The Group of Ministers (GoM) formed in the last meeting of the GST Council has decided to make some changes in the rates of Goods and Services Tax (GST). The good news is that it has been decided to exempt health insurance and term insurance from GST. However, it has been suggested to increase the GST rates on many luxury items like high-end watches and shoes.

Watches and shoes will become more expensive than before

In the meeting of the GoM held on Saturday, some amendments were agreed in the rates of Goods and Services Tax (GST). This is expected to generate additional revenue of Rs 22,000 crore. The group has agreed to increase the tax rates on some luxury items. The Group of Ministers has proposed to increase the GST rate on watches costing more than Rs 25,000 from 18% to 28%. Also, the tax rate on shoes costing more than Rs 15,000 will also be increased from 18% to 28%.

Will GST increase on drinking water?

Apart from this, the members of the Group of Ministers also decided to reduce the tax rate on 20-litre drinking water bottles and bicycles from 18% to 5%. The members proposed that GST on exercise notebooks can be reduced from 12% to 5%. It will also be recommended to reduce GST from 12% to 5% on bicycles costing less than ten thousand rupees.

This big update came on health and term insurance.

At the same time, the GoM has also decided to exempt from GST the term life insurance premium and the premium paid by senior citizens for health insurance. This move will reduce the tax burden on both insurance companies and policyholders. The ministerial panel constituted to rationalize the rates will submit its recommendations to the GST Council by October 31. The final decision in this regard will be taken in the next meeting of the GST Council.