New Delhi: As the government focuses on GST 2.0, which further eases tax laws, improves tax simplification and technology adoption, the ministerial panel tasked with rationalizing rates is deliberating on the possibility of reducing GST on essential items such as insurance doctors and tractors by up to 5 percent.
With tractor segment volumes witnessing marginal growth (y-o-y) in September, a reduction in GST on tractors will offset the revenue loss, according to industry experts. Currently, tractors generate between 12 and 28 percent of GST, depending on their classification.
Similarly, a GST cut on health and term insurance (a long-pending demand in the sector) will make them even more affordable for the masses. According to experts, health insurance is likely to see a decline from 18 per cent to 12 per cent, while term insurance may attract a 5 per cent GST.
The panel, chaired by Bihar Deputy Chief Minister Samrat Chaudhary, is reportedly focused on moving certain elements of the plan from 12 per cent to 5 per cent. The panel is expected to meet on October 19 to discuss the insurance issue, followed by discussions on tariff rationalization on October 20.
Last month, the GST Council, headed by Finance Minister Nirmala Sitharaman, set up a Group of Ministers (GoM) to slash the tax rate on life and health insurance as well as reduce the GST on anti-cancer drugs.
The GoM on life and health insurance is headed by Choudhary, who is currently heading the panel on rationalization of GST rates. The 54th meeting of the GST Council, held on September 9, reached a “broad consensus” to provide relief to individuals and senior citizens with a decision on the GST levied on health insurance premiums. The current rate of GST on health and life insurance policies is 18 per cent.
However, the GST Council announced that it would reduce the rate on anti-cancer drugs from 12 per cent to 5 per cent. The life and health insurance industry is hopeful that the reduction will ease the tax burden for both insurers and policyholders.
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