The GST Council is expected to consider a series of recommendations by the Ministerial Group on insurance products, including reducing the GST rate to 5% on all individual health insurance policies, extending the exemption for health insurance for senior citizens, and introducing pure insurance. be. Term life insurance. However, the issue of price rationalization for a long list of goods and services may take longer to resolve.
The council, chaired by Finance Minister Nirmala Sitharaman, is scheduled to meet in Jaisalmer (Rajasthan) on December 21. It is also likely to consider the executive committee’s proposal to raise the tax rate on all vehicles, including electric vehicles, to 18%. Besides discussing the input tax credit clarification for Swiggy and Zomato, the board will also discuss other issues.
Officials said the government supports GST exemption for pure term life insurance policies covering family members. This means that GST is not applicable on these policies, reducing the financial burden on policyholders. It also proposes to apply GST to health insurance policies, especially for the elderly, and reduce the GST rate to 5% for all individual health insurance policies, but without the option of input tax credit (ITC). There is.
Currently, 18% GST is added to the GST rate on premiums of health insurance, term insurance and unit-linked insurance plans. Contribution plans differ in how GST is applied. The insurance premium paid in the first year is 4.5%, but from the second year onwards it is 2.25%. For single premium annuity life insurance, the GST rate is 1.8%. Prices are the same for all age groups.
A committee of officials, known as the suitability committee, has finalized the proposal for old and used cars, officials said. As currently, GST will be levied on the supplier’s margin. There are four categories of new and used cars that are subject to GST. The first category includes gasoline, LPG, and CNG vehicles with a displacement of 1200cc or more and a total length of 4 meters or more. The second category includes diesel vehicles with a displacement of 1,500 cc or more and a total length of 4 meters. The third category includes motor vehicles with an engine capacity greater than 1500 cc, commonly known as sport utility vehicles (SUVs), including utility vehicles. All these are subject to 18% GST.
The fourth category is all other vehicles, including EVs, at 12%. The conformity committee is currently proposing to increase the conformance rate from 12 percent to 18 percent.
Another source said the issue of high interest rate rejigging may have to wait a little longer. The Ministerial Group on Tax Rationalization, chaired by Bihar Deputy Chief Minister Samrat Chaudhary, is believed to have proposed a review of GST rates on nearly 150 items, including clothing and footwear, and a special 35% tax rate on cigarettes and cigarettes. are. An aerated drink.
However, the Central Board of Indirect Taxes and Customs had stressed that any decision would be taken by the GST Council. “The GST Council is yet to deliberate on changes in GST rates. The Council has not even received the government’s recommendations. In fact, the government is yet to finalize and submit the recommendations to the Council and the “The council will take a final view on the government’s recommendations,” the government said in a Dec. 3 post to X.
