be levied on health insurance premium where the sum insured is up to Rs 5 lakh.
For all other health insurance policies, the GoM has proposed 18% GST. As far as life insurance policies are concerned, most panel members favoured a complete waiver of GST on term insurance premium.
Term insurance policies offer a sum assured only at the death of the policyholder. These do not have any investment component attached to them. Separately, the GoM on GST rate rationalisation, too, met in Delhi on Saturday and recommended a three-slab structure instead of the existing four-tier tax structure—5%, 12%, 18%, and 28%.
Sources said the slabs will be based on pricing, with high-value items attracting GST at higher rates. The panel also decided to lower tax rates on 20-litre packaged drinking water bottles, bicycles, and exercise notebooks to 5% from 18%. The proposals include cutting GST on bicycles costing under Rs 10,000 to 5% from 12%.
28% GST for luxury watches, shoes
The panel has also suggested higher GST for some luxury items. The GoM also suggested hiking GST on shoes above Rs 15,000 a pair and on wrist watches above Rs 25,000 from 18% to 28%.
Sources said some items currently in the 18% slab, such as hair dryers, hair curlers, and make-up preparations, could be put in the 28% bracket.
According to one of the members of the GoM, this would help the government mop up Rs 22,000 crore more, thus making up for the revenue losses due to the reduction in GST rates on health and life insurance premiums. The six-member GoM on rate rationalisation is also headed by the Bihar deputy CM.