GST rejig: Cheaper water, bikes; pricier shoes, watches

• The Group of Ministers on GST rate rationalisation has reduced GST on 20-litre packaged drinking water bottles.
• The GST on bicycles and exercise notebooks has also been reduced to 5%.
• The GoM also suggested hiking GST on shoes and wristwatches.

The Group of Ministers (GoM) on GST rate rationalisation on Saturday decided to lower tax rates on 20-litre packaged drinking water bottles, bicycles and exercise notebooks to 5%, but suggested raising taxes on high-end wristwatches and shoes, an official said.

The rate rejig decision taken by the GoM on GST rate rationalisation under Bihar Deputy Chief Minister Samrat Chaudhary would lead to a revenue gain of ₹22,000 crore, the officials added.

The GoM proposed reducing GST on packaged drinking water of 20 litres and above to 5% from 18%. If the GoM's recommendation is accepted by the GST Council, the GST on bicycles costing less than ₹10,000 will be reduced to 5% from 12%.

The GST on exercise notebooks will be reduced to 5% from 12%, the GoM proposed. The GoM also suggested hiking GST on shoes above ₹15,000 a pair and on wristwatches above ₹25,000 from 18% to 28%.

The GoM on rate rationalisation in its previous meeting on Saturday had discussed tax rate tweaks on over 100 items, including lowering taxes on certain goods from 12 to 5%, to give relief to the common man.

Some items in the 18% slab like hair dryers, hair curlers, and beauty or make-up preparations that the GoM took up could be back in the 28% bracket.

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.

Term life insurance, senior citizens' health coverage may be exempt

GST on term life insurance premiums and premiums paid by senior citizens for health cover is likely to be exempted from tax, an official said on Saturday. The GoM to decide on the GST rate on life and health insurance met on Saturday and decided to exempt GST on premiums paid for health insurance with coverage of ₹5 lakh for individuals other than senior citizens.

The final decision in this regard will be taken by the GST Council

The premiums paid for health insurance coverage of above ₹5 lakh will continue to attract 18% GST. Currently, 18% GST is levied on life insurance premiums paid for term policies and family floater policies.

"GoM members are broadly on board for cutting my rates on 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 give relief to people. Special focus be on senior citizens. We will submit a report to the council. A final decision will be taken by the council".

However, there might be no GST on insurance premiums paid for senior citizens, irrespective of the coverage amount.

The GST Council in its meeting last month had decided to set up a 13-member GoM to decide on tax on health and life insurance premiums. The GoM has been mandated to submit its report to the Council by October.

With inputs from PTI.

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