Panels on GST rate rationalisation, cutting tax on insurance premium to meet on Saturday, ETCFO
New Delhi: The two ministerial panels set up by the GST Council are slated to meet on October 19 to discuss GST rate rationalisation and lowering 18 per cent tax rate on health and life insurance premiums. This would be the first meeting of the 13-member GoM, 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 per cent 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 Group of Ministers (GoM) on GST rate rationalisation would discuss pruning the 12 per cent slab, bringing more items into the 5 per cent 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 per cent 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 (GST) is a four-tier tax structure with slabs at 5, 12, 18 and 28 per cent.
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 per cent slab.
The average GST rate has fallen below the revenue neutral rate of 15.3 per cent. This has prompted the need to start discussions on GST rate rationalisation.
