The rate rejig decision taken by the GoM on GST rate rationalisation would lead to a revenue gain of ₹22,000 crore, officials said.
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“On Saturday (October 19, 2024), the Group of Ministers (GoM) on GST rate rationalisation decided to lower tax rates on 20-litre packaged drinking water bottles, bicycles and exercise notebooks to 5%, but suggested raising taxes on high-end wrist watches and shoes,” an official said.
The rate rejig decision taken by the GoM on GST rate rationalisation under Bihar Deputy Chief Minister Samrat Chaudhary would lead to a revenue gain of ₹22,000 crore, the officials added.
The GoM proposed reducing GST on packaged drinking water of 20 litres and above to 5% from 18%. If the GoM’s recommendation is accepted by the GST Council, the GST on bicycles costing less than ₹10,000 will be reduced to 5% from 12%.
Also, GST on exercise notebooks will be reduced to 5% from 12%, the GoM proposed.
The GoM also suggested hiking GST on shoes above ₹15,000 a pair and on wrist watches above ₹25,000 from 18% to 28%.
The GoM on rate rationalisation in its previous meeting on Saturday (October 19, 2024) had discussed tax rate tweaks on over 100 items, including lowering taxes on certain goods from 12- to 5%, to give relief to the common man.
Some items in the 18% slab like hair dryers, hair curlers, and beauty or make-up preparations that the GoM took up could be back in the 28% bracket.
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, and Kerala Finance Minister K.N. Balagopal.
Currently, GST 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%, prompting the need to start discussions on GST rate rationalisation.
Term life insurance premium, senior citizen’s health coverage may be exempt
The GoM to decide on the GST rate on life and health insurance met on Saturday (October 19, 2024) and decided to exempt GST on premiums paid for health insurance with coverage of ₹5 lakh for individuals other than senior citizens.
The final decision in this regard will be taken by the GST Council. Official premiums paid for health insurance coverage of above ₹5 lakh will continue to attract 18% GST.
Currently, 18% GST is levied on life insurance premiums paid for term policies and family floater policies.
“GoM members are broadly on board for cutting my rates on insurance premiums. A final decision will be taken by the GST Council,” an official said.
Bihar Deputy Chief Minister Samrat Chaudhary said, “Every GoM member wants to give relief to people. Special focus be on senior citizens. We will submit a report to the council. A final decision will be taken by the council”.
However, there might be no GST on insurance premiums paid for senior citizens, irrespective of the coverage amount.
The GST Council in its meeting last month had decided to set up a 13-member GoM to decide on tax on health and life insurance premiums.
Mr. Choudhary is the convenor of the GoM. The panel includes ministers from Uttar Pradesh, Rajasthan, West Bengal, Karnataka, Kerala, Andhra Pradesh, Goa, Gujarat, Meghalaya, Punjab, Tamil Nadu, and Telangana.
The GoM has been mandated to submit its report to the Council by October-end.
Published – October 19, 2024 06:16 pm IST