GST Waiver Likely On Health Cover For Senior Citizens, Term Life Insurance

By OB Bureau On Oct 20, 2024

senior citizens job portal — Representational image.

New Delhi: The Goods and Services Tax (GST) on premiums paid by senior citizens for health insurance and premiums paid by all for term life insurance may be exempted. Most members of a ministerial panel set up specifically to study this agreed in favour of extending such relief on Saturday.

Separately, the Group of Ministers (GoM) on rate rationalisation also discussed a GST rejig for several items and proposed cutting rates for some items such as packaged water above 20 litres (5 per cent from 18 per cent), bicycles priced less than Rs 10,000 (5 per cent from 12 per cent) and exercise notebooks (5 per cent from 12 per cent.

Shoes above Rs 15,000 and wristwatches above Rs 25,000 are likely to be shifted to the topmost slab of 28 per cent GST from 18 per cent now, a state finance minister said. This rate rejig exercise will help the states and Centre to realise revenue gain of Rs 22,000 crore, which will help cover the revenue loss from the reduction in GST rates for insurance premiums and other items, the minister said, according to The Indian Express.

For the insurance sector, GST on term life insurance premiums is likely to be exempted for all persons, including plans that consist of family members. Health insurance premiums paid by senior citizens irrespective of coverage will also be exempted. For other citizens, health insurance cover up to Rs 5 lakh is likely to be exempted and the existing rate of 18 per cent will be charged for health insurance cover over Rs 5 lakh.

“Every GoM member wants to give relief to people. Special focus is on senior citizens. We will submit a report to the Council. Work is being done to reduce the GST rate from 18 per cent, exemption will be given for certain categories (of insurance premium). The final decision will be taken by the GST Council,” Bihar Deputy Chief Minister Samrat Choudhary, who is the convenor of both the GoMs on insurance and rate rationalisation, said after the two meetings.

The GoM on rate rationalisation will continue to discuss rate proposals rejig including merger of slabs, another state finance minister said, according to the report.

“Rate rationalisation is an ongoing process. Several items of common use have been discussed. More discussions are pending, especially for demerit goods in the 28 per cent slab and for items which were reduced earlier from the 28 per cent slab to 18 per cent or 12 per cent,” the minister said.