New Delhi: The GST Council will hold its next meeting in Rajasthan’s Jaisalmer on December 21, during which it is likely to take a decision on exempting or lowering the GST rate on health and life insurance.

The council, chaired by Union Finance Minister Nirmala Sitharaman, may also take up the issue of rationalising GST rates on a number of goods consumed by the common man such as bottled drinking water and notebooks for students, to bring them under the 5 per cent slab from 12 per cent at present.

The GST Council has asked the Group of Ministers (GoM) to finalise the report on the GST rate on insurance by the October end. After the GoM meeting on health and life insurance, the council met last month and arrived at a broad consensus on exempting GST on insurance premiums paid for life insurance policies, and senior citizens’ health insurance.

GST on premiums paid by individuals, other than senior citizens, for health insurance of up to Rs 5 lakh, is proposed to be exempted. However, 18 per cent GST will continue on premiums paid for policies with health insurance cover of over Rs 5 lakh.

The GoM on GST rate rationalisation also has suggested that the council rework tax rates on goods such as packaged drinking water, bicycles, exercise notebooks, luxury wristwatches, and shoes.

The GoM on rate rationalisation proposed reducing GST on packaged drinking water of 20 litres and above to 5 per cent from 18 per cent. If the GoM’s recommendation is accepted by the GST council, GST on bicycles costing less than Rs 10,000 will be reduced to 5 per cent from 12 per cent while GST on notebooks used by students will be reduced to 5 per cent from 12 per cent.

The GoM also proposed increasing GST on shoes priced above Rs 15,000 from 18 per cent to 28 per cent. It also proposed raising GST on wristwatches costing above Rs 25,000 from 18 per cent to 28 per cent.

Currently, GST is a four-slab regime. Essential items are either exempted or taxed at 5 per cent while luxury goods face a 28 per cent levy. The 12 and 18 per cent slabs are positioned between the two.

GST On Health Insurance Premium: The Group of Ministers (GoM) is expected to recommend exempting goods and services tax (GST) on term life insurance premiums and health insurance premiums paid by senior citizens. However, the Official’s premiums paid for health insurance coverage of above Rs 5 lakh will continue to attract 18 per cent GST.

This long-awaited GST exemption or reduction for life and health insurance has been a key demand from the industry, as it would ease the tax burden on both insurers and policyholders.

While most GoM members, led by Bihar Deputy Chief Minister Samrat Chaudhary, advocated for a “full exemption” on premiums for life and health policies, some members suggested lowering the GST rate from the current 18 per cent to 5 per cent.

The ministerial panel, responsible for reviewing the rates, is set to present its recommendations to the GST Council by October 31. The final decision will be made during the next GST Council meeting. Currently, life and health insurance premiums are subject to an 18 per cent GST.

The GST Council addressed this issue during its September meeting, following discussions about the 18 per cent GST on life and health insurance premiums. The panel learnt to have discussed the revenue implication in various options suggested by the Fitment Panel — comprising revenue officials of the Centre and states. 

Other options discussed during the GoM meeting included exempting premiums paid by senior citizens and premiums with coverage up to Rs 5 lakh, or alternatively, only exempting premiums paid by senior citizens from the GST ambit. 

Last month, the GST Council, headed by Finance Minister Nirmala Sitharaman, set up a GoM on slashing the tax rate on life and health insurance, as well as reducing the GST on cancer drugs. 

The 54th GST Council meeting, held on September 9, reached a “broad consensus” to bring relief to individuals and senior citizens with a decision on the GST applied to health insurance premiums. (With IANS Inputs)

New Delhi: As the government focuses on GST 2.0 which further eases tax laws, enhance tax simplification and adoption of technology, the ministerial panel tasked to rationalise rates is deliberating on lowering GST on essential items like health insurance and tractors up to 5 per cent. 

As tractor segment volumes saw marginal growth (year-on-year) in September, a reduction in GST on tractors will offset the revenue loss, according to industry experts. Tractors currently attract 12-28 per cent GST, depending on their classification.

Similarly, a cut in GST on health and term insurance – a long-pending demand of the sector — will further make them more affordable for the masses. As per experts, health insurance is likely to see a decrease from 18 per cent to 12 per cent, while term insurance may attract a GST of 5 per cent.

According to reports, the panel, chaired by Bihar Deputy Chief Minister Samrat Chaudhary, is focused on moving certain items from the 12 per cent slab to 5 per cent. The panel is expected to meet on October 19 over the insurance issue, followed by discussions on rate rationalisation on October 20.

Last month, the GST Council, headed by Finance Minister Nirmala Sitharaman, set up a Group of Ministers (GoM) on slashing the tax rate on life and health insurance, as well as reducing the GST on cancer drugs.

The GoM on life and health insurance is headed by Choudhary, who is currently heading the panel on GST rate rationalisation. The 54th GST Council meeting, held on September 9, reached a “broad consensus” to bring relief to individuals and senior citizens with a decision on the GST applied to health insurance premiums. The current GST rate on health and life insurance policies stands at 18 per cent.

However, the GST Council announced to reduce the rate on cancer drugs to 5 per cent from 12 per cent. The life and health insurance industry is hopeful that the reduction would alleviate the tax burden on both insurers and policyholders.

New Delhi: Goods and services tax (GST) revenue growth rate declined to 6.5 per cent in September at Rs 1.73 lakh crore as the rise in collections from domestic transactions as well as imports slowed.

However, with the festival season ahead, collections are expected to be better in the coming months, tax experts said. According to government data released on Tuesday, GST revenues in September last year was Rs 1.63 lakh crore, while the In August 2024, the mop-up was Rs 1.75 lakh crore.

Gross domestic revenue grew 5.9 per cent to about Rs 1.27 lakh crore. Revenue from import of goods was up 8 per cent to Rs 45,390 crore. Refunds worth Rs 20,458 crore were issued during the month, an increase of 31 per cent over the year-ago period.

After adjusting refunds, the net GST revenue in September stood at Rs 1.53 lakh crore, 3.9 per cent higher than the year-ago period. GST collections during the April-September period of the current fiscal year grew 9.5 per cent to over Rs 10.87 lakh crore.

PwC India Partner Pratik Jain said while the year-to-date GST revenues (September 2024) grew over 9 per cent, the monthly growth is perhaps less than expected.

“This may need a closer look by the GST Council, particularly in the wake of rate rationalisation exercise. However, with festive seasons coming, the collection for next couple of months might be better,” Jain said.

Deloitte India Partner MS Mani said the GST revenues for the coming months will be eagerly watched as they are also a proxy for the economic growth and can be correlated with the GDP numbers.

However, the significant increase in GST refunds, especially IGST Export refunds, depicts the efforts of tax authorities in expediting refunds and the policymakers in simplifying the refund process.

“The tepid single-digit growth in GST revenues in many of the large states should, hopefully, be corrected in the coming months,” Mani added.

EY Tax Partner Saurabh Agarwal said the significant increase in GST refunds for exports suggests a substantial rise in exports from India. Adding further, the overall increase in GST refunds demonstrates the government’s commitment to timely release funds to support the working capital of exporters and industries facing an inverted duty structure.