GST Council Meeting on 21st Dec to Discuss Rate Cuts for Health and Life Insurance

55th GST Council Meeting on 21st Dec 2024

The GST Council is scheduled to be held on December 21 to discuss an important proposal regarding potential exemptions or reductions in GST rates on health and life insurance. The announcement was made via a post on the social media platform X.

The conference is set to take place in Jaisalmer, and will be presided over by Union Finance Minister Nirmala Sitharaman, alongside state finance ministers. Key discussions are expected on rate rationalization, with lowering GST on several essential goods from the current 12% bracket to 5%, based on suggestions from the 55th GST council’s meeting board of state ministers.

Currently, the GST system operates under a four-tier tax structure, with rates of 5%, 12%, 18%, and 28%.

In its last session on September 9, the council directed a group of ministers (GoM) to prepare their report on GST charges for insurance by the end of October. Following this directive, the GoM for health and life insurance met last month, reaching a consensus to exempt GST on premiums for term life insurance and health policies for senior citizens.

Proposed Tax Rate Rationalization:

The GoM on health and life insurance, as well as the panel on rate rationalization, is led by Bihar Deputy Chief Minister Samrat Chaudhary. The former group consists of 13 members, while the latter includes six members.

Health insurance premiums: The GST council meeting proposes exempting GST on health insurance premiums up to ₹5 lakh for individuals (excluding senior citizens), while maintaining an 18% GST on coverage exceeding that limit
Packaged Drinking Water: The GST on packaged drinking water (20 liters+) should be reduced from 18% to 5%, as recommended by the GoM
Bicycle: The GST on bicycles under Rs 10,000 should be lowered to 5% from the current 12%
Notebook: The GST rate on exercise notebooks will be reduced from 12% to 5%
Wristwatches and Shoes: The GoM has recommended an increase in the GST rate on shoes priced above Rs 15,000 per pair and wristwatches costing more than Rs 25,000, from 18% to 28%.

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