Finance Minister Nirmala Sitharaman.
Finance Minister Nirmala Sitharaman is likely to meet finance ministers of states for pre-budget consultations and GST Council meeting on 21-22nd of next month. The finance ministers of the states will present their recommendations for the budget for 2025-26, which will be unveiled on February 1, 2025. According to PTI news, the 55th meeting of the GST Council will be held on one of these two days. In this, the much awaited decision will be taken on exemption on health and life insurance or reducing GST rate. The council is likely to reduce tax rates on many common items from 12 per cent to 5 per cent, according to the recommendations of a panel of state ministers.
It was agreed to exempt insurance premium from GST.
According to the news, the official said that the two-day meeting is going to be held in Jaisalmer or Jodhpur in Rajasthan. Last month, the Group of Ministers (GoM) on Health and Life Insurance GST had broadly agreed to exempt from GST the insurance premiums paid for term life insurance policies and health insurance of senior citizens. It is proposed to exempt from GST the premium paid for health insurance with coverage up to Rs 5 lakh by individuals other than senior citizens.
No relief on premium of these health insurance policies
Premiums paid for policies with health insurance cover above Rs 5 lakh will continue to attract 18 per cent GST. The GST Council, in its 54th meeting on September 9, had tasked the GoM to finalize the report on imposition of GST on insurance by the end of October. Additionally, the GoM on GST rate rationalization has also suggested that the GST Council rejig tax rates on several items including packaged drinking water, bicycles, exercise notebooks, luxury wrist watches and shoes. This rate reshuffle is expected to generate revenue gains of around Rs 22,000 crore.
GST may be reduced on these also
The Group of Ministers constituted on rationalizing the rates has proposed to reduce GST on packaged drinking water of 20 liters and above from 18 percent to 5 percent. If the GST Council accepts the recommendation of the Group of Ministers, the GST on bicycles priced below Rs 10,000 will be reduced from 12 per cent to 5 per cent. Also, GST on exercise notebooks will be reduced from 12 percent to 5 percent. The Group of Ministers has also proposed to increase GST on shoes priced above Rs 15,000 per pair from 18 per cent to 28 per cent. It has also proposed to increase GST on wrist watches priced above Rs 25,000 to 28 per cent from 18 per cent.
Deputy Chief Minister of Bihar is the convener
Bihar Deputy Chief Minister Samrat Chaudhary is the convenor of the 13-member Group of Ministers formed on health and life insurance and the 6-member Group of Ministers formed on rationalization of rates. Currently, GST is a four-tier tax structure with slabs of 5, 12, 18 and 28 percent. Under GST, essential goods are either exempted or taxed at the lowest slab, while luxury goods attract cess at the highest slab of 28 per cent.
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