New Delhi: In the coming days, there is going to be relief in paying the premium of term or health insurance. In the meeting of the Group of Ministers (GoM) formed to decide the GST rate on life and health insurance on Saturday, a consensus was reached on completely abolishing the tax on the premium of health insurance and term insurance with coverage up to Rs 5 lakh.

The final decision will be taken by the GST Council

As before, 18 percent GST will continue to be levied on health insurance with coverage of more than Rs 5 lakh. Apart from this, the health insurance premium paid by senior citizens can also be exempted from tax. However, the final decision in this regard will be taken by the GST Council. At present, 18 percent GST is levied on the premium of term insurance and health insurance.

Special attention will be given to senior citizens

An official said that the GoM members are broadly in agreement for reduction in rates on insurance premium. After the meeting, GoM convenor and Bihar Deputy Chief Minister Samrat Chaudhary said that every member of the GoM wants to give relief to the people. Special attention will be given to senior citizens. We will submit a report to the Council by the end of this month. The final decision will be taken by the GST Council.

Last month, the GST Council constituted a 13-member group of ministers to take a decision on tax on life and health insurance premiums. Apart from Samrat Choudhary, this group of ministers includes ministers from Uttar Pradesh, Rajasthan, West Bengal, Karnataka, Kerala, Andhra Pradesh, Goa, Gujarat, Meghalaya, Punjab, Tamil Nadu and Telangana. During the financial year 2023-24, the central and state governments received Rs 8,262.94 crore from the tax levied on health insurance premium. The next meeting of the GST Council is to be held in November.

Bicycles and water bottles will be cheaper

A meeting of the Group of Ministers (GOM) constituted to rationalize GST rates was also held on Saturday. It was agreed to reduce the tax rate to 5% on bicycles, 20-litre water bottles and study notebooks costing less than Rs 10,000. Currently, 12% GST is levied on bicycles and study notebooks costing less than this price and 18% GST is levied on water bottles. However, the final decision in this regard has to be taken by the GST Council.

An official said that the GoM headed by the Deputy Chief Minister of Bihar suggested increasing tax on expensive wrist watches and shoes. The GoM has suggested increasing the GST from 18 percent to 28 percent on shoes costing more than Rs 15,000 and wrist watches costing more than Rs 25,000. This decision of the GoM will lead to a revenue gain of Rs 22,000 crore. 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.