The government’s rate change decision on rationalization of GST rates would lead to a revenue gain of ₹22,000 crore, officials said. | Photo credits: Getty Images/iStockphoto
“On Saturday (October 19, 2024), the Group of Ministers (GoM) for Rationalization of GST Rates decided to reduce tax rates on 20 liter packaged drinking water bottles, bicycles and sports notebooks to 5% but proposed to reduce taxes on raise high taxes. put an end to wristwatches and shoes,” an official said.
The government’s rate change decision on rationalization of GST rates under the leadership of Bihar Deputy Chief Minister Samrat Chaudhary would lead to a revenue gain of ₹22,000 crore, the officials added.
The government has proposed reducing VAT on packaged drinking water of 20 liters and above from 18% to 5%. If the GoM’s recommendation is accepted by the GST Council, the GST on bicycles costing less than ₹10,000 will be reduced from 12% to 5%.
The GST on practice notebooks will also be reduced from 12% to 5%, the government has proposed.
The GoM also proposed to increase GST on shoes above ₹15,000 per pair and on wristwatches above ₹25,000 from 18% to 28%.
The government on rate rationalization had discussed adjustments in tax rates on over 100 points, including reducing taxes on select goods from 12 to 5%, to provide relief to the common man, in its previous meeting on Saturday (October 19, 2024). .
Some items in the 18% bracket, such as hairdryers, hair curlers and beauty or makeup preparations that the government has taken over, could fall back into the 28% bracket.
The six-member GoM also includes Finance Minister Suresh Kumar Khanna of Uttar Pradesh, Health Minister Gajendra Singh of Rajasthan, Finance Minister of Karnataka Krishna Byre Gowda and Finance Minister of Kerala KN Balagopal.
Currently, GST is a four-tiered tax structure, with slabs of 5, 12, 18 and 28%.
Under GST, essential items are exempted or taxed at the lowest slab, while luxury and substandard items attract the highest slab. Luxury and sin goods attract waste on top of the highest 28% plate.
The average GST rate has fallen below the revenue-neutral rate of 15.3%, prompting the need to initiate discussions on rationalization of the GST rate.
The premium for term life insurance and health cover for seniors can be exempted
The GoM that decided the GST rate for life and health insurance met on Saturday (October 19, 2024) and decided to exempt GST on premiums paid for health insurance covering ₹5 lakh for persons other than senior citizens.
The final decision on this will be taken by the GST Council. Official premiums paid for health insurance policies above ₹5 lakh will continue to attract 18% GST.
Currently, 18% GST is levied on life insurance premiums paid for term and family policies.
“GoM members are broadly supportive of the fact that I have reduced my 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 provide relief to people. Special attention is paid to seniors. We will submit a report to the council. A final decision will be made by the council.”
However, GST may not be levied on insurance premiums paid for seniors, regardless of the amount of cover.
The GST Council at its meeting last month had decided to set up a 13-member government to decide on taxation of health and life insurance premiums.
Mr. Choudhary is the Chairman of the GoM. The panel comprises ministers from Uttar Pradesh, Rajasthan, West Bengal, Karnataka, Kerala, Andhra Pradesh, Goa, Gujarat, Meghalaya, Punjab, Tamil Nadu and Telangana.
The government has been instructed to submit its report to the Council by the end of October.
Published – Oct 19, 2024 6:16 PM IST
